Global equity markets held steady on Wednesday, with US stock futures climbing as strong earnings from an AI infrastructure firm revitalized investor interest in technology stocks. Meanwhile, traders are awaiting the release of key US inflation data later in the session.
Dow futures rose 0.12%, S&P 500 futures gained 0.26%, and Nasdaq 100 futures advanced 0.71%. In European early trading, the pan-European Stoxx 600 index was largely flat, with major benchmarks in Frankfurt, Paris, and London showing little change. Across Asia, the MSCI Asia-Pacific index rose 0.7%, driven by a 3.7% surge in South Korea's KOSPI and a near-1% gain in Japan, both lifted by strong performance in semiconductor stocks.
CoreWeave, Inc. reported robust earnings, reigniting enthusiasm for AI-related trades. The company's shares surged 18% in pre-market trading after posting better-than-expected sales. SUPER MICRO COMPUTER INC also climbed 8.6% after its revenue forecast exceeded analyst estimates.
Optimism in Tech Stocks
Strong earnings growth and a resilient economic backdrop should help the S&P 500 navigate challenges from rising interest rates and inflation, according to RBC strategists, who maintain a positive outlook on the index over the next year. The recent earnings season has been well-received by investors, as they look for confirmation that AI infrastructure companies can deliver the profitability needed to sustain the tech rally. "The results from CoreWeave, Inc. and SUPER MICRO COMPUTER INC are further evidence that demand for AI infrastructure remains robust," said Florian Ielpo, macro head at Lombard Odier Investment Managers. However, he cautioned that strong earnings do not automatically translate into higher valuations, especially in an environment of elevated borrowing costs.
All eyes are now on the US inflation data due later today, which could influence market expectations for the Federal Reserve's September meeting. Rising oil prices and higher chip costs are also adding to inflationary pressures. "The upside risk for inflation will not disappear regardless of today's data outcome," said Ipek Ozkardeskaya, an analyst at Swissquote. "But if the data comes in below expectations, we could see both bonds and stocks rallying, given the strong earnings season in the US and Europe."
US-Iran Tensions Escalate Over Strait of Hormuz
Tensions between the United States and Iran appear to be hardening over the Strait of Hormuz. President Donald Trump stated that the US has "total control" over the waterway, warning that "at some point, they might take action, and then they'll be crushed." Both the US and Iran-aligned Houthi rebels in Yemen have reported attacks on shipping targets. Iran's top security official, Mohsen Rezaei, said the vital shipping channel would remain closed unless the US accepts Tehran's conditions to end the conflict. Despite Trump's repeated claims that a deal is imminent, the war shows no signs of ending. This situation is threatening global inflation and economic growth as energy prices remain elevated. US crude rose 0.8% to $83.89 per barrel, while Brent crude gained 0.7% to $89.49, heading for a sixth consecutive day of gains. Both benchmarks closed more than $1 higher on Tuesday, reaching their highest levels since July 31, extending a roughly 5% rally from Monday. "Our base case has long been a gradual but messy de-escalation," said Dorian Carrell, head of multi-asset income at Schroders. "We don't expect a return to full capacity in Strait of Hormuz shipping. This will support oil prices and sustain an energy-driven inflation factor in the short to medium term."
Inflation Data in Focus Today
Rising oil prices have heightened concerns that renewed energy price pressures could prompt a more hawkish response from the Federal Reserve. Markets remain focused on the US consumer price data due later today for clues on the Fed's next rate move. While Wednesday's CPI data will not fully reflect the recent surge in energy prices, it could still be a key factor in shaping expectations for the Fed's September meeting. Money markets currently price in roughly a 50% probability of a rate hike next month. Economists surveyed by Bloomberg expect the headline US inflation gauge to show a 0.1% month-on-month increase in July, following a 0.4% decline in the prior month. Annual CPI inflation is expected to slow to 3.4% from June's 3.5%. "Today's CPI data is expected to be relatively benign, which, all else being equal, could pave the way for the Fed to hold rates steady before the midterm elections," said Schroders' Carrell. "If the inflation data comes in higher than expected, it could boost expectations for rate hikes in September and December, thereby putting pressure on stocks and bonds," said Stephan Kemper, chief investment officer for Germany at BNP Paribas Wealth Management. Boston Fed President Susan Collins indicated she would support a September rate hike if inflation remains high, according to a report from the Financial Times. "The inflation data could help reduce uncertainty, as the market is currently evenly split on whether the Fed will hike or hold rates steady in September," said Jens Naervig Pedersen, a strategist at Danske Bank.
