Tech stocks recover in US, Europe; Trump threatens escalation in Iran
The White House has tariffs back in its sights.
Stocks on Wall Street and in Europe were back on the rise as tech companies came back into favour ahead of quarterly reports from Alphabet and Intel later this week, while conglomerate 3M beat earnings expectations and automaker General Motors raised its annual outlook.
Oil prices advanced as US President Donald Trump threatened new military action against Iran as tensions remain high and played down the prospect of talks with the Islamic Republic.
Meanwhile, the Trump administration is considering a range of new tariffs with the existing 10% levies set to expire this week, and the president will accelerate talks with Canada’s prime minister Mark Carney after the US imposed a 50% levy on a range of Canadian goods, which will come into effect next month.
Australian futures are pointing to a small gain when trading opens across the Tasman, while milk powder prices rose at the latest Global Dairy Trade auction.
New hope
Stocks on both sides of the Atlantic rallied on gains for semiconductor firms and chipmakers. The tech-heavy Nasdaq Composite climbed 1.3% in late trading, while the Dow Jones Industrial Average advanced 0.7% and the S&P 500 gained 0.9%.
Earnings from Alphabet and Intel are seen as the main linchpins on the artificial intelligence trade, which has been buffeted by fears about the pace of investment in infrastructure and the rise of Chinese large language models that threaten the ability to deliver an adequate return on that spend.
“Technology stocks have led the rebound, with the Philadelphia Semiconductor Index surging more than 5%. Micron, Western Digital, SanDisk, AMD, Intel, Applied Materials and Marvell all posted strong gains as investors bought back into AI-related names ahead of a crucial week of earnings,” Moomoo market strategy consultant Greg Boland said in a note. “While concerns remain over AI spending and lofty valuations, the market is positioning for another strong set of results from the sector.”
Meanwhile, Nikkei Asia reported Taiwan Semiconductor Manufacturing Co planned to raise prices by 10% next year to reflect the rising cost of production, and OpenAI chief Sam Altman was said to be preparing to brief the White House and US lawmakers on the next generation of AI models.
Apple nudged higher after Bloomberg reported that the iPhone maker plans to launch a leasing programme with Klarna, changing the way it sells devices.
Boiling point
The revival of the tech trade overshadowed elevated tensions in the Middle East, with Brent crude oil futures up 1.9% at US$90.93 a barrel at 7am in Auckland.
US President Trump played down the prospect of reviving peace talks with Iran, saying his forces would strike a fortified Iranian nuclear site soon. Meanwhile, Iran-backed Houthis warned all vessels against docking at Saudi ports in the Red Sea.
Separately, tariffs are back on the agenda for the White House, with US Trade Representative Jamieson Greer telling CNBC that the administration was considering new action against dozens of nations.
US corporate earnings season continued, with 3M leading the Dow higher after the conglomerate beat expectations and raised its annual outlook, while General Motors advanced as its increased forecast and stronger profit were buoyed by wider margins on its biggest vehicles and toymaker Hasbro rallied as its Magic: The Gathering card game business underpinned its better-than-expected result.
Defence company Northrop Grumman declined despite raising its earnings outlook, and Halliburton also fell, even as the oil services firm reported increased earnings and revenue.
US housebuilder DR Horton dipped as it trimmed its outlook amid sluggish buyer demand and continued supply issues.
Across the Atlantic, UK defence firms BAE Systems and Babcock International rallied on the appointment of former defence minister John Healey as Britain’s new chancellor of the exchequer, and Swiss pharmaceutical firm Novartis advanced after returning to sales growth in the June quarter.
The UK’s FTSE 100 rose 0.6%, Germany’s DAX advanced 0.7% and France’s CAC 40 increased 0.3%.
Tensions between Novo Nordisk and Eli Lilly escalated, with the Danish maker of Wegovy suing the Mounjaro developer in the US District Court in New Jersey, accusing its US rival of false advertising in claiming its weight-loss drugs outperform Novo’s.
Novo alleges Lilly compared the highest approved doses of its medicines with lower doses of Novo’s Wegovy and Ozempic while omitting newer, higher-dose versions that Novo says deliver greater weight loss.
The stronger leads from the US and Europe are set to flow through to the antipodes, with futures pointing to a 0.2% increase for the S&P/ASX 200 index when trading opens across the Tasman.
Local dairy companies will be in focus today after the GDT price index rose 1.5% for an average winning price of US$3,815 a tonne at the latest GDT auction. Whole milk powder prices climbed 1.6% to US$3,486/tonne, while butter and cheddar prices were weaker.
The kiwi dollar fell to 58.31 US cents at 7am from 58.64 cents yesterday. Local data today include the Reserve Bank’s monthly credit card spending and balances figures.
Reporting by Paul McBeth. Image from at on Unsplash.
