Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take - 5 August - BP and Diageo turn corners, Palantir defies everyone, Wall St too quick to shrug off jobs report
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Stocks rally sharply on Wall St led by gains for big tech names
- Palantir smashes earnings expectations to reach new all-time high
- BP posts better-than-expected earnings and looks to another strategy review
- Diageo signals mid-single-digit profit growth next year, shares rise sharply
Well, that didn't take long...Stocks rallied smartly yesterday as investors got over the July jobs report and we got a bit of a bounce from the sharp selling from the end of last week. It just feels too quick a bounce on Wall St. Trump's new tariffs come into effect on 7 August so we maybe think investors might use this rally to sell into to take profits?
The FTSE 100 was up 0.6% with bigger gains seen in Frankfurt and Paris of more than 1% for the session. Wall Street rallied even further with the Nasdaq and Russell 2k both rising 2% and the broad S&P 500 up almost 1.5% with Meta, Google, Nvidia up over 3% and Tesla and Microsoft both rising over 2%. European stock markets are firmer this morning with the FTSE up a third of a percent early doors with support from Diageo, Fresnillo, BP and Smith & Nephew.
A quick word on the big picture. We had a proper interruption to this melt-up grind higher, which is the kind of correction that is needed. But the market likely requires stronger medicine than this. Market pricing has moved aggressively in favour of a September rate cut by the Federal Reserve, after a weak July jobs report and ugly revisions to May and June signalled the US labour market may finally be cracking under the pressure of tariffs. Markets seem hopeful that the Fed will come to the rescue but if we get a recession in the US then it takes a long time after the first cut before the market bottoms.
Companies
Numbers go up: Palantir enjoyed a blowout quarter as sales jumped by nearly 50% to hit $1bn in revenues for the first time, with net income rose 144%. Shares ticked up 4% in after-hours trade to $168, having risen over 4% in the normal session on Monday, as the number was well above the $940mn expected by the Street. The data intelligence company also raised its full-year revenue guidance to $4.150bn, up from the prior $3.9bn, with Q3 revs also seen above previous estimates. CEO Alex Karp was incredibly bullish as ever: “We’re very sorry our haters are disappointed.”
Tesla rallied after its board awarded CEO Elon Musk a pay package worth almost $30bn. It’s a redo of the compensation plan struck down by a judge in January 2024. Musk is critical to the success of Tesla, so this move reduces the material risk that he disengages with the brand and should keep him at the carmaker.
In London this morning, investors raised a glass to Diageo’s results - shares rallied 6% as it signalled organic operating profit in 2026 would see mid-single-digit growth, suggesting the drinks maker is turning a corner with its cost-cutting programme. Sales are seen flat next year but management said they are now looking at shaving $625mn in costs, up from a previous target of $500mn. Have not been convinced that the alcohol industry faces its tobacco moment.
BP also rose as it lifted its dividend and reported a smaller-than-expected fall in underlying profits. Sequential quarterly profit growth from $1.38bn to $2.35bn looks positive - albeit still down 15% from a year before it was well ahead of the $1.8bn expected. The company also looks to be going after more savings to placate Elliott – today it has committed to a new review only a few months after it said it would cut costs by $4-5bn by 2027. Good quarter and more savings to come but Brent is at $68, not the $80 it it in January and pries this morning are softer back below the 200-day line
Elsewhere, we have Smith & Nephew shares rising 12% on strong results and one of the best performers on the FTSE 100 this year, Fresnillo, jumped 7% after its quarterly update. It’s been a huge beneficiary of rising gold and silver prices this year.
Finally, meme stock favourite Opendoor rallied 18%.
The FTSE 100 was up 0.6% with bigger gains seen in Frankfurt and Paris of more than 1% for the session. Wall Street rallied even further with the Nasdaq and Russell 2k both rising 2% and the broad S&P 500 up almost 1.5% with Meta, Google, Nvidia up over 3% and Tesla and Microsoft both rising over 2%. European stock markets are firmer this morning with the FTSE up a third of a percent early doors with support from Diageo, Fresnillo, BP and Smith & Nephew.
A quick word on the big picture. We had a proper interruption to this melt-up grind higher, which is the kind of correction that is needed. But the market likely requires stronger medicine than this. Market pricing has moved aggressively in favour of a September rate cut by the Federal Reserve, after a weak July jobs report and ugly revisions to May and June signalled the US labour market may finally be cracking under the pressure of tariffs. Markets seem hopeful that the Fed will come to the rescue but if we get a recession in the US then it takes a long time after the first cut before the market bottoms.
Companies
Numbers go up: Palantir enjoyed a blowout quarter as sales jumped by nearly 50% to hit $1bn in revenues for the first time, with net income rose 144%. Shares ticked up 4% in after-hours trade to $168, having risen over 4% in the normal session on Monday, as the number was well above the $940mn expected by the Street. The data intelligence company also raised its full-year revenue guidance to $4.150bn, up from the prior $3.9bn, with Q3 revs also seen above previous estimates. CEO Alex Karp was incredibly bullish as ever: “We’re very sorry our haters are disappointed.”
Tesla rallied after its board awarded CEO Elon Musk a pay package worth almost $30bn. It’s a redo of the compensation plan struck down by a judge in January 2024. Musk is critical to the success of Tesla, so this move reduces the material risk that he disengages with the brand and should keep him at the carmaker.
In London this morning, investors raised a glass to Diageo’s results - shares rallied 6% as it signalled organic operating profit in 2026 would see mid-single-digit growth, suggesting the drinks maker is turning a corner with its cost-cutting programme. Sales are seen flat next year but management said they are now looking at shaving $625mn in costs, up from a previous target of $500mn. Have not been convinced that the alcohol industry faces its tobacco moment.
BP also rose as it lifted its dividend and reported a smaller-than-expected fall in underlying profits. Sequential quarterly profit growth from $1.38bn to $2.35bn looks positive - albeit still down 15% from a year before it was well ahead of the $1.8bn expected. The company also looks to be going after more savings to placate Elliott – today it has committed to a new review only a few months after it said it would cut costs by $4-5bn by 2027. Good quarter and more savings to come but Brent is at $68, not the $80 it it in January and pries this morning are softer back below the 200-day line
Elsewhere, we have Smith & Nephew shares rising 12% on strong results and one of the best performers on the FTSE 100 this year, Fresnillo, jumped 7% after its quarterly update. It’s been a huge beneficiary of rising gold and silver prices this year.
Finally, meme stock favourite Opendoor rallied 18%.
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