Markets Post-Earnings: AI Momentum, Fed Myths, and the Gold Rush
With the earnings and macro-data blitz now behind us, here’s our quick market take:
1️⃣ Equities & Earnings
AI heavyweights once again smashed expectations, with investors cheering fresh CAPEX upgrades. As long as the AI build-out train keeps rolling, tech sentiment should stay bullish. The current playbook seems simple: boost AI CAPEX, pledge a few hundred billion to invest in the US, and your stock stays bid.
Q2 earnings have been solid—83% of S&P 500 companies have beaten estimates, with an average surprise of +7.1%. Tech led with a 94% beat rate. This bespoke thread provides an up-to-date earnings metrics.
Semiconductors have been the comeback story post April lows—up >18% YTD now.
In EM, India has lagged peers this year despite strong rallies elsewhere. RBI’s latest rate hold amid INR weakness and recent US rhetoric have been headwinds, but the market may be setting up for an H2 catch-up if sentiment shifts.
2️⃣ Rates & Fed
Plenty of chatter around Trump’s potential Fed chair pick, but unless it’s an extreme choice, I expect long-end yields to stay anchored. Markets are pricing ~100 bps of cuts before Powell’s term ends in March and only 50bps post that till end of 2026. This also reinforces that market pricing is more about economic expectations than about who holds the Fed gavel next. However, 100bps cuts in the next 6-7 months seems too aggressive to me - CPI could remain near 3% in the near term as companies try passing on much of the tariffs to consumers till 2025 end post which stimulus from the ‘One Big Beautiful Bill’ is expected to help the corporations. Hiring freezes seem more common than layoffs, and with immigration slowing, labour supply is tightening—making it harder for unemployment to rise much from 4–4.1%. Latest ISM Manufacturing and Services PMIs although had a small bump but still holding with Services reading still 50+.
3️⃣ Gold & Commodities
I have been surprised how all Gold dips just keep getting bought —regardless of USD or equity moves—cementing its role as the ultimate debasement trade and a strong 60/40 hedge. Bitcoin remains range-bound; watch 112k and 120k for a breakout. Silver is already +30% YTD but could have more upside if the economy stays firm and markets remain risk-on. A break above $40 could trigger another leg higher.
4️⃣ FX
EUR’s recent pullback from overbought levels found strong support at 1.14, helped by the softer NFP print. Some traders are now using EUR as an equity hedge as JPY loses its appeal given higher inflation and negative real yields there put a question mark (maybe temporary) on the policies there. No trade here for now, but 1.12 can be an interesting tactical long.
Our weekly Market Dashboard is also attached.
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