U.S. markets lost steam yesterday after a tepid revenue outlook from (NASDAQ:) sparked fresh concerns about a slowdown in AI-driven enterprise spending. Despite posting a solid 56% jump in sales, Nvidia’s weaker-than-expected forecast weighed on sentiment, sending its shares lower in after-hours trading and casting a shadow over the broader tech rally. Meanwhile, the gave back earlier gains after notching another record high during regular trading.
Investors are also digesting growing political pressure on the Federal Reserve. New York Fed President hinted at potential policy changes as early as September, though without specifying direction, while Treasury Secretary Benson & Melson renewed calls for an internal audit of the Fed.
In a fresh twist, Governor Lisa Cook may challenge her dismissal by the Trump administration in court, stoking uncertainty around central bank independence. Short-term Treasury yields rose as markets continued to price in the likelihood of rate cuts before year end. Elsewhere, the Trump administration’s floated plan to charge a 15% commission on Nvidia’s AI chip sales to China remains in early, untested stages.
Currency markets were mixed, with the pulling back slightly by session’s end. Commodity markets found some support, as prices edged higher on falling U.S. inventories, while gained ground amid political and monetary policy jitters.
In Europe, political and fiscal uncertainty in France took center stage, with bond markets reacting sharply. The yield spread between French and German 10-year debt widened to its highest in seven months, reflecting investor anxiety as Prime Minister François Bayrou scrambles to secure cross-party backing ahead of a potential confidence vote.
He’s set to begin talks with opposition lawmakers next week in a bid to stabilize his fragile leadership. French corporates, including Carrefour, are warning that ongoing political gridlock could nudge the economy toward recession.
Across the region, EU policymakers are juggling geopolitical and trade concerns. Brussels is reportedly considering lifting tariffs on U.S. industrial goods to pave the way for a reciprocal deal on car tariffs, a priority for the Trump administration. Meanwhile, the bloc is weighing secondary sanctions aimed at curbing the flow of restricted goods to Russia via third-party countries, in a push to close loopholes in existing measures.
European equities remained broadly stable, but banking stocks came under pressure amid bond market volatility. The held steady, and broader FX movements were muted as traders focused on upcoming data.
In Asia, markets delivered a mixed performance as investors weighed fresh signals from China and disappointing earnings in the region. In a notable stumble, Meituan reported revenue that missed expectations and a near-90% collapse in adjusted net profit, underscoring the fierce price war gripping China’s food delivery sector.
At the same time, concerns about intellectual property security resurfaced after Taiwan’s prosecutors indicted three individuals, including a former Tokyo Electron employee, for allegedly stealing Taiwan Semiconductor Manufacturing’s (NYSE:) trade secrets. Meanwhile, Chinese chipmakers are accelerating plans to ramp up AI chip production, with SMIC preparing to double its 7nm output next year.
In the Pacific, Qantas bucked the trend with a 15% earnings jump and a new order for 20 Airbus jets, signaling robust travel demand. In contrast, Air New Zealand posted a 15% earnings slide, weighed down by ongoing engine maintenance disruptions.
Investors punished companies missing expectations, with names like Woolworths and Domino’s Pizza sharply sold off. Australia’s July inflation surprised to the upside, tightening the outlook for RBA rate cuts and adding another layer of complexity for markets.