Shares in Alphabet jumped after Google’s parent reported second-quarter revenue that topped analysts’ expectations. That’s mainly thanks to hearty advertising on the company’s flagship search business, which is successfully navigating a marketing slowdown and fending off emerging competition from AI chatbots.
Meta also reported strong results for the second quarter and gave an optimistic outlook for the current one, spurred on by the firm’s short-form video feature, Reels, becoming more popular with users and advertisers alike. The social media company’s shares bumped up after the news.
Meanwhile, though, Microsoft reported lukewarm second-quarter sales growth and predicted that its crucial cloud business, Azure, would keep slowing down. That overshadowed the excitement about customer interest in the firm’s new AI-powered products, sending its shares lower.
The Fed resumed rate hikes last week following a short pause in June, raising its benchmark federal funds rate by a quarter of a percentage point to a target range of 5.25% to 5.50%. That’s the highest level in 22 years, and the US central bank left the door open for a further hike at its next meeting in September.
Still, the Fed kindled hopes that the US economy could avoid a recession. And it could be right: data out last week showed the world’s biggest economy grew at a 2.4% annualized rate during the second quarter. That marked a rebound from the 2% seen in the first three months of the year, and was well above the 1.8% economists predicted.
The eurozone’s downturn deepened even further at the start of the third quarter. The purchasing managers’ index (PMI) – a measure of business activity in the bloc – fell to an eight-month low, after a sharper-than-expected slowdown in services and a decline in manufacturing that was steeper in July than the month before.
But that didn’t stop the ECB from going ahead with a widely expected quarter-point rate hike last week. That pulled the central bank’s deposit rate up to 3.75%, matching a record last reached in 2001 when it was trying to prop up the value of the newly launched euro.
Finally, the Chinese government pledged a raft of measures designed to perk up the economy last week. The all-important property market was right at the top of the agenda, along with local government debt issues, rising youth unemployment, and weak domestic demand.
