Equities are continuing to stay upbeat in European morning trade, with S&P 500 futures seen up 0.4% currently. Meanwhile, European stocks are also surging today in erasing the weekly losses from the past two days. The DAX is up 1.1% while the CAC 40 is up 1.6% on the day. This comes after the US and Japan has struck a trade deal, though what may become of it depends on Japan prime minister Ishiba’s fate.
As for broader market sentiment, a lot will come down to what will follow from big tech earnings after the close today. Alphabet/Google and Tesla are the two big names on the agenda.
With Alphabet, there’s a few things to scrutinise besides the numbers. One of the most important ones being calls for Google to divest its Chrome browser. That is a big challenge to their search dominance, so we’ll have to see what the company has to say about that. And in the AI space, it’s all about how Gemini is going up against the competition. Increased capex is almost a given for companies investing in AI, so I wouldn’t view it as a bad thing for Alphabet.
At this stage, it’s either you invest/spend or fall behind in the AI race.
As for Tesla, Elon Musk’s fallout with Trump has proven to be one of its major downfalls this year. The stock itself is down nearly 18% on the year and continues to struggle on multiple fronts. The recent removal of the federal EV tax credit under Trump’s new tax legislation only adds to headwinds and there might not be enough other avenues to drive a rebound in sentiment for Tesla at the moment.
It’s pretty much a case of underdelivering and underperforming being synonymous to Tesla this year. So, we might get that again later today.
While equities may be holding more bullish now, it’s going to be tricky navigate through the two more struggling companies in the Magnificent 7 this week. All that before we get to the big guns in the week ahead.
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This article was written by Justin Low at investinglive.com.
