Update Equities: Markets navigate tension and optimism
Global equity markets posted mixed performances over the past week, shaped by diverging economic signals and rising trade tensions. The MSCI US index rose by 0.6%, underpinned by robust June employment data and continued strength in technology. This includes Nvidia becoming the first company to surpass a USD 4-trillion market cap.
European equities advanced by 1.1%, supported by optimism around Germany’s new industrial investment initiative. However, Japanese equities slipped by 0.3%, as fears over potential tariff escalations weighed on sentiment. Emerging markets declined by 0.7%, reflecting broader caution amid geopolitical uncertainty. Overall, the MSCI World dipped by 0.2%, as investors weighed solid macroeconomic data against a more fragile geopolitical backdrop.
At the sector level, performance varied notably across regions and industries. Technology stocks led gains globally, with the MSCI US IT sector climbing by 3.2%. This reflects continuing optimism driven by the outlook for artificial intelligence (AI) and Nvidia’s historic market-cap milestone. Energy stocks also performed strongly in both the US (+3.1%) and Europe (+0.4%), supported by firmer oil prices and rotation into value sectors. Materials saw modest gains in the US (+1.4%) and Europe (+0.4%), aided by stabilizing commodity demand. In contrast, defensive sectors underperformed. Consumer staples, for example, fell sharply (by -1.3% in the US and -0.7% in Europe), as investors rotated out of lower-growth names. Health care stocks were mixed, in Europe the sector rose by 1.6%, bolstered by strong earnings outlooks, while the US health care sector declined by 0.9% amid some profit-taking
At the corporate level, consulting firm Capgemini announced the USD 3.3 billion acquisition of WNS Holdings, strengthening its AI-driven offerings. The deal is expected to add to earnings per share by 2026 and aligns with Capgemini’s digital transformation strategy. In contrast, advertising company WPP issued a profit warning, revising its 2025 outlook downward amid US client losses and margin pressure, sparking governance concerns ahead of a CEO transition. Activist interests may also intensify for WPP. Meta acquired a stake of around 3% in Essilor Luxottica, reinforcing their smart eyeglass collaboration and signalling growing ambition in wearable AI tech. In Germany, according to Handelsblatt newspaper, a major industrial alliance “Made for Germany” was launched, pledging EUR 300 billion in domestic investment through 2028, spearheaded by Siemens, Deutsche Bank and others.