Equities: CPI-driven gains and tech dispersion – Deutsche Bank

Deutsche Bank strategists note that softer United States (US) Consumer Price Index (CPI), gains in chipmakers and strong bank earnings supported US equities despite sharp weakness in software stocks. Asian and European markets also advanced, although mainland Chinese shares lagged after weaker-than-expected second-quarter growth.

Index nears record with mixed tech

"For equities, yesterday was another eventful session as earnings season started to get going. At the headline level, the S&P 500 (+0.38%) did well thanks to the downside CPI print and the dovish rates repricing. But this included some big moves under the surface, with IBM (-25.21%) posting its biggest daily decline in available Bloomberg data back to 1968, after they missed analyst estimates. It's another example of the huge ongoing tech disruption."

"Other software stocks also underperformed, including ServiceNow (-5.76%) and Adobe (-4.30%). Despite this, the information technology sector (+1.25%) was the best performer in the S&P 500 and the NASDAQ was up +0.90% amid gains for chipmakers that pushed the Philly semiconductor index +2.54% higher. So differentiation within the tech sector continues to be an ongoing theme, and one that supported the headline indices yesterday even as the equal-weighted S&P 500 slipped (-0.38%)."

"There were also some big earnings advances as well, with Goldman Sachs (+9.00%) posting its best day since Trump announced the 90-day tariff extension last year, which came after their own earnings beat expectations. There were also sizeable gains for JPMorgan (+2.50%) and Bank of America (+1.88%) after their results, which helped the KBW Bank index to a +1.05% gain. This morning S&P (+0.20%) and Nasdaq (+0.74%) futures continue to rally."

"Asian equity markets are also higher with the KOSPI (+7.70%) back leading the gains. Elsewhere, the Nikkei (+1.14%) and the Hang Seng (+1.46%) are also posting solid advances, while mainland Chinese equities remain subdued, with the CSI 300 (+0.04%) and Shanghai Composite (-0.08%) after Q2 GDP "only" expanded by 4.3% year-on-year, falling short of 4.5% expectations and slowing notably from the previous quarter (5%)."

"Earlier in Europe, markets generally put in a decent performance yesterday, with the STOXX 600 (+0.17%) reaching a one-week high, alongside modest gains for the FTSE 100 (+0.30%), the DAX (+0.13%) and the CAC 40 (+0.03%). "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)