US equities finished Monday’s session modestly firmer after a sharp pullback in crude prices helped calm fears over inflation and interest rates. The Dow Jones Industrial Average added roughly 0.5%, while the S&P 500 edged slightly higher and the Nasdaq Composite finished little changed as investors positioned themselves ahead of a heavy earnings week. Asian and European markets also advanced.
Wall Street closes higher as oil slide eases inflation worries
Oil was the standout mover. WTI crude fell sharply, dropping around 7.5% to approximately $82 per barrel as easing tensions between the United States and Iran prompted the decline. That decline flowed through to bond markets, with the 10-year US Treasury yield easing to around 4.65% as traders scaled back some of their concerns about persistent inflation pressure.
Sector performance across Wall Street was uneven. Communication services and consumer staples names led the gains, both rising by roughly 1.5%, while energy stocks fell around 2% in step with the drop in crude prices.
Among individual names, Workday climbed close to 9% and Palantir advanced around 7%, while Nvidia fell roughly 5% amid renewed questions over the scale and financing of artificial intelligence spending, and Sandisk dropped around 11%.
Corporate earnings remained a bright spot overall, with 83% of S&P 500 constituents beating profit expectations so far this season. Attention is now shifting firmly towards results from Microsoft, Meta, Apple and Amazon, alongside the Federal Reserve’s policy announcement, both due later this week.
Asian markets suffer a heavy chip-driven sell-off
The mood in Asia turned considerably more volatile on Tuesday. South Korea’s Kospi index plunged by more than 9%. Japan’s Nikkei 225 fell close to 4%. The renewed selling was triggered by renewed concerns over AI-related spending, which sparked a broad semiconductor sell-off. Chinese technology shares proved somewhat more resilient, supported by optimism over the country’s progress in domestic semiconductor manufacturing, although mainland indices still ended the session lower overall.
The ripple effects reached US futures markets too. Nasdaq 100 futures fell around 0.7%, S&P 500 futures eased about 0.3% and Dow futures slipped roughly 0.2% as Wall Street braced for the twin catalysts of Big Tech earnings and the Fed’s rate decision. Nvidia remained under pressure in early trading, while after-hours movers included gains for Cadence Design Systems, Rambus and Applied Digital, and a decline of around 4.5% for Sanmina following softer guidance.
European shares outperform as lower yields lift sentiment
Regional benchmarks edged higher, outperforming North American markets as falling bond yields boosted sentiment, with banking stocks among the strongest performers. SAP surged on optimism heading into its AI-related earnings, while semiconductor names such as ASML and Infineon came under pressure in sympathy with the broader chip sell-off and concerns over Nvidia-linked spending.
Argenx shares fell after the biotech group confirmed its US$2.2 billion acquisition of Forte Biosciences.
Currencies and commodities react to shifting risk sentiment
Here is how the main currency and commodity moves are shaping up for investors tracking global risk sentiment.
The US dollar stays firm ahead of the Fed
The US Dollar Index held around the 101.5 level as markets awaited the Federal Reserve’s policy announcement amid heightened uncertainty over a possible rate hike. The euro slipped modestly against the dollar, with EUR/USD easing to around 1.1374, as dollar demand persisted even as easing oil prices and a calmer diplomatic backdrop between Washington and Tehran reduced some near-term inflation concerns.
Oil extends its decline on hopes of a lasting truce
Brent and WTI crude both extended Monday’s sharp losses as hopes for renewed negotiations between the United States and Iran eased fears over potential disruption to Middle East supply routes. Traders remained cautious, however, since shipping through the Strait of Hormuz has yet to return to normal levels, meaning further diplomatic progress will be critical in determining whether the recent geopolitical risk premium continues to unwind.
US President Donald Trump said discussions between Washington and Tehran amounted to “good talks”, pointing to potential diplomatic progress despite recent friction. At the same time, drone attacks on neighbouring countries underscored how fragile the regional security situation remains, highlighting the risk that any diplomatic breakthrough could still be derailed by further violence.
Stocks on the move
A number of companies saw significant share price moves driven by earnings, analyst rating changes and other company-specific news.
