Jenson Holmes from Titan Wealth offers this week’s round-up of global markets
CORPORATE earnings made this one of the busiest weeks of the year, while closely watched central bank decisions added another layer of focus for investors.
Policymakers struck a more hawkish tone than markets had anticipated, with both the Federal Reserve and Bank of England showing signs of division. Even so, equity markets remained resilient, supported by a series of strong half-year earnings updates from major companies.
In the US, the Fed left interest rates unchanged for a fifth consecutive meeting. While the decision to maintain rates was widely expected, investors noted a more divided stance within the Federal Open Market Committee, with three members voting in favour of a further rate increase.
The Fed acknowledged that economic growth remains solid, employment conditions are stable and productivity continues to improve, although inflation remains above its long-term target.
The outcome suggests policymakers remain cautious about inflation risks, but markets were reassured by the absence of any immediate tightening, although the new chair, Kevin Warsh, was deliberately vague in his post-meeting comments, which led to a big move higher in 30-year treasury yields and the largest steepening of the yield curve in more than 20 years.
The Bank of England also left rates unchanged. Although the Monetary Policy Committee’s six-three voting split was slightly more hawkish than expected, bond markets reacted positively after governor Andrew Bailey highlighted signs of a softening labour market and suggested inflation could peak later this year. As a result, expectations around the timing of any rate increase have shifted to later this year or early next.
In Japan, the Bank of Japan kept its benchmark interest rate unchanged at 1%, reflecting a continued commitment to supporting moderate economic growth while carefully monitoring inflation developments. However, the BoJ appeared to intervene in foreign exchange markets later in the week, buying the yen in an effort to boost the flagging currency.
Corporate earnings were again the main support for markets throughout the week. In the UK, strong results from a number of major large-cap companies were well received and helped propel the major index towards a new high. In the US, the technology sector remained firmly in the spotlight as investors assessed whether substantial AI investment was translating into tangible returns.
The Magnificent Seven remained in the spotlight, with Microsoft the standout performer thanks to strong earnings, accelerating Azure cloud growth and growing adoption of its Copilot platform. Amazon and Apple also exceeded expectations, supported by resilient demand across their key business divisions.
Before reporting this week, Apple reached a record market capitalisation of $5.036 trillion, a day after surpassing NVIDIA as the world’s most valuable company. In contrast, Meta disappointed investors with weaker guidance and lower cash generation, as AI spending continued to rise, while Alphabet reported strong operational performance but faced some market caution due to higher expected capital expenditure.
The overall theme was clear: markets are increasingly rewarding companies that can demonstrate measurable returns from AI investment while scrutinising those where spending is running ahead of profitability.
