Joy in the Air

There's a distinct sense of joy on the financial markets at the moment. European equities have seized the opportunity to shine as they catch up with Wall Street. On the other side of the Atlantic, risk appetite shows no sign of waning. Behind this buoyant mood lie some strong corporate earnings reports, underpinned by a resilient American consumer. Notably, today's final trading session of the week coincides with monthly equity options expiry - a context marked by investor complacency, with hopes pinned on upcoming trade deals, solid earnings results, and, as a bonus, one or two Fed rate cuts before year-end.

Romain is taking a well-earned break from this column for the next two weeks. In the meantime, I’ll have the pleasure of guiding you through the latest market developments.

Closing levels on Wall Street speak volumes: both the S&P 500 and the Nasdaq ended yesterday’s session at record highs, a testament to the current bullish sentiment on US markets. The S&P 500 added 0.54%, while the tech-heavy Nasdaq 100 followed suit with a 0.76% gain. The current exuberance is being fuelled by robust performances from tech giants, with a fresh boost from an excellent quarterly report by Taiwan Semiconductor (TSMC).

European markets, too, enjoyed a solid rebound, helping maintain their year-to-date lead over Wall Street. Amsterdam rose 1.37%, lifted by the stellar performance of the Be Semiconductor / ASML Holding / ASM International trio. A special nod to our Belgian readers: with just one exception, every constituent of the BEL20 closed in the green — a commendable 19 out of 20 — helping the index climb by 1.13%.

Elsewhere, the tone remained upbeat: Frankfurt gained 1.51%, Milan 0.92%, London 0.52%, and Paris 1.29%, all propelled by industrial stocks — notably in aerospace (Airbus, Safran), defence (Rheinmetall, Leonardo, Thales), and electrical equipment and components (Siemens, Schneider Electric, Legrand).

Yesterday’s data releases provided further support to the Federal Reserve’s patient stance, repeatedly emphasised by Chair Jerome Powell. US retail sales saw a notable rebound of 0.6% in June, beating expectations. At the same time, jobless claims came in lower than forecast — 221,000 versus an expected 235,000. These figures underscore the enduring strength of the US economy and the American consumer’s willingness to keep spending.

Adding to this momentum, the Philly Fed Index surprised positively, rising to 15.9 in July from -4 in June, indicating improving business conditions in the Philadelphia region. Against a backdrop of commercial uncertainty, these indicators strengthen the case for a wait-and-see approach from the Fed, allowing more time to assess the impact of the current US trade policy framework.

Elsewhere in the news, corporate earnings continue to roll in. Netflix was in the spotlight last night, raising its revenue forecast. While today’s corporate calendar is lighter, it still features some heavyweights, including BHP and American Express. On the macro front, the agenda is sparse, with the US consumer confidence index the only noteworthy item — a useful gauge of prevailing sentiment.

And finally, as mentioned at the outset, today is the third Friday of the month — monthly options expiry day. This often triggers a few technical adjustments in the afternoon session.

In Asia-Pacific this morning, markets are taking diverging paths. Hong Kong is up 0.79% at the time of writing, while Australia’s ASX is buoyed by mining stocks and up 1.50%. Japanese markets are more subdued, down around 0.20%. South Korea is also losing ground. In India, the Bombay index is struggling, down 0.65% due to weakness in financial stocks. In Europe, pre-market indicators suggest the rally may well continue.

Today's Economic Highlights:

On today's agenda: building permits and housing starts in the United States; the University of Michigan sentiment in the United States; the producer price index in Germany. See the full calendar here.

• GBP / USD: US$1.34
• Gold: US$3,333.53
• Crude Oil (BRENT): US$69.68
• United States 10 years: 4.44%
• BITCOIN: US$120,412

In corporate news:

• EasyJet anticipates a profit decline due to a French air strike and rising fuel costs.
• GSK faced a setback as FDA advisers voted against approving Blenrep for treating blood cancer.
• Ilika experienced a widened pretax loss and a significant decrease in grant income, despite a slight increase in revenue for the financial year.
• Telia's Q2 2025 core earnings surpassed expectations due to asset sales, leading the company to reiterate its full-year outlook.
• Husqvarna's Q2 2025 financial results surpassed expectations with strong sales and earnings, alongside the appointment of Glen Instone as the new CEO.
• Saab exceeded profit forecasts in Q2, reporting significant increases in revenue and operating profit.
• Danske Bank reported a Q2 net profit that met expectations and a H1 net income totaling DKK 11.2 billion.
• Netflix surpassed earnings forecasts due to strong revenue growth and the success of 'Squid Game.'
• BHP has delayed its Jansen potash project due to cost overruns and design changes.
• EQT has finalized the acquisition of Niwas Housing Finance.

See more news from UK listed companies here

Analyst Recommendations:

• Genus Plc: Investec maintains its buy recommendation and raises the target price from 2465 to GBX 2714.
• Standard Chartered Plc: Shore Capital downgrades to hold from buy with a target price of GBX 1270.
• Diploma Plc: Berenberg maintains its buy recommendation and raises the target price from 5600 to GBX 5750.
• Flutter Entertainment Plc: Barclays maintains its overweight recommendation and raises the target price from 226 to GBP 261.
• Gsk Plc: Goldman Sachs maintains a neutral recommendation with a price target reduced from 1580 to GBX 1560.
• Ocado Group Plc: Barclays maintains its underweight recommendation and raises the target price from 2.30 to GBP 2.60.
• Mondi Plc: JP Morgan maintains its overweight recommendation and raises the target price from 14.30 to GBP 14.60.
• Easyjet Plc: JP Morgan maintains its overweight recommendation and reduces the target price from GBP 7 to GBP 6.70.
• Experian Plc: Morgan Stanley maintains its overweight rating and raises the target price from 4550 to GBX 4700.
• Shell Plc: Zacks maintains its neutral recommendation with a price target reduced from USD 79 to USD 77.
• Puig Brands Sa: Berenberg maintains its hold recommendation with a price target reduced from 19.50 to EUR 19.
• Swatch Group: Oddo BHF maintains its underperform recommendation with a price target reduced from 125 to CHF 119.
• Evolution Ab: Nordea Bank maintains its buy recommendation and raises the target price from 880 to SEK 930.
• Eqt Ab: DNB Carnegie upgrades to buy from hold with a price target raised from SEK 325 to SEK 370.
• Heineken Holding N.v.: Bernstein maintains its outperform recommendation and reduces the target price from 113 to EUR 112.