U.S. markets extended their winning streak Thursday as the S&P 500 closed at a record high for the ninth time, while the Nasdaq logged its fourth consecutive all-time high. Investor confidence was bolstered by robust earnings from tech giants, including TSMC and Netflix, alongside strong U.S. retail sales, signaling a resilient consumer economy.
However, market volatility spiked temporarily following a report that former President Donald Trump may attempt to remove Federal Reserve Chair Jerome Powell. The rumor was quickly denied by Trump, helping markets stabilize by the end of the trading session.
Asia-Pacific: Rally Led by Semiconductors
Asian equities rallied broadly on Friday, following Wall Street’s lead:
Taiwan’s Taiex rose 1.2%, buoyed by TSMC’s stellar Q2 results, which showed a 44% revenue jump, driven by demand for AI chips.
Hong Kong’s Hang Seng gained 1.3%, while China’s Shanghai Composite advanced 0.3%, supported by upbeat tech sentiment.
Japan’s Nikkei 225 held steady amid caution ahead of next week’s BoJ meeting.
Europe: Eyes on Central Banks
European markets opened on a stable note, with attention focused on future monetary policy moves:
The European Central Bank is expected to pause interest rate cuts, after a surprise reduction last month.
Investor sentiment remained cautious ahead of key earnings from EU industrial and consumer firms.
India: Market Slips on Earnings and Outflows
Indian equities retreated sharply:
The Sensex fell over 600 points, and the Nifty dropped below 25,000, weighed down by foreign fund outflows, disappointing results from Axis Bank, and lingering uncertainty over the U.S. interest rate trajectory.
Analysts warn of short-term volatility as Indian markets recalibrate to global monetary signals and domestic earnings.
Key Market Drivers to Watch
U.S. Tariff Risks: Trump’s renewed threats to impose 30% tariffs on imports from the EU, Canada, Mexico, Japan, and South Korea have heightened geopolitical tensions, with global firms reassessing supply chain exposure.
Investor Positioning: According to Bank of America’s latest survey, fund managers are reducing cash holdings to 3.9%, indicating aggressive equity positioning. Ironically, this has triggered a traditional “sell signal,” suggesting possible overbought conditions.
Public Listings Down: The World Federation of Exchanges raised concerns over the declining number of IPOs globally, with listings down 22% since 2020, calling it a threat to long-term capital market vibrancy.
Outlook
Markets are likely to remain sensitive to:
Earnings season developments, especially from mega-cap tech stocks.
Central bank commentary, especially from the Fed and ECB.
Further U.S. trade policy announcements that could impact global risk appetite.
Bottom Line: Global equities are riding high on strong tech performance, but policy risks, rate uncertainty, and trade tensions continue to cast shadows. Prudent diversification, especially in tech, healthcare, and AI-linked sectors, is being advised by leading strategists.