China has reportedly begun manufacturing domestic immersion DUV lithography equipment, a direct challenge to ASML’s long-standing dominance in advanced chipmaking machinery. Initial shipments to Chinese chipmakers are expected before the end of the year, although output will likely remain limited and the technology is still thought to trail ASML on performance and reliability. ASML shares fell around 4.6% following the report.
DeepSeek has reportedly paused a second fundraising round after leaked remarks from founder Liang Wenfeng drew attention to China’s AI gap with the United States and its continued reliance on Nvidia chips. The pause delays a potential US$71 billion valuation deal that would have followed a US$7 billion funding round completed in June, though talks could resume once scrutiny of the comments fades.
Johnson & Johnson has agreed a proposed US$5.5 billion settlement to resolve around 76,000 outstanding US lawsuits alleging its talc products caused ovarian cancer, subject to approval from 95% of claimants. The company continues to deny that its products cause cancer, but said the settlement removes the cost and uncertainty of prolonged litigation.
The US Federal Aviation Administration has proposed inspections of 453 Boeing 737 MAX aircraft after discovering that some passenger seats were installed incorrectly. The regulator warned that, left uncorrected, the faulty installations could raise the risk of passenger injury during an emergency landing, and it is requiring airlines to carry out corrective work.
LVMH reported stronger second-quarter sales, helped by robust US demand for jewellery that offset weaker spending in Europe linked to reduced tourism during the Iran conflict. Fashion and leather goods returned to modest growth, and the group held margins steady despite currency headwinds, pointing to a gradual recovery in luxury demand.
Vodafone raised its full-year profit and cash flow guidance, saying it now expects results towards the top end of its previous range. First-quarter performance beat expectations, supported by strong service revenue growth, improving German operations and resilient African markets. Morgan Stanley welcomed the update but kept an Equal-weight rating on the stock.
Advisers to Banca Monte dei Paschi di Siena and Banco BPM are reportedly exploring a merger combining cash and shares as an alternative to Intesa Sanpaolo’s takeover approach for Monte Paschi. The proposed structure would broadly reflect the current market valuations of both lenders, although neither bank has commented publicly on the report.
Porsche plans to cut around 9,000 jobs by 2035, roughly one-fifth of its workforce, as it restructures in response to weak demand in China and a slower-than-expected shift towards electric vehicles. The agreement avoids compulsory redundancies, while the company will still invest €2.1 billion in its German manufacturing and research facilities.
Analyst and broker views worth watching
Several brokers issued fresh ratings changes that are worth flagging for investors monitoring specific names.
Erste Group downgraded Caterpillar to Hold from Buy, citing limited further upside given its premium valuation. The broker acknowledged the company’s strong operating margins, high return on equity and healthy order intake in its Energy Systems division, but warned that declining year-on-year margins and an elevated price-to-earnings ratio leave less room for additional gains.
Inditex shares rose after Barclays upgraded the stock to Overweight, pointing to attractive returns, strong pricing power, tight inventory control and room for further margin improvement. The broker expects mid-teens total shareholder returns over the coming year, underpinned by earnings growth and dividends, and remains confident in Zara’s long-term growth story despite ongoing consumer spending risks.
Thales shares gained after Deutsche Bank upgraded the stock to Buy, citing clearer visibility across the company’s defence, space and cyber security divisions. Strong first-half results showed healthy order growth, improved margins and a marked improvement in free cash flow. The company maintained its 2026 outlook, supported by robust defence demand and a recovering space business.
Upcoming data and events to watch
Several important releases and corporate results are due over the coming days. Key US data include consumer confidence, housing price indicators, the trade balance, business inventories and the Richmond Fed’s manufacturing and services surveys. Markets will also watch a seven-year Treasury auction and the latest weekly oil inventories data closely.
On the earnings front, results are expected from Visa, Coca-Cola, Boeing, KLA, Seagate, Rio Tinto, Safran, Unilever and Air Liquide, alongside the closely watched reports from Microsoft, Meta, Apple and Amazon. The Federal Reserve’s policy decision, due later this week, will be a key catalyst for global markets.
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