Tesla’s net income dropped 16% in the second quarter, marking another quarter of steep declines at the company as automotive sales continue to fall. Speaking with Wall Street on Wednesday, Tesla Chief Executive Elon Musk highlighted plans to release a lower-priced Model Y electric vehicle, spoke about his hopes for a new pay package from the company’s board in fall and talked up plans to “greatly expand” Tesla’s robotaxi service to half the country by the end of the year. Tesla reported $1.17 billion in net-income, down from $1.4 billion the year prior. The company also reported $22.5 billion in revenue for the quarter, down 12%. Revenue from its automotive business fell 16%. The energy business fell 7%. Tesla’s finances have been in a free fall since last fall, after Musk’s entrance into partisan politics brought protests and worsened the company’s reputation in once-popular regions like California and Europe. Musk has encouraged investors to focus their attention on future revenue streams stemming from its investments in autonomous vehicles and robotics. In June, Tesla launched a small fleet of robotaxis near its headquarters in Austin, Texas. The company faces more headwinds going into the third quarter as the federal government rewrites policies around EV incentives, eliminating the $7,500 consumer tax credit, as well as many of the valuable carbon credits paid by other car manufacturers to Tesla to offset the sale of gasoline-powered vehicles. Tesla rose 0.1% ahead of second-quarter earnings from the maker of electric vehicles. Coming into the report Wednesday, Tesla has risen three of the past five days but has declined nearly 18% this year, according to Dow Jones Market Data. After-hours Tesla shed 4.4%.

The SMI gained 1.5 per cent on Wednesday to 12,077 points. All 21 SMI stocks closed higher. A total of 22.01 (previously: 18.91) million shares were traded. The day's winner in the SMI was Alcon, up 3.5 per cent, though there was no news driving the move. The share has lost solid 9 per cent since the beginning of the year and is therefore lagging behind the SMI, meaning that there is some catching up to do, according to market participants. The second strongest performer was Lonza, gaining 2.8 per cent. The contract manufacturer for the pharmaceutical industry upgraded its sales and margin forecast after a strong first half-year. Nestlé advanced 0.3 per cent. The food company will publish its financial results on Thursday, as will pharmaceutical manufacturer Roche. Its shares advanced by 2.8 per cent. Rising market interest rates helped UBS shares climb 2 per cent. ABB (+2.3), Kühne + Nagel (+2.6%) and Sika (+2.1%) also performed above average.

Europe
The European stock markets recorded substantial gains on Wednesday, as investors welcomed the trade agreement between the United States and Japan and reacted to a number of quarterly earnings releases. The Stoxx Europe 600 index edged up 1.1% to 550.2 points. In Paris, the CAC 40 and SBF 120 gained 1.4% and 1.3% respectively. The DAX 40 rose by 0.8% in Frankfurt and the FTSE 100 picked up 0.4% in London. AUTOMOTIVE SECTOR: automotive stocks advanced strongly following the trade agreement between the United States and Japan. Stellantis jumped 9% in Paris, Mercedes-Benz increased by 5.8% in Frankfurt and Volkswagen climbed 6.1%. Renault gained 2.7% after announcing a 1.3% rise in sales volumes in the first half of the year. ALSTOM (+6%): the rail equipment manufacturer confirmed on Wednesday its outlook for its 2025-2026 financial year and for the medium term, after posting a rise in sales in the three months to the end of June. DASSAULT AVIATION (-8.5%): on Tuesday, the aircraft manufacturer reiterated its targets for 2025, following mixed first-half results. THALES (-2.4%): on Wednesday, the technology and defence group lifted its sales growth target for 2025, having reported an increase in its first-half results, thanks to the strength of its defence business. UBISOFT (+5.5%): on Tuesday evening, the video games publisher announced revenues well below its forecasts for the first quarter, although confirming its full-year targets. VALNEVA (+15.9%): the vaccine manufacturer seems to have benefited from the halo effect surrounding the biotech Abivax, whose share price soared by more than 500% on Wednesday after the presentation of positive clinical results for its drug candidate against moderately to severely active haemorrhagic rectocolitis. In the wake of Abivax, the share prices of several French biotechs took off on Wednesday.

United States
Stocks rallied Wednesday, with the S&P 500 and Nasdaq Composite setting new closing highs, as the U.S. and Japan reached a trade agreement. These stocks moved Wednesday: Alphabet fell 0.6% ahead of its quarterly earnings report. Alphabet had closed higher for 10 straight sessions, rising 9.7% over the span. Texas Instruments reported second-quarter earnings and revenue that beat analysts’ estimates but shares of the semiconductor company declined 13% after it issued a disappointing earnings forecast for the third quarter. AT&T was up 1.2% as the telecommunications company posted adjusted earnings in the second quarter of 54 cents a share on revenue of $30.8 billion, topping analysts’ estimates on both metrics. GE Vernova rose 15% after the power company reported better-than-expected second-quarter earnings and raised its full-year financial guidance. Second-quarter operating profit and revenue at SAP rose from a year earlier and the German enterprise software maker backed its previous full-year guidance. Shares listed in the U.S., however, were down 5%. Cloud revenue in the second quarter rose 24% to €5.13 billion but missed estimates of €5.18 billion. Enphase Energy was down 14% after the maker of solar-power inverters topped earnings and revenue estimates in the second quarter but said it anticipates third-quarter revenue of $330 million to $370 million versus consensus of $368.5 million. Cal-Maine Foods rose 14% after reporting a large jump in fiscal fourth-quarter earnings and revenue that soared 72% to $1.1 billion as the egg producer and distributor said its net average selling price per dozen eggs increased 55% to $3.31 and it sold 311.4 million dozen shell eggs, up 9% from a year earlier.

Asia
The positive mood following the trade agreement between the US and Japan continued on Thursday on most Asian stock markets. In Japan, the Nikkei 225 rose by a further 1.6 per cent to 41,812 points after the previous day's rally. In China, investors are hoping for a US agreement with the country, with the HSI in Hong Kong climbing 0.6 per cent. On the Chinese mainland, the Shanghai Composite added 0.5 per cent. The Australian S&P/ASX 200 fell 0.3 per cent after the previous day's gains. Macquarie dropped 4.8 per cent following weak quarterly figures, with the CFO set to step down at the end of 2025. Fortescue reported an increase in annual iron ore deliveries and the cancellation of green hydrogen projects in the US and Australia, with the share price jumping 4.2 per cent.

Bonds
Long-dated U.S. government debt yields edged higher on Wednesday. The 10-year Treasury note yield climbed 5 basis points to 4.39%. Home prices rose to a new high last month, indicating that a recovery in the housing market this year is likely off the table.

Analysis
UBS increases Temenos target price to CHF 48.50 (46) – Sell
Vontobel downgrades Givaudan target price to CHF 4,750 (4,900) – Buy
MWB raises Cicor Technologies to Buy (Hold) – target price CHF 200 (135)