US EQUITY OPEN: Tech leads gains after strong earnings from MSFT, ARM, and LRCX
OPEN: Stocks open higher on Thursday, driven by the strong Microsoft (MSFT +15%) earnings report, which saw strong Azure and Copilot growth. As such, Tech is leading, also helped by earnings beats in Arm (ARM) and Lam Research (LRCX). Meanwhile, Communications is underperforming, weighed by Meta (META -9.3%) sinking after a profit miss and elevated concerns over free cash flow and increasing spend and expenses. Also providing support for equities is a modest pullback in US yields after a notable rally in yields on the long end in response to a lack of forward guidance from Fed Chair Warsh in his latest press conference.
Oil prices are trading lower as earlier gains were put aside amid the ongoing mediation and diplomacy efforts. Pakistani Foreign Ministry Spokesperson said discussions between Tehran and Washington are ongoing regarding the situation in the Strait of Hormuz and de-escalation, Al Jazeera reports
In FX, dollar weakness has continued, recently extended after sharp JPY strength, resulting in speculation over JPY intervention growing; details remain light. Modest dovish reaction seen in UK assets in response to the BoE 's extended hold narrative still being in play; also, BoE Governor Bailey pushed back on them heading towards a hike.
US assets displayed a muted reaction towards US data in the morning; PCE was largely as expected (core M/M slightly soft), initial claims saw a modest rebound, continued claims fell, and GDP Q2 was revised lower.
Amid the weaker dollar, precious metals are firmer; spot gold currently trades around USD 4, 100/oz.
STOCK SPECIFICS
- Microsoft (MSFT): Reported strong earnings w/ accelerating growth in Azure and Copilot
- Meta (META): Q2 EPS missed; concerns over increased spending, expenses and lower free cash flow remain.
- TSMC (TSM) said to be developing AI Chip packaging tech to counter Intel (INTC), The Information reports; effort at an early stage, unclear when it will reach commercial production.
- Qualcomm (QCOM): Q3 profit miss while next quarter guidance includes a data centre miss.
- Arm (ARM): Earnings and guidance beat offsets concerns over lower 2027 royalty growth expectations amid incremental Android weakness.
- Fortinet (FTNT): Q2 results beat expectations; raised outlook.
- Mastercard (MA): Q2 profit & rev. beat.
- Lam Research (LRCX): Q4 results beat expectations w/ stronger-than-expected Q1 guidance.
- Starbucks (SBUX): Q3 top and bottom line beat, w/stronger-than-expected FY26 guidance.
- Carvana (CVNA): Gave weaker-than-expected 2H adjusted EBITDA guidance.
- Bloom Energy (BE): Upgraded at Mizuho to 'Outperform' from 'Neutral'.
Sessions shaped by a cluster of mega-cap and semiconductor prints have tended to produce sharp index-level divergence rather than uniform breadth, and this fits that pattern: a beat anchored on cloud and AI monetisation from one mega-cap pulling the Nasdaq higher while a miss on capex-heavy AI spending at another drags communications. The recurring split in recent earnings cycles has been between AI revenue showing up in reported numbers (cloud growth, chip equipment, licensing) and AI spending showing up as cost, with the market consistently rewarding the former and punishing the latter on free cash flow grounds; the Microsoft-Meta pairing is a clean instance. Semiconductor equipment and IP names beating alongside (LRCX, ARM) reflects the established transmission where hyperscaler capex guidance reads through the supply chain, while Qualcomm's data centre guidance miss marks the boundary of that read-across. The macro overlay is secondary but worth noting: a pullback at the long end after a guidance-free Fed press conference removes a headwind that had been pressuring duration-sensitive tech, and the mix of in-line PCE with a downward GDP revision leaves the data path unchanged. The follow-ons of this kind are typically whether the AI capex-versus-monetisation debate widens to other reporters, and whether JPY intervention speculation, if confirmed, feeds back into yields and the dollar.