Stock Market Update

Microsoft (MSFT) and the semiconductor stocks put a bullish charge in the equity market yesterday, and it looks this morning as if it will be Amazon (AMZN) and the semiconductor stocks that will put a bullish charge in it when the opening bell rings. AMZN is up 11% after its better-than-expected report, and the VanEck Semiconductor ETF (SMH) is up 2.8%.

These gains have been foundational for the equity futures market, which is trading with a bullish bias that has the cash indices on track for a nicely higher open. It is a rather remarkable show of resilience considering oil prices are up (WTI +1.7% to $85.02/bbl), Treasury yields are rising, and Apple is down 8% following some disappointing fiscal Q4 revenue guidance stemming from supply constraints.

Nonetheless, the momentum factor is flowing after South Korea's Kospi soared 17.9% in Friday's trade and the Bank of Japan refrained from raising its official rate at Friday's policy meeting, as expected. There was some conjecture that the BOJ might raise its official rate to accentuate yesterday's intervention effort by Japan to strengthen the yen. The concern was that a surprise rate hike could trigger a disorderly unwinding of yen-based carry trades, but alas, that has not happened. Japan's Nikkei surged 4.0%.

Today's data releases include the Q2 Employment Cost Index at 8:30 a.m. ET, the Chicago PMI for July at 9:45 a.m. ET, and the final University of Michigan Consumer Sentiment Index for July at 10:00 a.m. ET.

In corporate news:

• Amazon (AMZN 262.22, +26.72, +11.4%): Amazon reports Q2 (Jun) results, beats on revs; AWS segment sales increased 37% yr/yr to $42.2 bln; expects to spend approximately $220 bln in CapEx in 2026, up from its prior estimate of $200 bln
• Apple (AAPL 307.95, -25.48, -7.6%): Apple beats by $0.13 including impact of tariff refunds, reports revs in-line; guides Q4 (Sep) revenues below consensus; expects the impact from supply constraints to increase significantly sequentially
• Coinbase (COIN 155.48, -8.10, -5.0%): reports Q2 (Jun) results, misses on revs; Provides Q3 outlook, including Subscription & Services revenue of $500-$800 mln
• ExxonMobil (XOM 155.77, -1.20, -0.8%): misses by $0.04
• Reddit (RDDT 154.00, -24.04, -13.5%): beats by $0.30, beats on revs; Daily Active Uniques (“DAUq”) increased 18% year-over-year to 130.3 million

Reviewing overnight developments;

Equity indices in the Asia-Pacific region ended the week on a higher note with South Korea's Kospi (+17.9%) reclaiming the bulk of this week's loss. Japan's Nikkei: +4.0%, Hong Kong's Hang Seng: +0.1%, China's Shanghai Composite: +0.7%, India's Sensex: +0.2%, South Korea's Kospi: +17.9%, Australia's ASX All Ordinaries: +0.2%.

In news:

• China is expected to accelerate government spending during the second half of the year.
• Investors learned that Japan, South Korea, and the U.S. intervened in the foreign exchange market yesterday, helping the yen rise off this year's low against the dollar.
• Tesla is considering a sale of its China business, according to The Wall Street Journal.
• The Bank of Japan left its policy rate at 1.00%, as expected, noting that risks to prices remain skewed to the upside.

In economic data:

• China's July Manufacturing PMI 49.2 (expected 50.1; last 50.3) and July Non-Manufacturing PMI 49.0 (expected 50.0; last 50.2)
• Japan's July Tokyo CPI 2.0% yr/yr (last 1.7%) and Tokyo Core CPI 1.9% yr/yr (expected 1.8%; last 1.6%). June Retail Sales 0.5% yr/yr (expected 3.1%; last 5.0%), June Industrial Production 1.3% m/m (expected 1.0%; last 0.1%). June Housing Starts 18.6% yr/yr (expected 12.7%; last 33.9%) and Construction Orders 2.3% yr/yr (last -6.7%)
• South Korea's June Retail Sales 2.7% m/m (last 0.1%). June Industrial Production 6.4% m/m (expected 3.0%; last -2.9%); 5.8% yr/yr (expected 2.5%; last -1.1%). June Service Sector Output 0.7% m/m (last 1.0%)
• Hong Kong's Q2 GDP -0.6% qtr/qtr (expected -0.3%; last 2.9%); 4.3% yr/yr (expected 4.8%; last 5.9%)
• Australia's Q2 PPI 1.3% qtr/qtr (expected 0.5%; last 0.4%); 3.6% yr/yr (last 3.0%). June Private Sector Credit 0.8% m/m (expected 0.6%; last 0.7%) and June Housing Credit 0.6% m/m (last 0.6%)
• Singapore's July Bank Lending SGD931.4 bln (last SGD917.7 bln). Q2 Unemployment Rate 2.0% (last 2.0%) and Q2 Business Expectations 12.00 (last 17.00)

Major European indices are looking for a higher finish to the week, benefiting from the overall sentiment improvement over the past 24 hours. STOXX Europe 600: +0.7%, Germany's DAX: +0.7%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.8%, Italy's FTSE MIB: +0.9%, Spain's IBEX 35: +0.6%.

In news:

• Eurozone's flash CPI for July showed an acceleration in the year-over-year rate to 2.9% from 2.8% while Core CPI accelerated to 2.5% from 2.4%.
• British bank Natwest is up about 5% after reporting earnings while apparel retailer Puma is down after its results showed slowing demand.

In economic data:

• Eurozone's flash July CPI 2.8% m/m (last -0.1%); 2.9% yr/yr, as expected (last 2.8%). Flash July Core CPI 0.0% m/m (last 0.2%); 2.5% yr/yr (expected 2.4%; last 2.4%)
• Germany's July Unemployment Change 6,000 (expected 5,000; last -1,000) and Unemployment Rate 6.4% (expected 6.3%; last 6.3%)
• U.K.'s July Nationwide HPI 0.1% m/m, as expected (last 0.0%); 1.8% yr/yr (expected 1.9%; last 2.2%)
• France's flash July CPI 0.6% m/m (expected 0.3%; last -0.3%); 2.1% yr/yr (last 1.8%). June PPI -0.6% m/m (last -0.2%); 2.6% yr/yr (last 3.1%)
• Italy's July Business Confidence 89.6 (expected 88.9; last 88.6) and Consumer Confidence 94.2 (expected 92.5; last 92.4). Flash July CPI 0.2% m/m (expected 0.3%; last 0.0%); 2.8% yr/yr, as expected (last 3.0%)
• Spain's May Current Account surplus EUR1.84 bln (last EUR1.88 bln)Swiss June Retail Sales 1.5% yr/yr (expected 3.1%; last 3.4%)