A Bullish Momentum in US Equities
Wall Street closed Thursday on a high note, with all three major indices ending the session in the green. The S&P 500 reached a new all-time high, climbing 0.8% to close at 6,502.08, while the Nasdaq jumped 1%. The Dow Jones Industrial Average also performed strongly, adding nearly 350 points, a gain of 0.8%.
Leading Sectors and Market Movers
Investor sentiment was supported by gains in consumer discretionary and communication services. On the downside, utilities lagged, marking the only sector to close in negative territory.
US Treasury yields fell ahead of Friday’s anticipated labour market data, with the 10-year yield dipping to 4.16%. The US dollar strengthened, and oil prices slid, reflecting caution ahead of the weekend OPEC+ meeting, where the possibility of increased supply is expected to be discussed.
US Equity Futures and After-Hours Sentiment
Investor momentum continued overnight, with US equity futures inching higher as markets looked ahead to the August jobs report, seen as pivotal for confirming expectations of a Federal Reserve rate cut at its September meeting. In after-hours trading, Broadcom surged 4% following strong earnings and upbeat guidance, boosting sentiment across the tech sector.
European and Asian Markets React Positively
Despite soft data, European indices finished higher. The Eurozone’s July retail sales fell by 0.5%, but the smaller-than-expected decline helped reassure investors. The STOXX 50 and STOXX 600 rose by 0.4% and 0.6%, respectively, buoyed by lower long-term yields that reduced concerns over borrowing costs.
Travel Sector Lags
While broader sentiment was positive, travel shares underperformed. Jet2 dropped 12.5% after cutting its winter capacity, with Ryanair, easyJet, and TUI also ending lower.
Asian Markets in Brief
Asian markets followed Wall Street’s bullish lead:
- Japan’s Nikkei advanced, driven by a new US-Japan trade agreement and a surge in household spending.
- Hong Kong, Australia, and Singapore markets also climbed.
- Chinese stocks steadied after weekly losses.
- South Korea’s market remained flat.
Economic Indicators Shift Expectations for Fed Policy
Investor attention now turns to Friday’s non-farm payrolls release. Analysts expect a modest increase of around 80,000 jobs and the unemployment rate to hold steady at 4.2%. These figures could support expectations of a Federal Reserve rate cut at the upcoming September meeting.
Labour Market Data Insights
Recent data from the ADP employment report showed only 54,000 private-sector jobs added in August, while weekly jobless claims increased slightly, both suggesting a cooling labour market.
Commentary from the Fed
New York Fed President John Williams noted that gradual interest rate cuts are likely if unemployment rises modestly and inflation softens into next year. He stated that current policy is “modestly restrictive” but could shift toward neutral over time. Williams added that tariffs may lift inflation by 1–1.5% and that growth is slowing, reinforcing the importance of incoming data, particularly the August jobs report—for the Fed’s next move.
Major Corporate Highlights
Tech and AI-Driven Growth Stories
Broadcom surged 4% in after-hours trading after reporting strong Q3 earnings and announcing $10 billion in AI chip orders. CEO Hock Tan committed to leading the company for another five years, with expectations that AI revenue will “improve significantly” in fiscal 2026. While custom AI chip growth is strong, other semiconductor segments showed some weakness.
OpenAI, in partnership with Broadcom, plans to manufacture its own custom AI chips starting in 2026 to reduce dependency on Nvidia. The chips will be used internally and align with the broader trend of AI companies developing in-house hardware.
Consumer and Retail Sector Developments
Amazon rallied over 4% following a report forecasting a resurgence in AWS AI growth, supported by its partnership with Anthropic and aggressive datacentre expansion. Analysts project 20%+ growth in AWS by late 2025.
Lululemon shares dropped 15% after cutting full-year forecasts due to weak U.S. demand, supply chain missteps, and rising competition in the athleisure space. While international sales grew 15%, U.S. comparable sales fell by 1%.
Financial and Investment Sector Activity
Goldman Sachs announced a $1 billion investment in T. Rowe Price, acquiring a 3.5% stake and becoming its fifth-largest shareholder. The move supports Goldman’s aim to expand private markets offerings for retirement-focused retail clients. T. Rowe shares rose 6% on the news.
Sanofi experienced a sharp 9% decline, wiping nearly $13 billion off its market cap after its new eczema treatment, amlitelimab, showed weaker efficacy than its best-selling drug, Dupixent, despite meeting key trial goals.
Other Notable Movers
- Apple is expected to raise prices for its iPhone 17 lineup for the first time in seven years. The modest price hike could lift average selling prices by 5% in fiscal 2026 without materially impacting demand.
- Porsche will be removed from Germany’s DAX index on September 22 following extended share price weakness, largely attributed to U.S. tariffs. Scout24 will replace it in the index as part of routine rebalancing.
- AMD received a Buy rating from Truist, driven by strong demand for AI-adjacent data center products, including its MI355 GPU and improved ROCm software. Margins are expected to expand in upcoming quarters.
- Airbus was upgraded to Buy by UBS, with a €220 price target based on stronger order visibility and easing supply chain headwinds. The bank forecasts 945 deliveries in 2026, above consensus.
- RWE was upgraded to Outperform by Bernstein, with a €41 price target. Analysts cited disciplined capital allocation, a €1.5 billion buyback, and growth drivers including UK offshore wind and German gas projects.
Commodities and Currency Markets
Oil and Energy
Oil prices declined in Asia on Friday:
- Brent crude traded at $66.83
- WTI crude at $62.88
These moves came amid concerns over rising U.S. inventories, slowing global fuel demand, and market caution ahead of potential OPEC+ supply increases. Crude was on track for weekly losses.
Currency Trends
The US Dollar Index slipped to 98.1, giving up gains from the previous session. The greenback weakened as labour market data supported a dovish Fed outlook, with the euro climbing to 1.1668. The New Zealand and Australian dollars posted the strongest gains against the dollar.
Trade and Policy Developments
US President Donald Trump signed an executive order reducing tariffs on Japanese car imports from 27.5% to 15%. The move reinforces the July U.S.-Japan trade agreement, which includes:
- $550 billion in Japanese investment into U.S. projects
- Increased agricultural imports
- Higher defence spending
This agreement is expected to reduce policy uncertainty for automakers and support global trade sentiment.
Upcoming Economic Events to Watch
Markets are closely watching several key economic releases:
- United States: Nonfarm payrolls, unemployment rate, and average hourly earnings
- Europe: Germany’s factory orders, and France’s trade balance and current account
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