Global markets moved cautiously as escalating tensions in the Middle East pushed oil prices and bond yields higher, unsettling investor sentiment just as the second quarter earnings season for the world’s largest technology companies got underway. Wall Street closed lower on Wednesday, Asian markets found pockets of strength in semiconductor names on Thursday, and European equities managed to hold onto gains thanks to a strong batch of corporate results. Traders now turn their attention to the European Central Bank’s rate decision, due later today.
Overnight moves across global equity markets
Before looking at individual stock movers, it helps to understand how each major region performed as investors digested a heavy mix of geopolitics, trade headlines and corporate earnings.
Wall Street closes lower ahead of Big Tech results
US equities finished Wednesday’s session broadly weaker. The Dow Jones Industrial Average was little changed, the S&P 500 edged lower, and the Nasdaq Composite underperformed. Sentiment was dampened by fresh trade headlines, including plans for a 100 percent tariff on imported generic pharmaceuticals starting in 2028 and additional levies on selected Canadian goods, with investors still waiting for clarity on what will eventually replace existing US trade measures.
Markets were also positioning ahead of results from Alphabet and Tesla, both of which reported after Wednesday’s closing bell. Alphabet beat expectations on cloud revenue, underlining continued strength in AI related demand, yet its shares slipped in after hours trading as investors zeroed in on the scale of planned capital spending. Tesla shares also came under pressure after the company posted negative free cash flow for the first time in more than two years, a result of heavy outlays on AI infrastructure, battery manufacturing and its robotaxi ambitions. Elsewhere, Super Micro Computer jumped on news of record orders, while ServiceNow advanced in after hours dealing following better than expected results and an upgraded outlook.
Asian markets rise on chip sector strength
Asian equities mostly firmed on Thursday, led higher by semiconductor names after major US technology firms reaffirmed their commitment to AI infrastructure spending. South Korea was the standout performer, with the Kospi climbing over 3 percent as SK Hynix and Samsung Electronics rallied. Japanese shares also posted gains, even as investors kept a close eye on Middle East developments and the inflationary pressure stemming from higher oil prices.
US stock futures ticked higher despite the disappointing cash flow figures from both Alphabet and Tesla. Both companies reported negative free cash flow after stepping up AI related spending, feeding concerns about the near term cost of the AI build out. Alphabet’s robust cloud growth was not enough to fully reassure investors, while Tesla’s results missed expectations even as its electric vehicle sales showed improvement.
European shares supported by strong earnings
European equities closed higher on Wednesday, helped along by solid corporate earnings despite a difficult macroeconomic backdrop. The Euro STOXX 50 rose 0.5 percent and the STOXX Europe 600 added 0.6 percent. Airbus was among the session’s biggest gainers after lifting its delivery targets and unveiling a 5 billion euro share buyback programme, while banking names including Santander, BBVA and Intesa Sanpaolo advanced on the back of strong quarterly numbers.
Currency and commodity markets react to geopolitical risk
Beyond equities, currency and commodity markets have been especially sensitive to the unfolding situation in the Middle East, so it is worth breaking down what has been driving the dollar, the euro and oil prices this week.
Dollar softens, euro firms as rate expectations shift
The US dollar eased slightly on Thursday, trading around the 101 level, as investors weighed rising energy driven inflation risks against a softer economic backdrop and lingering uncertainty over the Federal Reserve’s next move. Safe haven demand helped limit the currency’s losses given the ongoing tensions in the Middle East. Against this backdrop, EUR/USD firmed to around 1.1429 as markets weighed geopolitical developments alongside interest rate expectations on both sides of the Atlantic.
Oil extends its rally on Middle East shipping fears
Oil prices rose for a fifth straight session, with Brent crude climbing above 95 US dollars a barrel, after Houthi attacks on two Saudi oil tankers stoked fears of disruption to key Middle East shipping routes. The gains came despite an unexpected build in US crude inventories, with geopolitical risks continuing to dominate market sentiment.
Tensions in the region remain elevated. The United States has warned it will destroy Iranian bridges or power plants should Tehran strike shipping in the Strait of Hormuz, and the exchange of strikes has now stretched into an eleventh consecutive night despite ongoing mediation efforts. Washington estimates the conflict has already cost around 37.5 billion US dollars, though some reports suggest the true figure could be considerably higher.
Company earnings and stock movers to watch
A wide range of companies saw notable share price moves on the back of earnings, analyst commentary or corporate news, so it is worth running through the most significant names sector by sector.
Technology and AI infrastructure names
Alphabet delivered a stronger than expected second quarter, with revenue rising 24 percent to 119.8 billion US dollars on the back of robust growth in Google Cloud and AI services. The company also raised its 2026 capital expenditure guidance to a range of 195 to 205 billion US dollars to fund further AI infrastructure expansion. Despite the strong headline numbers, shares fell around 1.5 percent in after hours trading as investors focused on the scale of that spending commitment.
