Asian-Pacific stock indices post gains

US stock index futures fell overnight after quarterly results from Alphabet and Tesla failed to fully satisfy investors, despite continued enthusiasm surrounding artificial intelligence spending. Alphabet dropped 3.5% after-hours.

Cloud revenue growth exceeded forecasts, and the company raised its 2026 capital expenditure guidance by an additional $15 billion to between $195 billion and $205 billion. But it looks as if investors were unsettled as the quarter's free cash flow turned negative for the first time due to heavy AI and cloud infrastructure investment.

Tesla fell over 5% after quarterly earnings disappointed despite improving electric vehicle deliveries. Increased spending on artificial intelligence, robotics and autonomous driving technologies weighed on profitability and pushed the company into negative cash flow for the quarter.

Tesla reiterated its plan to spend $25 billion on capex this year. CEO Elon Musk said that the company should be spending on capex as fast as it could to get things done, without being too wasteful.

Source: TN Trader

The other 'Mag 7' hyperscalers report next week with results coming from Microsoft, Meta and Amazon. Apple also reports, as do SK Hynix and Arm. Ahead of all this, chipmaker and designer Intel reports after tonight's close.

US investors have been thrown again by advances made by China's AI development. Last year, DeepSeek roiled the sector after it released an open-source LLM with most of the capabilities of US competitors but developed at a fraction of the price.

Last week, China's Moonshot did a similar thing when it released Kimi-K3. Demand was such that the company had to suspend subscriptions while it caught up. It is understood that Moonshot is looking to list in Hong Kong within six months, potentially stealing thunder from both Anthropic and OpenAI.

Meanwhile, geopolitical concerns remain firmly in focus as President Donald Trump threatened further attacks on Iranian infrastructure following continued hostilities in the Middle East, while Iran-backed groups launched attacks on shipping in the Red Sea.

European stock indices traded cautiously as investors balanced stronger-than-expected corporate earnings against rising bond yields, higher oil prices and the European Central Bank's latest policy decision.

Source: TN Trader

Crude oil prices were up again this morning, pushing up to their highest levels in close to six weeks. The rebound in oil since the beginning of this month followed the complete breakdown of the US/Iran ceasefire. This has pushed up bond yields as concerns have built that higher energy costs could reignite inflation across Europe.

Despite this, investors expect the European Central Bank (ECB) to leave interest rates unchanged at 2.25% after today's monetary policy meeting. But analysts will closely monitor ECB President Christine Lagarde's comments in case she deigns to provide forward guidance on interest rate expectations for the rest of this year.

In yet another worrying omen for chip stocks, French semiconductor supplier STMicroelectronics, which can boast a client list including SpaceX and Apple, slumped15% this morning, despite forecasting a significant increase in data centre revenues this year and beyond.

The US dollar was modestly firmer against all the majors in early trade this morning. The cash Dollar Index continued to consolidate around 100.80, holding on to gains made earlier this week. This represented a rebound after last week's sharp selloff, which followed some unexpectedly soft US inflation data.

The US dollar continues to act as the 'go-to' on any flight to safety, something that has occurred frequently since the US and Israel attacked Iran at the end of February. It's fair to say that this conflict has now escalated considerably. This week, President Trump warned the US would target Iranian infrastructure if Tehran continued attacks on shipping through the Strait of Hormuz.

Iran-backed Houthi militants subsequently launched missile and drone attacks on Saudi oil tankers operating in the Red Sea, raising concerns about another major disruption to global energy supplies. This has all contributed to a sharp rally in oil prices. This is triggering fears that inflation will work its way back into the system, forcing central banks, most crucially the US Federal Reserve, to raise rates.

The yield on the US 10-year Treasury note ticked up to 4.68% today, to hit, by my calculations, an eighteen-month high. The probability that the Federal Reserve raises interest rates following its monetary policy meeting next week has risen to 34%, up from 12% last week.

