Record-high stocks tremble as big week for market risk looms
MSCI's global equity index was 0.3% lower after hitting an all-time peak on Thursday, after Japan's Topix index ended the day 0.9% lower, having also hit a record high a day earlier.
Futures trading signalled Wall Street's Nasdaq Composite would flatline later in the day, with sentiment still buoyed by Google parent Alphabet's robust earnings that propelled the tech-heavy index to its latest peak on Thursday.
Investors said they did not expect the markets' glass-half-full approach to trade war risks to last if jobs growth and earnings slow but the U.S. Federal Reserve also douses expectations that it will rush to the rescue by easing monetary policy.
With the Fed's next rate decision on July 29 as Chair Jerome Powell comes under pressure from Trump to quit, August 1 brings the latest batch of monthly U.S. jobs data and the deadline for U.S. trade deals with Europe and other countries.
"We've come to this sort of real, sort of pinch point of high risk, of things going in either direction, and markets have just breezed through it so far," Premier Miton CIO Neil Birrell said.
"I'm genuinely struggling to work out why the bond markets seem relatively complacent and why equity markets have kept going up," he said, especially with disruption caused by trade uncertainty now showing up in companies' earnings.
TECH, CENTRAL BANKS
The dollar index, was heading for a 0.6% weekly drop, in the latest sign that U.S. policy and debt risk meant it was no longer viewed by investors as a haven asset when stock markets turn lower.
"We know that the dollar tends to depreciate when there is a proper risk-on wave,' Amundi Investment Institute cross-asset strategist Federico Cesarini said.
'But the other side of the correlation, risk-off (and) dollar up, is not with us anymore.'
Tech titans Amazon, Apple, Meta and Microsoft may all issue tariff-related updates with next week's earnings reports, just as parts of the tech sector have shown signs of revenues turning hard to forecast because of stockpiling and trade anxiety.
Chipmaker Intel's shares dropped 5% in pre-market trade on Friday as it forecast steeper quarterly losses than expected and said it had halted or scrapped new factory projects in the U.S. and Europe.
Money markets are only pricing about 42 basis points (bps) of Fed easing this year, setting next week's monthly non-farm payrolls report up as a major risk event if hiring has slowed and rate cut expectations have not risen.
Trump has kept up pressure on Powell to cut rates after a rare presidential visit to the central bank on Thursday, although he said he did not intend to fire the head of the central bank, as he has frequently suggested he would.
U.S. 10-year Treasury yields were steady at 4.41% while two-year yields, which track monetary policy bets, were also flat at 3.925%.
The Bank of Japan has its own policy announcement on Thursday, and Prime Minister Ishiba's Liberal Democratic Party holds a meeting on the same day.
That's after the European Central Bank held rates steady on Thursday and was viewed by traders as likely to pause further cuts until the end of the year.
The euro was steady against the dollar on Friday at $1.178 , although German government debt sold off, with the yield on benchmark 10-year Bunds up 4 basis points (bps) at 2.726%.
Elsewhere in markets, gold eased 0.8% to around $3,339 an ounce. Brent crude futures gained 0.4% to $69.65 a barrel.
(Reporting by Kevin Buckland; Editing by Lincoln Feast, Sam Holmes and Saad Sayeed)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Etihad
2 hours ago
- Al Etihad
US trade advisor says Trump tariff rates unlikely to change
3 Aug 2025 20:22 WASHINGTON (AFP) New US tariff rates are "pretty much set" with little immediate room for negotiation, Donald Trump's trade advisor said in remarks aired who has wielded tariffs as a tool of American economic might, has set tariff rates for dozens of economies, including the European Union, at between 10 and 41 percent, come August 7, his new hard deadline for the a pre-taped interview broadcast Sunday on CBS's "Face the Nation," US Trade Representative Jamieson Greer said "the coming days" are not likely to see changes in the tariff rates."A lot of these are set rates pursuant to deals. Some of these deals are announced, some are not, others depend on the level of the trade deficit or surplus we may have with the country," Greer said."These tariff rates are pretty much set."Undoubtedly, some trade ministers "want to talk more and see how they can work in a different way with the United States," he "we're seeing truly the contours of the president's tariff plan right now with these rates."Last Thursday, the former real estate developer announced hiked tariff rates on dozens of US trade will kick in on August 7 instead of August 1, which had previously been touted as a hard deadline. Meanwhile, White House economic advisor Kevin Hassett said that while talks are expected to continue over the next week with some US trade partners, he concurred with Greer's tariffs assessment in that the bulk of the rates "are more or less locked in."
