Market overview – a record week for equities
Global equity markets ended the week on a high note, with the S&P 500 reaching an all-time high on Thursday. This rally was primarily fueled by strong corporate earnings, particularly from tech giants like Nvidia, which surpassed both revenue and profit expectations. Gains in the communication and energy sectors supported the upward momentum, while more defensive sectors such as utilities and consumer staples underperformed.
Despite this optimism, investors remain wary of lingering macroeconomic uncertainties. Mixed signals from global markets and trade developments continued to inject caution into sentiment.
Global economic developments
Here’s a summary of the major economic movements across different regions this week.
Asia’s mixed market sentiment
Asian equities displayed mixed performance. While Chinese markets extended gains, boosted by government stimulus and expanding chip production, Japan’s Nikkei 225 declined due to weak economic data. Other markets like India and South Korea also faced headwinds amid global trade uncertainties and interest rate policies. South Korea’s central bank held its policy rate unchanged.
Additionally, new U.S. tariffs on Indian imports came into effect, adding to regional uncertainty.
U.S. economy shows signs of cooling
Economic indicators in the U.S. pointed to a gradual cooling in the labor market, though overall conditions remain healthy. Initial jobless claims slightly exceeded forecasts, while continuing claims declined, signaling a decrease in ongoing unemployment.
Notably, Q2 GDP growth was revised upward, supported by robust fixed investments. Inflation, as measured by the PCE index, ticked higher but remains within acceptable bounds. The bond market has started to price in the possibility of interest rate cuts later in 2025, sparking cautious optimism.
Federal Reserve Governor Christopher Waller expressed support for a 25 basis point rate cut in September, citing slowing job growth and contained inflation once tariff effects are excluded. He highlighted risks of a rapid deterioration in the labor market and signaled openness to further cuts guided by data.
Sector highlights and stock movers
Several stocks across tech, consumer, and industrial sectors made notable moves based on earnings, guidance, and analyst actions.
Tech and AI stocks in focus
Nvidia: Analysts raised their price targets across the board after Nvidia delivered better-than-expected results, reinforcing its leadership in AI infrastructure. JPMorgan increased its target to $215, Morgan Stanley to $210, KeyBanc to $230, Truist to $228, and DA Davidson to $195 (neutral rating, citing China risks).
Marvell Technology: Shares dropped 11.3% due to a disappointing revenue forecast, with the company citing delays in Microsoft’s AI chip deployment and softness in the data center and custom ASIC segments.
Dell Technologies: Although Q2 revenue exceeded estimates at $29.78 billion, shares fell 5.3% on weak future guidance. Dell now expects $20 billion in AI server revenue by FY2026.
Cybersecurity and consumer strength
SentinelOne: Stock jumped 9% after raising its annual revenue forecast, powered by rising demand for its AI-driven cybersecurity solutions. Q2 revenue rose 22% to $242.2 million, with ARR hitting $1 billion.
Ulta Beauty: Posted strong quarterly sales of $2.79 billion and revised its full-year outlook upwards thanks to high store traffic, trendy brand demand (e.g., Elf Beauty, Fenty Beauty), and international expansion.
Retail and industrial trends
Dollar General: Boosted its annual earnings forecast as value-conscious shoppers flocked to stores. Same-store sales increased 2.8%, with full-year net sales growth now projected between 4.3% and 4.8%. The retailer also noted growing appeal among higher-income consumers and benefits from cost-saving efforts.
Caterpillar: Announced plans to acquire Australian software firm RPMGlobal, sending RPM shares up 17%. Caterpillar also increased its 2025 tariff cost estimate to $1.5–$1.8 billion, with Q3 alone expected to see $600 million in tariff-related expenses.
Stada: German pharmaceutical firm Stada plans to launch an IPO this autumn, after postponing earlier this year due to volatility. CEO Peter Goldschmidt confirmed the company is preparing the offering following a strong first half, including 6% revenue growth and record EBITDA across its healthcare, generics, and specialty product lines.
Siemens: J.P. Morgan placed Siemens on its ‘Positive Catalyst Watch’ ahead of its Capital Markets Day on December 9. The bank raised Siemens’ price target to €300 by December 2026, citing improved margins, free cash flow, and the company’s restructuring progress, especially regarding its 73% stake in Siemens Healthineers.
Europe’s mixed market reaction
European equities ended Thursday on a subdued note. The STOXX 50 index edged higher, while the broader STOXX 600 slipped by 0.2%. Chip-related stocks posted mixed results; ASML dropped 1%, whereas Infineon gained 1.1%.
Auto manufacturers rallied despite weak registration data, led by Chinese EV giant BYD. Meanwhile, Pernod Ricard rose 1.4% after forecasting stronger sales for fiscal 2026, despite a tough first quarter in China and the U.S. The company anticipates a lesser-than-expected tariff impact and projects long-term sales growth of 3–6% annually through 2029.
Currency and commodity update
Currencies and commodities experienced shifts this week due to inflation expectations, trade policy developments, and geopolitical tensions.
Dollar and euro stability
The U.S. dollar index held steady at 97.9 as investors awaited the Core PCE Price Index for inflation cues. EUR/USD hovered around 1.1661. A rate cut of 25 basis points in September is increasingly priced in by the bond market.
Oil prices buoyed by geopolitical tensions
Oil prices slipped on Friday morning but are set for weekly gains. WTI crude rose 0.8%, and Brent crude added 0.6%, supported by geopolitical tensions, including Russia’s airstrikes on Ukraine and Ukrainian attacks on Russian oil infrastructure. However, reduced seasonal demand in the U.S. and rising OPEC+ supply could offset these gains. Seasonal refinery slowdowns are expected to build global stockpiles.
What to watch next
Looking ahead, today’s focus is on key U.S. economic data, particularly the Core PCE Price Index, alongside personal income and spending figures. In Europe, inflation and growth signals will come from Germany’s CPI and France’s CPI, and consumer spending data.
On the corporate side, Alibaba’s quarterly earnings report is the major release to watch, offering fresh insight into global consumer demand and the health of the tech sector.
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