The mood had been cautious ahead of earnings reports from some tech heavyweights, with investors already wary around high levels of capital spending on artificial intelligence (AI). Apple delivered a disappointing forecast on Thursday, hampered by supply chain shortages, pushing its shares down over 7% the following session. Meanwhile gains from Amazon and Microsoft helped to offset the loss. Amazon reported strong cloud sales, helping to allay spending concerns, whilst Microsoft forecast better-than-expected cloud growth, in which it added nearly $450bn in market value on Thursday.
Overall, the S&P 500 index rose 1.1%, the Dow Jones Industrial Average added 1.0% and the tech-heavy Nasdaq Composite was up 1.6%. Sector performance was mixed, with utilities and real estate amongst the biggest laggards, whereas consumer discretionary led, supported from the gain in Amazon. Beyond earnings, investors continued to monitor the conflict in the Middle East, as well as the latest policy decision from the Federal Reserve. The central bank left interest rates unchanged, as widely expected, although three officials cast dissenting votes. Stocks saw sharp losses after the meeting with limited guidance provided by Chair Kevin Warsh. Meanwhile Treasury yields ticked higher, with the 10-year note reaching its highest level since January 2025, while the 30-year yield topped 5.25%, its highest level since mid-2007.
European markets logged weekly gains, as company earnings reports helped to lift risk appetite. In addition, the reversal in oil prices also helped. For the week the STOXX 600 gained 0.7%, hitting a fresh intra-day record high on Friday although it was unable to hold it. Regional indices also advanced for the week overall, with the UK FTSE 100 hitting a fresh record. The Bank of England left interest rates on hold as expected, with the pound declining after the decision before gaining ground against the broadly softer US dollar. Eurozone annual inflation climbed in July, adding weight to the case for the European Central Bank to hike interest rates imminently.
South Korea’s Kospi had a highly volatile week, driven by the market heavyweights Samsung Electronics and SK Hynix which fluctuated on AI sentiment. The index saw a sharp three-day rout, with SK Hynix plunging despite posting record net profit in the second quarter. Then on Friday, investors piled back in to AI names, sending the index up 18% in its biggest ever daily rise. Nevertheless, the bounce back was not enough to avoid a weekly loss. Chinese equity markets were higher, with gains in areas like banks, consumer staples and internet platforms. One notable performer was CXMT which jumped 466% in its Shanghai market debut on Monday, although this also stoked concerns around AI valuations as well as rising competition. In Japan, the Nikkei 225 logged a weekly loss of 0.4%. On Thursday the yen spiked past 160 against the dollar, fuelling speculation of currency intervention.