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Good evening,
Risk assets reversed last week’s sell-off, with stock indices posting strong gains and closing around 2% higher, driven largely by renewed expectations that the Fed will cut interest rates at its next meeting following Friday’s weak jobs report. Traders have increased their bets on a Fed rate cut in September, now pricing in a 90% probability. The Treasury yield curve continues to shift lower with 10-year yields at 4.20%, their lowest level since late April. In currency markets, the $ traded sideways with no significant move to highlight.
Crude oil fell almost 2% on Monday, following OPEC’s weekend announcement to increase output by 547k bpd from September. This ongoing ramp-up signals a near-complete reversal of prior voluntary cuts and is fueling oversupply concerns. (CNN)
Regarding tariffs, Trump said he will be 'substantially raising' India tariffs over Russia oil purchases. To recap, the import levies taking effect on Friday include: 39% on Switzerland, 35% on Canada, 25% on Mexico and India, 15% on Japan and the EU, and 10% on the UK.
US Earnings: Berkshire Hathaway (mcap $990bn) missed revenue and profit estimates when it reported on Saturday, with operating earnings down 4% YoY and profits well below consensus as the conglomerate warns of negative impacts from steep US tariffs. Although the railroad, energy, manufacturing, service, and retail sectors all posted higher profits compared to last year, a decline in insurance underwriting weighed on the overall results. Berkshire wrote down a loss of $3.8bn from its Kraft Heinz stake, a longtime underperformer. Shares fell 3% today and are little changed YTD.
After the close, Palantir Tech (mcap $380bn) beat top and bottom estimates in a quarter described by management as ‘phenomenal’ with sales rising by 48%. It also raised full-year revenue projections. Shares gained 4% in regular trading hours and advanced 5% in extended trading. (CNBC)
Earnings tomorrow: Caterpillar, AMD, Amgen, Pfizer, BP and Diageo.
Economics: It was a light day on the data front; US factory orders for June fell 4.8%, reversing May’s 8.3% gain, mainly due to a steep drop in commercial aircraft orders; however, orders were still 3.8% higher YoY. Inflation updates: Switzerland +0.2% YoY, a modest acceleration and Turkey +33.5% YoY, in clear descent.
Deals: In private markets, Nvidia and Capital G, Alphabet’s growth equity unit, are reportedly close to backing Vast Data, an AI-focused data infrastructure co, in a funding round that could value the business at up to $30bn. Also, growth equity firm General Atlantic and UK-based buyout firm Oakley Capital are in advanced negotiations to acquire French SaaS provider Brevo for ~€1bn.
IPO updates: Firefly Aerospace, a maker of rockets, space tugs and lunar landers, raised its guidance price by 13% to $42 mid-range to raise ~$700mn. Also, crypto firm Bullish is seeking to raise $629mn in a New York share sale, which would value the company at ~$4.2bn at the top end of its $28–$31 price range. (Reuters)
Figma (FIG), the San Francisco-based design software company, which was priced at $33 last Thursday and had a strong debut with shares skyrocketing 252%, fell 27% today to ~$89 or a total market value of $44bn.
Business news: Tesla approved a share award worth $29bn (96mn shares) to Elon Musk. Stock gained 2% but is 23% lower this year.
Finally, a stock mover to highlight today is mid-cap fashion retailer American Eagle Outfitters (mcap $2.3bn), which surged 24% after Trump posted positive comments about its latest ad campaign featuring actress Sydney Sweeney. Shares are still 21% lower YTD. (NBC)
See you tomorrow.
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