Morning Wrap: AI Fuels the Rebound. Technology Makes a Strong Comeback

📈 Stock Market – Wall Street and Corporate Earnings

• The Wall Street session ended in excellent spirits, with the rebound encompassing all major US indices.

• The Dow Jones gained 1.2%, while the benchmark S&P 500 index rose by approximately 1.7%.

• The main winner and growth leader was the Nasdaq, which gained nearly 2.8%.

• US indices were primarily driven by technology companies.

• Microsoft took center stage, boasting very strong results the previous day and ending the session up by about 15%.

• Micron gained 18%, AMD rose 15%, while Sandisk surged by roughly 25%.

• After the market close, Amazon reported very strong results — company revenue increased by 20% YoY to reach $200.6 billion.

• The star of Amazon's report was the AWS segment, whose revenue increased by 37% YoY to $42.2 billion, marking its fastest growth rate in 18 quarters.

• The dynamic expansion of the cloud business shows that Amazon's massive investments in infrastructure and artificial intelligence are starting to yield increasingly clear results.

• At the same time, high capital expenditures remain a significant topic for the market.

• Amazon's reported earnings per share (EPS) came in at $5.75, though the result was largely supported by a one-off gain related to its investment in Anthropic.

• Amazon announced further increases in capital expenditure, underlining the scale of the company's ambitions in developing AI infrastructure and cloud services.

• After the session, Apple also presented its results, delivering a solid, and at times even very strong, report.

• Apple's revenue rose by 16% YoY to $109.4 billion, while earnings per share (EPS) reached $2.02.

• iPhone sales were very strong, increasing by over 20% YoY, and the services segment set another record for the June quarter.

• Despite clearly beating expectations, the market found no major "wow" factor in the report.

• Investors pointed to weaker-than-forecasted results in the services segment and a mixed picture for sales in China.

• Consequently, the strong results were not enough to sustain earlier optimism, causing Apple shares to come under pressure in extended trading.

🌏 Asian Markets

• The rebound following recent declines was also visible in Asian markets, where investors reacted to the earlier sell-off in tech stocks and responded positively to strong earnings from US giants tied to artificial intelligence.

• Standing out the most was the South Korean KOSPI, which rose by about 1.7%, driven by a sharp rebound in the semiconductor sector, including shares of Samsung Electronics and SK Hynix.

• Japan's Nikkei 225 recorded a strong rally, rising over 5%, supported by improving sentiment toward the tech sector and gains in semiconductor and AI-related companies.

• Investors focused primarily on signals that the high spending of major US firms on AI infrastructure is beginning to translate into real results, which once again boosted risk appetite in the region.

🏛️ Macroeconomics and Central Banks

• The strong Wall Street rebound did not align with equally strong macroeconomic data, as US Q2 GDP growth came in at 1.5%, well below expectations of 2.1%.

• However, details of the report indicated the continued solid health of the American consumer.

• PCE inflation aligned with forecasts at 3.4%.

• The number of initial jobless claims in the US fell to 197,000, confirming the resilience of the labor market.

• The data failed to provide a clear direction for the market — weaker economic growth was partially offset by stable inflation and strong labor market figures.

• The Bank of Japan held interest rates unchanged as expected, in an 8-to-1 vote.

• The lack of monetary policy change came as no surprise; hence, market attention focused primarily on the bank's communication and the outlook for future rate hikes.

• Preliminary data showed that industrial production in Japan rose 1.3% MoM in June, clearly beating expectations of 0.7%, pointing to improved sector activity and serving as a positive signal for the Japanese economy.

• Tokyo core inflation (excluding fresh food) came in at 1.9% YoY, exceeding forecasts of 1.7%.

• The higher-than-expected reading from Tokyo could increase pressure on the Bank of Japan, though on its own it will likely not serve as a sufficient argument for rapid monetary tightening.

• China's Manufacturing PMI dropped to 49.2 points in July (below expectations of 50.0 points), signaling a continued contraction in the sector, ongoing struggles with domestic demand, and uncertainty surrounding the economic outlook.

• Producer price inflation in Australia surprised sharply to the upside in Q2, signaling renewed price pressures — the PPI index rose 1.3% QoQ (well above expectations of 0.5%), while on an annual basis it accelerated to 3.6% from 3.0% previously.

💱 Currencies

• USD/JPY continued its rebound, returning above the 160 level, recovering part of its losses following previous FX market interventions by Japanese authorities and the BoJ decision.

• Despite efforts to support the yen and the BoJ holding rates steady, pressure on the Japanese currency remains elevated.

🥇 Commodities

• The situation in the precious metals market looks somewhat weaker, with assets remaining under pressure.

• Gold is down by roughly 0.5%, trading below the $4,100 per ounce level.

• Silver is also posting modest losses, down by about 0.7%.

🪙 Cryptocurrencies

• The cryptocurrency market is also not starting the day in the best mood.

• Bitcoin is down by around 0.6%, testing the $64,000 level.

• Ethereum is hovering around $1,900.