Update Equities: Selective strength as market volatility persists
Market volatility remained elevated, as investors navigated a noisy mix of trade tensions, central bank caution and erratic political headlines this week.
The Trump administration's latest tariff announcements and export restrictions stirred up further uncertainty, particularly for companies with exposure to China. The US Federal Reserve remaining on hold and not cutting interest rates had added to the unease, reinforcing expectations that Fed rate cuts remain distant as long as inflation pressures persist.
The technology sector saw renewed weakness, especially among semiconductor names. AMD, for example, came under pressure after the US government imposed new export restrictions on artificial-intelligence chips developed for the Chinese market. It also flagged an USD 800 million impact tied to curbs on certain products.
On a more positive note, SAP’s better-than-expected earnings report provided a welcome counterbalance. The company posted strong cloud growth and maintained its full-year guidance, signalling operational strength despite a volatile economic environment. As the largest constituent of the DAX, SAP’s outperformance helped lift the broader index.
In the health care sector, Eli Lilly’s promising trial data for its oral weight-loss pill sent its shares higher. Novo Nordisk shares fell as investors re-evaluated the competitive threat to its blockbuster obesity treatments, particularly given the convenience and scalability of a pill-based therapy.
Speculation surrounding a peace deal mediated by the White House between Ukraine and Russia has added some upward momentum to selected European cyclicals, particularly in the construction and chemicals sectors, which would benefit most from any post-war recovery dynamic. However, it is considered unlikely that the proposed deal will come into effect.