Market Brief: CPI in Line, AI Stocks Rally, Robotics IPO Overwhelmed
US July CPI came in line with expectations, with annual inflation easing to 3.4% and core CPI slowing to 2.5%. Traders kept odds of a September Fed rate hike at 45%, while the S&P 500 hovered near record highs led by optical communications and AI stocks. The dollar and gold rose, and crude futures were flat.
The US 10-year Treasury auction yield hit the highest since the 2008 financial crisis. Meanwhile, the Trump administration is considering capital gains tax cuts ahead of midterm elections, which would most benefit the wealthy.
China's central bank said in its Q2 monetary policy report that it will gradually increase the frequency of overnight reverse repos to improve policy rate transmission. It will conduct the first intra-month overnight reverse repo operation.
Tencent's Q2 revenue grew 11% year-on-year, beating expectations, but AI compute purchases pushed capital expenditure to ¥52.78 billion, turning free cash flow negative. In the earnings call, management said AI investment returns are emerging, WorkBuddy's gross margin has improved significantly, and compute leasing provides a safety cushion.
Unitree's STAR Market IPO final winning rate was about 0.018%, a record low, with online subscriptions reaching 9.7846 million, a record high for the STAR Market. DeepSeek V4 Pro officially launched late at night, with tests approaching Fable 5 and overlapping with Grok 4.6.
Optical communications giant Coherent beat expectations on earnings and guidance, citing strong demand for the new fiscal year, but shares still fell 8% after hours. Cerebras saw unexpected hardware revenue decline, facing demand volatility in its challenge to Nvidia, and shares dropped 17% after hours. Cisco reported record quarterly revenue with $4 billion in AI orders, and gave strong guidance, but shares initially rose 8% then fell 6% after hours. Nebius Q2 revenue surged 454% year-on-year, with AI cloud sales up 514%, and shares soared 34%.
Korean media reported that Samsung and SK Hynix are considering massive dividends and buybacks, potentially totaling over $140 billion. Google released the Pixel 11 series, raising prices by $100 with minor hardware and design upgrades, and its wearables will now track insulin resistance, a step toward comprehensive glucose monitoring.