Tesla reported negative free cash flow of 1.1 billion US dollars for the second quarter as it accelerated investment across AI, battery production and its robotaxi programme. Vehicle deliveries and energy storage growth both beat expectations, though investors remain cautious about the pace of automotive demand and whether the company’s autonomous driving technology can translate into sustainable long term growth. Separately, Deepwater Management’s Gene Munster increased the perceived odds of a Tesla and SpaceX merger from around 80 percent to 90 percent following comments from chief executive Elon Musk during the earnings call, saying he was surprised the question was even addressed, even as Musk stressed any such deal would need to go through the appropriate corporate process.
IBM trimmed its annual revenue growth outlook shortly after flagging a shift in enterprise spending towards AI infrastructure. Second quarter results came in below expectations, weighed down by softer mainframe demand, though management indicated that related spending had simply been delayed rather than lost altogether. Shares fell close to 5 percent in after hours trading.
ServiceNow raised its full year subscription revenue forecast for the second time this year after beating both revenue and profit expectations, driven by strong uptake of its AI powered software platform. The company highlighted growing adoption of its AI platform, and shares gained around 4.5 percent in after hours dealing as investors remained focused on AI’s impact on the software sector.
Texas Instruments posted a strong quarter, with revenue up 23 percent year on year and earnings ahead of forecasts, supported by demand from the industrial, data centre and automotive sectors. The company also issued upbeat third quarter guidance, though shares still slipped after hours as investors booked profits following a strong run in semiconductor stocks generally.
AMD will invest up to 5 billion US dollars in Anthropic, while Anthropic in turn plans to purchase up to 2 gigawatts of AMD’s next generation AI chips starting in the first half of 2027, a partnership aimed at expanding AI computing capacity and positioning AMD as a credible alternative to Nvidia in the AI chip market.
Samsung unveiled three new foldable smartphone models, including a passport sized device, while raising prices across its premium range as it aims to defend its leadership in foldables ahead of Apple’s anticipated entry into the category. Despite strong growth prospects for foldables, rising memory chip costs are pressuring smartphone margins, particularly in lower-priced models. Reddit is reportedly weighing whether to block Google from using its content to train AI models as the two companies renegotiate their data licensing arrangement, amid concern that AI generated search results are reducing traffic to Reddit’s platform. Other publishers are also reassessing similar agreements as tensions over AI training data intensify.
Financials, industrials and aerospace
CME Group beat second quarter profit expectations on the back of strong hedging demand and higher equity index trading volumes, with shares climbing 6 percent. Chief executive Terry Duffy noted that concerns around perpetual futures contracts had somewhat overshadowed an otherwise solid quarter, though customer demand for such products remains limited and analysts see little threat to CME’s core business model.
Deutsche Boerse reported a 12 percent rise in second quarter net profit, ahead of analyst expectations, helped by higher interest rates, with EBITDA up 13 percent and net revenue up 9 percent year on year. The exchange operator maintained its 2026 revenue guidance of around 5.7 billion euros and expects treasury income to exceed 700 million euros.
GE Vernova posted second quarter revenue above expectations, though earnings missed forecasts and shares fell. Strong performance in its Power and Electrification divisions drove record orders and solid cash flow, prompting the company to raise its full year revenue and free cash flow guidance, even as its Wind division continued to post weaker sales and ongoing losses.
Dassault Aviation reported an 83 percent jump in first half adjusted operating income to 330 million euros, with revenue up 46 percent to 4.16 billion euros, supported by higher Falcon and Rafale jet deliveries. The company maintained its full year targets, though new orders declined year on year, with a potential major Rafale deal with India remaining a key focus for the business going forward.
AT&T posted better than expected second quarter earnings, supported by strong subscriber growth across fibre, fixed wireless and postpaid services, with revenue, EBITDA and free cash flow all improving, and added more than one million advanced connectivity customers over the period. AT&T maintained its full-year guidance and remains focused on expanding its fibre network. Citi analysts believe Nike’s decision to end most of its online distribution partnership with Chinese retailer Topsports from January 2027 could open the door for rivals Adidas and Puma to gain market share in China through increased retail exposure, with Adidas already recording strong Chinese sales growth and Puma set to benefit from Anta’s investment.
Healthcare and consumer names
Philip Morris reported second quarter earnings and revenue ahead of expectations, driven by continued strong growth in its smoke free product range, with quarterly revenue topping 11 billion US dollars for the first time. The company maintained its full year earnings outlook, though its third quarter guidance came in below forecasts.
Lonza reported strong first half profit growth, with EBITDA up 27 percent and improving margins, though shares fell as investors focused on softer than expected revenue growth. The company maintained its sales outlook and raised its margin guidance, supported by strong demand in its Advanced Synthesis and Specialized Modalities divisions, even as its Integrated Biologics unit underperformed.
Economic calendar and events to watch
With markets now firmly focused on central bank policy, here is what investors should be watching over the coming session.
ECB rate decision headlines a busy Thursday
Today’s main event is the European Central Bank’s interest rate decision and press conference, with markets widely expecting rates to remain unchanged at 2.4 percent.
On the data front in the United States, investors will be watching weekly jobless claims, the Chicago Fed’s national activity index and the latest Treasury auctions. It is also a busy day for corporate earnings, with results due from Intel, SAP, Roche, Nestle, RTX, T-Mobile, TotalEnergies, BNP Paribas and UniCredit.
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