Today, the market is being driven by three key issues: Big Tech’s results, tensions surrounding Iran and the ECB’s decision.
What drives the market?
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Big Tech’s spending is spooking investors – Alphabet and Tesla reported solid revenues, but the market punished both companies for their massive capital expenditure (Alphabet up to $205 billion by 2026, Tesla +142% year-on-year), triggering a fall in their share prices. In the coming days, Meta, Microsoft, Amazon and Apple will report their results – the market will be looking just as closely at their AI investment plans as at their profits themselves.
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Oil prices rise on Trump’s threats against Iran – the US president has announced a strike on Iranian nuclear infrastructure (Pickaxe Mountain), and there has also been another attack on a tanker off the coast of Saudi Arabia. Goldman Sachs warns that Brent could exceed $120 per barrel in the fourth quarter if disruptions in the Strait of Hormuz persist.
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The ECB is due to announce its interest rate decision at 14:15 – the market expects rates to remain unchanged (refinancing rate 2.40%, deposit rate 2.25%), but the “extremely volatile” situation surrounding the war in Iran could influence the tone of the press conference at 14:45.
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UniCredit beats forecasts – €2.9 billion net profit in Q2, with CEO Andrea Orcel describing progress on the Commerzbank deal as "the best possible".
Today’s macroeconomic calendar
The Australian labour market delivered a positive surprise – employment rose by 76,300 against a forecast of 15,100, which is a hawkish signal for the RBA. The rest of the day in the US and Canada will focus on retail sales and labour market data, but it is the ECB and the geopolitical situation surrounding Iran that will remain the main drivers of volatility in the oil market and share indices.
Before the European trading session, Nestlé, UniCredit, TotalEnergies, Thermo Fisher, RTX and Lockheed Martin are due to report their results today, whilst SAP and Intel are due to report after the US trading session.
Daily Summary: Trump's War Threats Weigh on Markets. Wall Street Sinks into the Red
Tensions around Iran weigh on markets!
US Open: Alphabet and Tesla Weigh on Wall Street, While Oil Prices Renew Investor Concerns
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