Telecom Earnings Worth Watching
Chart of the Week:
Leading Indicators Extend Decline, Raising U.S. Slowdown Risk
U.S. leading indicators fell 0.3% MoM in June, marking the seventh decline in eight months since Dec 2024 (with May’s final reading revised up from -0.1% to 0%). The 6-month annualized change for Jan–Jun 2025 fell 5.5%, breaching the Conference Board’s -5% recession warning level and marking the steepest drop since early 2024. Officials noted that while rising equity prices provided some support, they were outweighed by weak data in consumer expectations, new manufacturing orders, and a third consecutive rise in initial jobless claims.
Market Recap 1:
Earnings Boost Pushes U.S. Stocks to New Highs; Asia Gains, Semis Retreat on Profit-Taking
The S&P 500 and Nasdaq both hit new intraday and closing highs on Thursday, driven by strong corporate earnings and AI optimism. Asian markets outperformed, buoyed by tariff agreements between the U.S. and countries like Japan, the Philippines, and Indonesia, as well as easing China-U.S. tensions following China’s lift of its rare earth export ban and the U.S. resumption of advanced chip exports to China. In contrast, European equities underperformed due to ongoing geopolitical tensions with Russia.
Market Recap 2:
IG Leads in Bonds; Dollar Softens, Copper Extends Gains, Gold and Bitcoin Fluctuate Near Highs
U.S. Treasuries were broadly flat, with yields hovering around 4.4% amid mixed economic data. University of Michigan consumer sentiment beat expectations and inflation expectations eased, while credit conditions showed slight improvement. However, housing data revealed a second consecutive quarterly decline in residential investment. Strong corporate earnings and progress on global tariff negotiations supported both investment-grade and high-yield credit across the U.S., Europe, and Asia, keeping bond market sentiment upbeat. Still, investors should monitor corporate fundamentals and the potential cost impact of new tariffs.
What’s Trending:
U.S.-Asia Tariff Deals and China Optimism Drive Hang Seng to 3-Year High
Japan, the Philippines, and Indonesia have each reached tariff agreements with the U.S., with Japan seeing tariffs reduced from 25% to 15% on general exports and autos. These “reciprocal” and lower-than-expected tariffs lifted Japanese equities as uncertainty faded. Tariffs for Indonesia and previously announced terms for Vietnam also came in below the “Liberation Day” proposals, supporting overall Asian market sentiment.
In Focus 1:
Strong Earnings Make Communication Services a Standout Amid Sector Rotation
S&P 500 communication services sector is projected to post 29.9% YoY EPS growth in 2Q25—the highest among all sectors. Since end-1Q25, earnings estimates have been revised up by 0.5% (as of July 18), ranking just behind financials, energy, and materials. Financials benefited from a low 2024 base, while energy and materials saw milder-than-expected declines. Communication services is thus a major contributor to S&P 500 earnings growth.
In Focus 2:
Social Media Ads, Gaming Consoles, and Cloud Gaming Inject Fresh Momentum into Communication Sector
Companies across sectors are increasingly shifting budgets toward digital channels, with digital ads surpassing 70% of total ad spending since 2023. Social media commands a growing share, steadily overtaking traditional and other digital formats, supported by over 5.2 billion global users. Platforms like Instagram, TikTok, and Facebook have become primary battlegrounds for advertisers, offering targeted campaigns, in-platform sales, and robust analytics to optimize performance and audience reach.
