Key facts
- ASML, a top supplier of chip-making equipment, is expected to report an 8.8% rise in Q2 net profit and a 14% revenue increase.
- IBM's stock dropped 25% after it reported lower-than-expected revenue growth and earnings forecasts.
- The market sentiment indicates that ASML needs to deliver a substantial earnings beat.
- China's economic growth slowed to 4.3% in the first half of the year.
- The Bank of Canada is widely anticipated to maintain its current interest rates.
ASML, Europe's most valuable company and a critical supplier of advanced chip-making equipment, is set to report its second-quarter earnings on Wednesday. The company is the sole producer of EUV lithography systems, essential for manufacturing cutting-edge chips, with analysts forecasting an 8.8% rise in net profit to 2.61 billion euros and a 14% increase in revenue to 8.8 billion euros. Investors are also anticipating an upward revision to the company's full-year revenue guidance, currently between 36 billion and 40 billion euros.
The current market sentiment suggests that ASML must deliver a significant earnings beat to meet expectations. This is underscored by the recent performance of IBM, which saw its shares plummet by 25% after failing to keep pace with the shift in corporate spending towards data-center infrastructure. IBM projected a mere 1% revenue rise and forecast adjusted earnings per share of $2.93, falling short of market expectations of $3.02.
In broader market movements, South Korea's KOSPI surged by 8% amid a surprise slowdown in U.S. inflation, which cooled expectations for further interest rate hikes. Brent crude futures held steady above $85 a barrel, though they did not reach new peaks as investors monitored the situation in the Strait of Hormuz. China's economic growth for the first half of the year slowed to 4.3%, below economists' predictions, but this had minimal market impact as investors anticipate potential fiscal stimulus.
Later on Wednesday, the Bank of Canada is widely expected to maintain its current interest rates.