Key Takeaways
- US tech shares rallied on Thursday, driven by expectations that heavy AI spending will soon yield profits.
- Slower‑than‑expected US Q2 GDP growth and modest PCE inflation eased fears of an imminent Fed rate hike.
- Geopolitical easing—particularly Iran‑Oman talks over the Strait of Hormuz—boosted risk appetite and lifted European and Asian markets.
- Chipmakers rebounded sharply (Micron +18.4%, AMD +13%) while Microsoft Azure’s strong cloud growth eased AI‑spending worries.
- Mixed corporate results: Amazon’s net income jumped 244.9% after‑hours, Apple’s profit rose but shares fell on sales‑guidance concerns, Meta posted revenue growth but a net‑income loss and declining free cash flow.
- The Bank of England held rates at 3.75%; the Bank of Japan kept its policy rate at 1% and reportedly intervened to support the yen.
Market Overview
Global markets traded positively on Thursday as technology stocks posted sharp gains, reviving hopes that the recent sell‑off in artificial‑intelligence‑related assets is nearing an end. “Tech stocks seeing sharp gains fueled the optimism that massive AI investments will translate to profits,” the report noted, while chipmaker shares also recovered some of their recent losses. Analysts suggested that the demand for AI remains sustainable, implying that the earlier downturn may have been an overreaction to concerns about capital spending.
US Economic Data
The United States economy grew below estimates by 1.5% in the second quarter, a slowdown from the first quarter’s pace. The personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred inflation gauge—declined 0.1% month‑on‑month but rose 3.7% year‑on‑year in June. Core PCE, which excludes food and energy, edged up 0.1% monthly and 3.3% annually. These softer inflation figures, coupled with slower growth, have led market participants to anticipate that the Fed may retain its current policy stance longer, reducing expectations of a second rate hike.
Labor Market Signals
Initial jobless claims rose to 197,000 for the week ending July 25, a figure that came in below market estimates. The uptick in claims, while modest, reinforces the narrative of a cooling labor market that could give the Federal Reserve additional flexibility on interest rates.
Geopolitical Developments
Diplomatic talks between Iran and Oman regarding the Strait of Hormuz raised hopes that Middle East tensions might ease, thereby bolstering risk appetite across global markets. The easing of geopolitical strain contributed to a decline in the US 10‑Year Treasury yield, which fell three basis points to 4.65%, and Brent crude oil slipped 1.4% to $85.4 per barrel on Friday.
Currency and Commodities
The US Dollar Index edged up 0.1% to 100.2 amid lingering uncertainties, while gold slipped 0.5% to $4,082 per ounce. Conversely, the eurozone’s gross domestic product grew 0.4% quarter‑on‑quarter and 1% year‑on‑year in the second quarter, showing accelerating growth relative to the prior period.
Corporate Earnings – Tech Leaders
Microsoft’s Azure cloud services posted strong revenue growth, and the company’s capital‑spending outlook fell short of expectations, alleviating some AI‑spending concerns and pushing its shares up 15.5%. Meta reported a 28% year‑on‑year revenue increase to $60.8 billion for Q2, but suffered a net‑income loss of 14% to $15.85 billion; its shares fell 7.95% after announcing a decline in free cash flow. “Meta reported a revenue growth of 28% year‑on‑year to $60.8 billion in the second quarter, but a net income loss of 14% to $15.85 billion,” the article stated.
Chipmaker Resurgence
Chipmaker stocks rebounded sharply, with Micron Technology shares climbing 18.4% and AMD shares gaining 13%. The rally in semiconductors helped lift broader indices: the Dow Jones Industrial Average rose 1.19%, the S&P 500 increased 1.66%, and the Nasdaq advanced 2.78% on Thursday. American indexes opened Friday on a positive note.
Apple and Amazon After‑Hours
After the market close, Apple announced a 27.1% rise in net income to $29.8 billion for the three‑month period ending June, yet its stock slipped 6.1% in after‑hours trading due to expected sales declines stemming from supply‑chain constraints. Amazon, by contrast, posted a staggering 244.9% surge in net income to $62.6 billion for Q2, driving its shares up 10.4% in after‑hours trade.
European Market Performance
European markets benefited from better‑than‑expected corporate earnings and gains in mining stocks, the latter buoyed by rising precious‑metal prices. The Bank of England maintained its policy rate at 3.75% in a six‑to‑three vote, with Governor Andrew Bailey among those favoring a hold; the dissenting side advocated a 25‑basis‑point increase to 4%. Bailey commented that “inflation was declining faster than expected but the Middle East war continued to cause energy prices to remain high and volatile.”
The eurozone’s GDP growth of 0.4% quarter‑on‑quarter and 1% year‑on‑year signaled accelerating expansion. Germany’s consumer price index rose 0.8% month‑on‑month and 2.8% year‑on‑year in July, above estimates and accelerating versus June. Germany’s economy expanded 0.9% quarter‑over‑quarter and 0.9% annually in Q2, defying forecasts. Consequently, Germany’s DAX 40 gained 0.6%, France’s CAC 40 rose 0.92%, Italy’s FTSE MIB 30 climbed 1.29%, while the UK’s FTSE 100 edged down 0.1% on Thursday. European indexes opened Friday with a positive tilt.
Asian Market Reaction
The robust tech rally in the United States spilled over into Asian equity markets. South Korean semiconductor giants SK Hynix and Samsung Electronics saw their shares surge 29.7% and 25%, respectively. The Bank of Japan kept its policy rate at 1%, in line with expectations, on Friday. The US dollar/yen exchange rate fell 3.3% to 157.97 on Thursday before rebounding 0.8% to 160.7 on Friday, a move analysts attributed to official Japanese intervention aimed at supporting the yen.
Domestically, Japan’s Tokyo CPI rose 2% in July, within estimates but up from June’s 1.7% increase. Industrial production grew 1.3% month‑on‑month and 4.2% year‑on‑year in June, surpassing forecasts, while retail sales declined 4.1% monthly and 0.5% annually. Near Friday’s close, the Nikkei 225 advanced 4%, South Korea’s Kospi jumped 16%, China’s Shanghai Composite crept up 0.8%, and Hong Kong’s Hang Seng slipped 0.1%.
Conclusion
Thursday’s market movement underscored a shift from AI‑related pessimism to cautious optimism, underpinned by solid tech earnings, softer US inflation data, and easing geopolitical tensions. While corporate results remain mixed—showcasing both stellar performances (Amazon, Microsoft) and warning signs (Meta, Apple)—the broader environment suggests investors are weighing the prospect of prolonged monetary policy stability against lingering supply‑chain and energy‑price risks. As global equity markets continue to digest these cross‑currents, the interplay between technology capital spending, central‑bank cues, and regional developments will remain a focal point for traders and analysts alike.
https://www.aa.com.tr/en/economy/global-markets-trade-positive-as-tech-rally-eases-artificial-intelligence-selloff-concerns/4014714