Making sense of this crazy world
Earnings deliver strong profit growth
It’s been a good earnings season for most US companies, which in turn has been supportive of valuations. Interestingly, those companies that have missed estimates appear to have been punished more aggressively than would normally be the case. More about this later.
The latest UK growth figures are nothing to get excited about, but at least we’ve had some growth. GDP came in at 0.3% for the second quarter, following on from 0.7% in the first quarter of 2025.
The big news this week is that the US has extended its tariff dispute with China for another 90 days. This helped equities, although this time there was little excitement as it was not entirely unexpected, even though the announcement was just before the deadline for tariffs being introduced. On saying this, Far Eastern equities generally rose on the news.
At the beginning of the week, President Trump announced that he had done a “little deal” with China around Nvidia selling advanced AI chips to China for a fee. Guess what? The Chinese government has now urged companies to avoid using Nvidia Corp’s H20 processors!
India hasn’t been so lucky with an extra 25% levy on their exports to the US. It was only a few months ago that Prime Minister Modi stood side-by-side with Donald Trump at the White House as they promised to elevate bilateral trade to $500 billion by 2030. Mmm… what a difference a few months makes! This reinforced, once again, how quickly things can change.
Data shows investment flows are continuing to favour emerging market stocks, particularly with the dollar weakening. These markets have become a beneficiary of the recycling of assets away from the US by many investors.
Finishing off this week’s update, we provide news about a holiday resort looking to elevate tourism!
This week’s content:
- Earnings deliver
- Just a little deal
- 15% of nothing is…
- India on the back foot
- Emerging markets attracting lots of money
- A toxic mix?
- What stocks are classified as tech stocks?
- Summary
Earnings deliver
In the US, earnings for the second quarter have proved resilient and upbeat, with circa three quarters of earnings across the S&P 500 beating expectations.
To date, the earnings per share growth is encouraging, although again, it’s been the large tech companies that have been leading the way. However, when diving into the results, it is clear that for many of the companies across the S&P 500, there is little wriggle room and it wouldn’t take much for earnings to disappoint. For now though, data is supporting market buoyancy.
Continues…
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