Khaleej Times
5 hours ago
- Khaleej Times
India to maintain Russian oil imports despite Trump threats, government sources say
India will keep purchasing oil from Russia despite U.S. President Donald Trump's threats of penalties, two Indian government sources told Reuters on Saturday, not wishing to be identified due to the sensitivity of the matter. On top of a new 25% tariff on India's exports to the U.S., Trump indicated in a Truth Social post last month that India would face additional penalties for purchases of Russian arms and oil. On Friday, Trump told reporters he had heard that India would no longer be buying oil from Russia. But the sources said there would be no immediate changes. "These are long-term oil contracts," one of the sources said. "It is not so simple to just stop buying overnight." Justifying India's oil purchases from Russia, a second source said India's imports of Russian grades had helped avoid a global surge in oil prices, which have remained subdued despite Western curbs on the Russian oil sector. Unlike Iranian and Venezuelan oil, Russian crude is not subject to direct sanctions, and India is buying it below the current price cap fixed by the European Union, the source said. The New York Times also quoted two unnamed senior Indian officials on Saturday as saying there had been no change in Indian government policy. Indian government authorities did not respond to Reuters' request for official comment on its oil purchasing intentions. However, during a regular press briefing on Friday, foreign ministry spokesperson Randhir Jaiswal said India has a "steady and time-tested partnership" with Russia. "On our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances," he said. The White House did not immediately respond to requests for comment. India's top supplier Trump, who has made ending Russia's war in Ukraine a priority of his administration since returning to office this year, has expressed growing impatience with Russian President Vladimir Putin in recent weeks. He has threatened 100% tariffs on U.S. imports from countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the leading supplier to India, the world's third-largest oil importer and consumer, accounting for about 35% of its overall supplies. India imported about 1.75 million barrels per day of Russian oil from January to June this year, up 1% from a year ago, according to data provided to Reuters by sources. But while the Indian government may not be deterred by Trump's threats, sources told Reuters this week that Indian state refiners stopped buying Russian oil after July discounts narrowed to their lowest since 2022 - when sanctions were first imposed on Moscow - due to lower Russian exports and steady demand. Indian Oil Corp, Hindustan Petroleum Corp , Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd have not sought Russian crude in the past week or so, four sources told Reuters. Nayara Energy - a refinery majority-owned by Russian entities, including oil major Rosneft, and major buyer of Russian oil - was recently sanctioned by the EU. Nayara's chief executive resigned following the sanctions, and three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions, Reuters reported last week.
Khaleej Times
5 hours ago
- Khaleej Times
Big Tech may be breaking the bank for AI, but investors love it
Big Tech is spending more than ever on artificial intelligence - but the returns are rising too, and investors are buying in. AI played a bigger role in driving demand across internet search, digital advertising and cloud computing in the April-June quarter, powering revenue growth at technology giants Microsoft, Meta, Amazon and Alphabet . Betting that momentum will sustain, Microsoft, Alphabet and Amazon are ramping up spending to ease capacity shortages that have limited their ability to meet soaring AI services demand, even after several quarters of multi-billion-dollar outlays. The results offer the clearest sign yet that AI is emerging as a primary growth engine, although the monetization journey is still in its early days, investors and analysts said. The upbeat commentary underscores how surging demand for the new technology is shielding the tech giants from tariff-driven economic uncertainty hobbling other sectors. "As companies like Alphabet and Meta race to deliver on the promise of AI, capital expenditures are shockingly high and will remain elevated for the foreseeable future," said Debra Aho Williamson, founder and chief analyst at Sonata Insights. But if their core businesses remain strong, "it will buy them more time with investors and provide confidence that the billions being spent on infrastructure, talent and other tech-related expenses will be worthwhile," she added. Microsoft shares rose 4% on Thursday, with the Windows maker crossing $4 trillion in market value - a milestone only chip giant Nvidia had reached before it. Meta was up even more, rising 11.3% adding around $200 billion to its market value of about $1.75 trillion. Amazon slipped 7% after-market, after rising 1.7% in regular trading, on disappointing cloud computing results. All the companies have faced intense scrutiny from investors over their ballooning capital expenditures, which were expected to total $330 billion this year before the latest earnings. And until a few days ago, the Magnificent Seven stocks were also trailing the SP 500 in year-to-date performance. SILENCING DOUBTS Microsoft said on Wednesday it would spend a record $30 billion in the current quarter, after better-than-expected sales and an above-estimate forecast for its Azure cloud computing business showcased the growing returns on its massive AI bets. The prediction puts Microsoft on track to potentially outspend its rivals over the next year. It came after Google-parent Alphabet beat revenue expectations and raised its spending forecast by $10 billion to $85 billion for the year. Microsoft also disclosed for the first time the dollar figure for Azure sales and the number of users for its Copilot AI tools, whose adoption has long been a concern for investors. It said Azure generated more than $75 billion in sales in its last fiscal year, while Copilot tools had over 100 million users. Overall, around 800 million customers use AI tools peppered across Microsoft's sprawling software empire. "It's the kind of result that quickly silences any doubts about cloud or AI demand," said Josh Gilbert, market analyst at eToro. "Microsoft is more than justifying its spending." Amazon, for its part, said it expected second-half spending roughly at the same clip as its second-quarter total of $31.4 billion, suggesting it would spend around $118 billion for the full year. Analysts had projected about $100 billion. Other AI companies have also attracted a clutch of users. Alphabet said last week its Gemini AI assistant app has more than 450 million monthly active users. OpenAI's ChatGPT, the application credited with kicking off the generative AI frenzy, has around 500 million weekly active users. Meta, meanwhile, raised the bottom end of its annual capital expenditure forecast by $2 billion, to a range of between $66 billion and $72 billion. It also said that costs driven by its efforts to catch up in Silicon Valley's intensifying AI race would push 2026 expense growth rate above 2025's pace. Better-than-expected sales growth in the April-June period and an above-estimate revenue forecast for the current quarter, however, assured investors that strength in the social media giant's core advertising business can support the massive outlays. "The big boys are back," said Brian Mulberry, portfolio manager at Zacks Investment Management, which holds shares in all three major U.S. cloud providers. "This simply proves the Magnificent Seven is still magnificent at this moment in time."