Meanwhile, the Japanese yen remained close to multi-decade lows despite renewed warnings from Japanese officials about potential currency intervention. Finance Minister Satsuki Katayama reiterated that authorities stand ready to act, if necessary, although the significant interest rate differential between Japan and the US continues to support the dollar.

Source: TN Trader

Gold prices were lower this morning, pulling back from yesterday's fortnight high. Gold was trading below $3,960 last Friday and seemingly under constant downside pressure. But it then appeared that the selling had exhausted itself, and the precious metal staged a recovery, with the area just south of $4,000 per ounce once again acting as support.

From there, gold went on to push above $4,160. But then the sellers reappeared yesterday afternoon, pushing gold back down below $4,100. Could this simply be a minor bout of profit-taking which will soon run its course, or are lower cycle lows still in prospect?

There's some mild support around $4,080, and if gold can hold around here, then a rebound looks possible. But it really needs to break above $4,200 with some conviction to really get the bulls on board. Whether it can do this while the US dollar remains strong remains a big question.

Source: TN Trader

Silver also hit a two-week high yesterday afternoon, coming within a few cents of $61 per ounce. Like gold, it has put in an impressive performance since last Friday and looked as if it may be forming a significant bottoming structure. But that could be tested over the next few sessions, which means that silver may have more downside before calling the end of the correction, which began at the beginning of February this year.

On the flip side, if silver can hold support, which comes around the $54/55 mark, then that could be good enough to form a base from where prices can rebound once again. The daily MACD still looks constructive from a bullish perspective as it pushes up from oversold levels.

Source: TN Trader

Oil was up sharply again this morning. A tanker in the Red Sea, just off the coast of Saudi Arabia, was hit by an unidentified projectile, which Iranian-backed Houthis in Yemen claim to have fired. This follows their threat to target Saudi Arabian shipping and block access through the Bab al-Mandeb strait, which links the Red Sea and the Gulf of Aden.

This effectively hems in Saudi Arabia, while its Gulf neighbours are already having to deal with the effective closure of the Strait of Hormuz by Iran. The US has escalated its attacks on Iranian military facilities. President Trump had earlier threatened to bomb Iranian infrastructure in response to any further attacks on ships in the Strait of Hormuz.  

Iran responded by threatening to attack US-linked infrastructure and regional energy facilities should Washington carry out those threats. Front-month (September) Brent has risen 40% since the beginning of this month.

Source: TN Trader

Bitcoin was modestly lower for a second successive session on Thursday, but still within easy reach of the five-week high hit on Tuesday. US cryptocurrency regulation is centre stage this week as policymakers once again consider the proposed Clarity Act.

This aims to establish a comprehensive regulatory framework for digital assets in the US. The Senate has only about 16 days left before the summer recess, and the first week of August is widely considered the last realistic window for the CLARITY Act to advance this year.

Yesterday, policymakers circulated the text of what's meant to be a Senate finish-line version. It confirms a government-ethics provision limiting crypto conflicts of interest for the president and other senior officials. The bill would require support from around ten Democrat Senators, and the worry is that this won't be obtained ahead of the summer recess.

Investors turn their attention to a busy day of corporate earnings, with Intel, Dow Inc, Honeywell, Lockheed Martin, RTX, T-Mobile US, Union Pacific, Norfolk Southern, Blackstone, Comcast, Freeport-McMoRan, Newmont and Edwards Lifesciences all scheduled to report. Intel's results will be closely watched for signs that its foundry business and AI-related demand continue to improve.

The European Central Bank's monetary policy announcement is expected to dominate the European session, with interest rates widely forecast to remain unchanged. However, markets will closely analyse President Christine Lagarde's comments for any indication of future policy direction.

In the US, weekly initial jobless claims are expected to come in around 211,000, while investors will continue monitoring developments in the Middle East, where geopolitical tensions remain the primary driver of oil prices and broader market sentiment.

* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.