Bond Markets Steady Ahead of Key Data
US Treasury markets remained stable, with the benchmark 10-year yield holding at 4.69%. "If the CPI data is soft, it could increase the likelihood of the Fed holding rates steady in September, pushing US Treasury yields lower," said Evelyne Gomez-Liechti, an analyst at Mitsubishi UFJ Morgan Stanley Securities. However, she noted that yields could still trend higher in the medium term as markets anticipate a Fed rate hike by year-end. Meanwhile, rising oil prices have fueled inflation concerns, pushing UK gilt yields higher. The 10-year gilt yield rose 1.6 basis points to 4.969%, according to Tradeweb data. Eurozone government bond yields also edged higher as investors remained cautious ahead of the US CPI data. Germany's 10-year Bund yield rose 1.1 basis points to 3.159%, while France's 10-year OAT yield climbed 1.2 basis points to 3.978%.
Yen in Focus for Potential Intervention
The dollar weakened against most G10 currencies. The yen traded near flat at 159.40 against the dollar, with investors watching for a potential move toward the key 160 level, which could trigger another intervention by Japanese authorities. Japan's 5-year government bond yield rose to a record 2.12%, while the 2-year yield hit 1.645%, its highest in 31 years. Investors now price in nearly a 60% probability of a 25-basis-point rate hike by the Bank of Japan at its September meeting. The euro was largely unchanged at $1.1535. "Even if today's US inflation data comes in below expectations, the euro's upside against the dollar may be limited," said Chris Turner, a strategist at ING. A weak data print could challenge the euro's recent high of $1.1580, but further significant gains may be difficult given thin summer trading volumes, he added, as markets will face another round of inflation and jobs data, as well as the Jackson Hole central bank symposium, before the Fed's mid-September policy decision.
Gold Breaks Above $4,400
Gold prices rose, successfully breaking above the $4,400 level, as traders awaited the key US inflation data. "Traders are currently focused on today's US CPI data to gauge whether the recent technical breakout above $4,200 has enough momentum to push gold toward the next key resistance level near the 200-day moving average around $4,500," said analysts at Saxo Bank. Gold ETF inflows have increased for a fifth consecutive day, pushing total holdings to a six-week high, providing further evidence that investor demand is re-emerging.
Notable Stocks
SUPER MICRO COMPUTER INC rose over 7.5% after its fourth-quarter results beat expectations. The company issued an optimistic first-quarter earnings and revenue forecast, guiding for adjusted earnings per share of $1.01–$1.10, well above the LSEG consensus estimate of $0.76. Revenue guidance of $14.5–$15.5 billion also exceeded the $11.68 billion expected.
CoreWeave, Inc. surged over 18.5%. Its second-quarter adjusted operating margin reached 5%, compared to the FactSet consensus estimate of just 2.7%. Revenue came in at $2.58 billion, up 112% year-over-year, beating the LSEG estimate of $2.56 billion.
Lumentum rose over 8% after its fourth-quarter adjusted earnings and revenue exceeded expectations. The optical products maker, a beneficiary of the AI supply chain, has gained over 120% year-to-date.
Nebius jumped over 12.5% after the AI infrastructure concept company reported EBITDA and revenue that beat FactSet analyst estimates, with gross margins also exceeding forecasts.
Coherent, another optical components maker, surged over 5.5% in pre-market trading, boosted by Lumentum's strong results. The company is scheduled to report its earnings after Wednesday's close. Coherent's stock has gained over 65% during its fourth fiscal quarter.
H&R Block shares soared 11% after the company raised its fiscal 2027 outlook. It now expects adjusted earnings per share of $6.04–$6.24 and revenue of $4.11–$4.16 billion, compared to LSEG consensus estimates of $5.86 per share and $4.05 billion in revenue.
Kontoor Brands fell nearly 3% after the apparel company's second-quarter revenue of $584 million missed the FactSet analyst estimate of $587 million. Earnings per share slightly exceeded expectations, and the company raised its full-year profit guidance above consensus.
Cava Group shares surged nearly 12% after the Mediterranean fast-casual chain reported second-quarter earnings per share of $0.19, above the LSEG estimate of $0.18. Revenue of $368.4 million also beat the $361 million expected.
In Wednesday's pre-market trading, AI computing stocks were among the winners in the S&P 500, while the software sector was a major underperformer. Workday and Salesforce each fell over 1.5%, while Palantir Technologies and ServiceNow declined more than 1%.
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