After declines in Asia: gains in Europe and in Wall Street futures
In early trading, Intel is surging following a stronger-than-expected revenue forecast, while most semiconductor stocks are trading lower. The price of gold is climbing moderately, oil is falling. The USA will impose tariffs of 10%-12.5% on imports from most of its major trading partners. The "Magnificent Seven" group recorded its sharpest day of declines since the tariff turmoil in April 2025.
Trading review: current reports, trends, indices, stock prices, bonds, currency and commodities, and analyst recommendations. 15:30.
A mixed picture is emerging on global stock exchanges today: Asian stock exchanges closed with declines, with South Korea standing out, having fallen by over 5%. A positive trend is being recorded in Europe. Futures on Wall Street are trading with slight gains after sharp declines yesterday, against the backdrop of the price of Brent crude oil falling back below $100 per barrel and some weakening in US government bond yields.
Futures on the S&P 500 index are rising by about 0.2%, but the index is still on track to record a second consecutive week of declines — for the first time since the start of the escalation in the Middle East. In early trading, Intel is surging following a revenue forecast that was stronger than expected, while most semiconductor stocks are trading lower. Alphabet and Tesla shares are correcting slightly upward after the sharp profit-taking recorded in them yesterday. At the same time, the price of gold is climbing moderately and the dollar has weakened by about 0.1%.
Yesterday was a red day: the S&P 500 index fell by about 1.4% and the Nasdaq index shed 2%. Within the S&P 500, the communication services sector (XLC), which contains the shares of Google, Meta, and Netflix, and the consumer discretionary sector (XLY) stood out negatively. Technology stocks (XLK) also fell. The sharp rise in oil prices, against the backdrop of the escalation in the war with Iran, weighed on the markets and led to declines in stocks and bonds. The price of Brent crude oil crossed the $100 per barrel threshold, which increased concerns about renewed inflationary pressures and pushed US government bond yields to their highest level this year.
The question of whether Donald Trump's trade war is returning has also returned. Overnight it was reported that the USA will impose tariffs of 10%-12.5% on imports from most of its major trading partners. The new tariffs follow an investigation that determined that about 60 countries did not take sufficient steps to prevent the use of forced labor in their supply chains. Countries found to have adopted restrictions on the issue of forced labor — including Mexico, the UK, Canada, and India — will be subject to a 10% tariff on exports to the USA.
The "Magnificent Seven" group recorded its sharpest day of declines since the tariff turmoil in April 2025, after Alphabet and Tesla reports renewed doubts about the ability of giant investments in artificial intelligence to continue justifying the gains in technology stocks. The Roundhill Magnificent Seven ETF fell by more than 4%. The Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — wiped out, according to the Wall Street Journal, a total of about $800 billion from their market value. Alphabet lost about 6.5% despite publishing strong results, after it raised its capital expenditure forecast, and Tesla plummeted by about 14% following disappointing earnings.
Shares of defense giants Lockheed Martin and RTX surged after both companies reported an exceptionally large backlog of orders, reflecting growing demand for weapons systems and military equipment. Intel reported overnight (Thursday) revenue of $16.1 billion, compared to Wall Street analyst expectations that stood at $14.4 billion, the highest jump in almost 15 years.
The yield on the 10-year bond rose by 5 basis points to 4.7%, after touching its highest level since January 2025 during trading. The yield on the 2-year bond rose to 4.343%, while the yield on the 30-year bond climbed to 5.188%. The rise in yields reflects investors' fear that the rise in oil prices could revive inflation and delay the possibility of interest rate cuts by the Fed.
Yesterday, the European Central Bank (ECB) left interest rates unchanged. The interest rate on deposits remained at 2.25%, the interest rate on main refinancing operations remained at 2.4%, and the interest rate on the marginal lending facility remained at 2.65%. Next Wednesday, the Fed's interest rate decision will be published. Economists at Leader Capital Markets and Yonatan Katz estimated this week that the moderation in inflation in the USA reduces the probability of an interest rate hike soon.
