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Tech rebound lifts markets

Signs of a diplomatic opening between Washington and Tehran eased concerns over further disruption in the Middle East on Monday, helping Wall Street’s major indices move closer to record territory as technology shares led gains. Asian equities were mixed but largely higher on Tuesday as technology shares recovered following the previous day’s AI-driven sell-off, while South Korea’s market remained under pressure. On Tuesday, investors will scrutinise SpaceX’s first earnings report since its initial public offering for evidence that its AI-computing ambitions and Starship programme can support its lofty valuation, while AMD’s results should offer a fresh read on demand for data-centre AI chips.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Market chart
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Asian equities traded mostly higher on Tuesday as technology shares recovered from the previous day’s AI-led sell-off, supported by a further advance in US technology stocks overnight. Mainland China’s CSI 300 rose 0.9%, while Japan’s Nikkei 225 fell 0.2%; Korea’s Kospi declined 0.8% after losing more than 5% on Monday. Australia’s S&P/ASX 200 gained 1.3%, aided by lithium miners, while investors awaited the Reserve Bank of India’s policy decision on Wednesday.

US stocks approach record highs

The Dow Jones Industrial Average rose 1.3% to 53,178.41 points on Monday, while the S&P 500 gained 1.5% to 7600.50 points, leaving both indices close to record highs. The Nasdaq-100 advanced 1.8% to 28,776.80 points as US President Donald Trump ruled out further immediate attacks on Iran and pursued talks on reopening the Strait of Hormuz. Technology shares led the rally, with Amazon climbing 4.6% and Alphabet and Microsoft gaining almost 5% amid optimism about cloud computing and AI. Palantir shares also rose nearly 15% in after-hours trading on Monday after the data analytics and AI company reported second-quarter results that exceeded expectations and increased its full-year outlook.

US Treasury yields ease on Iran talks

US Treasury yields declined on Monday after US President Donald Trump said direct talks with Iran were planned and that he had suspended a military strike intended to reopen the Strait of Hormuz. The 2-year yield stood at about 4.3%, while the 10-year yield was at 4.7%; the 30-year yield had retreated to near 5.2% after reaching multi-year highs late last week, as global oil prices fell more than 4%. The move provided relief after yields rose sharply in July amid the US-Iran conflict, volatile energy prices and persistent inflation concerns.

US manufacturing outpaces euro area

Manufacturing expanded on both sides of the Atlantic in July, according to surveys released on Monday, although US activity was stronger than in the euro area. The euro-area S&P Global Manufacturing PMI rose to 51.9 from 51.4 in June, while its output index climbed to 52.9 from 51.7, the highest level since 2022, as companies worked through order backlogs despite sluggish demand. The US ISM Manufacturing PMI jumped to 55.6 from 53.3, also reaching its highest level since 2022, supported by stronger production, employment and export orders. However, the separate S&P Global US index remained at 53.9 as output and sales growth weakened, supply disruptions deepened and business confidence fell amid elevated energy prices, tariffs and conflict in the Middle East.

Swiss consumer prices edge lower

Switzerland’s Consumer Price Index fell by 0.1% month on month in July to 101.1 points, while annual inflation stood at 0.4%, according to Federal Statistical Office data released on Monday. Lower airfares, fuel costs and prices for clothing and footwear drove the monthly decline, partly offset by more expensive alternative accommodation, heating oil and car hire. Core inflation was 0.3% year on year. On Monday, the Swiss Market Index closed 0.2% higher, while the Euro Stoxx 50 gained 1.1%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from AMD, Amgen, Bayer, BioNTech, Booking, BP, Caterpillar, Continental, Electronic Arts, HSBC, McDonald's, Merck, Pfizer, SpaceX and Toyota.

Economic data in focus: Italian retail sales (10:00), US trade balance (14:30), Canadian trade balance (14:30), Canadian Purchasing Managers’ Index (15:30), US JOLTS jobs report (16:00) and US durable goods orders (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.