Apple’s iPhone revenue fell for a second consecutive quarter, a soft demand signal investors hope will turn around once the company releases new AI features in the fall. For its quarter ended in June, iPhone sales declined nearly 1% from the prior year to about $39.3 billion and overall Apple revenue increased about 5% to $85.8 billion. Both figures beat Wall Street expectations. Apple has also been trying to catch up to rivals in the artificial-intelligence arms race, unveiling an array of new AI tools in June that investors hope will encourage users to upgrade their iPhones. Microsoft, Meta Platforms and Alphabet have spent billions on so-called generative AI, spurred on by the release of startup OpenAI’s ChatGPT software released in late 2022. The world’s biggest technology companies have yet to unveil a strategy that points to reliable AI-infused profits in the near future, especially as many have ramped up spending. Apple’s AI strategy, as outlined by the company, so far has come at a far lower cost compared with peers but depends significantly on whether customers will be convinced to buy new phones.

The Swiss market ended on a positive note on Wednesday, in line with most of the markets across Europe, amid expectations of a rate cut by the Federal Reserve in September. Trading was halted twice in the Swiss market due to a technical issue. The benchmark SMI ended with a gain of 35.42 points or 0.29% at 12,317.44, after moving in a tight band between 12,282.02 and 12,352.11. VAT Group rallied about 3.5%. SIG Group advanced nearly 3%, and Sandoz Group gained nearly 2.5%. Lonza Group, Givaudan and ABB ended almost 1.5% up. Partners Group, Sonova, Schindler Ps, Alcon, Nestle and Logitech International gained 0.5 to 1.2%. Sika ended down 0.85% and Swiss Re ended lower by 0.55%. Lindt & Spruengli, Zurich Insurance, Richemont and UBS Group edged down marginally. A report from UBS & CFA Society said the Swiss investors' sentiment index dropped by 8.1 points from the previous month to 9.4 in June. According to UBS, which collaborates with the CFA Society Switzerland to release the indicator, survey participants were forming a larger consensus that lower short-term rates are anticipated in Switzerland, the Eurozone, and the U.S.

Europe
European stocks closed sharply lower on Thursday, weighed down by some disappointing economic data from the U.S., and a sell-off in bank stocks after the Bank of England lowered its key interest rates. Downbeat eurozone PMI and unemployment data, and some disappointing earnings weighed as well on markets. The Bank of England lowered its benchmark rate for the first time since the onset of the coronavirus pandemic as inflation receded and the underlying growth momentum remained weaker. In a very close call, the Monetary Policy Committee, led by Governor Andrew Bailey, decided to cut the bank rate by a quarter-point to 5% from 5.25%, which was the highest since early 2008. Policymakers expect inflation to rise to around 2.75% in the second half of the year as declines in energy prices last year fell out of the annual comparison. However, inflation is projected to fall back to 1.7% in two years' time and to 1.5% in three years. The pan European Stoxx 600 dropped 1.23%. The U.K.'s FTSE 100 ended down 1.01%, while Germany's DAX and France's CAC fell 2.3% and 2.14%, respectively. The Switzerland market was closed for National Day holiday. Among other markets in Europe, Austria, Belgium, Finland, Greece, Iceland, Netherlands, Norway, Poland, Portugal, Spain and Sweden closed with sharp to moderate losses. Greece, Iceland and Russia ended modestly lower. Turkiye closed higher, while Denmark ended flat. In the UK market, Natwest Group tumbled more than 8%, HSBC Holdings lost 6.5%, Standard Chartered ended down nearly 6% and Lloyds Banking Group lost 5.7%, while Barclays closed 4.7% down after posting a fall in second-quarter profit. Melrose Industries tanked 12.5% and Schrodders plunged 9.7%. Antofagasta, Prudential, EasyJet, Glencore, IMI, ICG, Beazley, IHG, Entain, Ashtead Group and Weir Group lost 2.5 to 4.7%. Next rallied nearly 8.5% after raising its guidance for the year. Smith & Nephew gained about 6.8% on strong half-year results.

United States
After extending yesterday's rally early in the session, stocks moved sharply lower over the coursed the trading day on Thursday. The major averages all showed substantial moves to the downside. The tech-heavy Nasdaq plunged 405.25 points or 2.3 percent to 17,194.15, the S&P 500 tumbled 75.62 points or 1.4 percent to 5,446.68 and the Dow slumped 494.82 points or 1,2 percent to 40,347,97 The sell-off on Wall Street comes as some disappointing data led to concerns about the outlook for the U.S. economy, offsetting optimism about a near-term interest rate cut by Federal Reserve. The Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at an accelerated rate in the month of July. The ISM said its manufacturing PMI fell to 46.8 in July from 48.5 in June, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.8 percent. With the bigger than expected decrease, the manufacturing PMI dropped to its lowest level since hitting 46.6 in November 2023. The Labor Department also released a report showing first-time claims for U.S. unemployment benefits rose to their highest level in almost a year in the week ended July 27th. The report said initial jobless claims climbed to 249,000, an increase of 14,000 from the previous week's unrevised level of 235,000. Economists had expected jobless claims to inch up to 236,000. Semiconductor stocks saw a substantial pullback following the rally seen in the previous session, with the Philadelphia Semiconductor Index plunging by 7.1 percent. Airline stocks also showed a significant move to the downside, dragging the NYSE Arca Airline Index down by 5.6 percent. Considerable weakness was also visible among oil service stocks, as reflected by the 4.0 percent nosedive by the Philadelphia Oil Service Index.

Asia
Increased concerns about a slowdown in economic growth in the USA pushed the East Asian stock markets into the red at the end of the week, in some cases massively. The losses were most pronounced in Tokyo, where the Nikklei-225 fell by 4.7 per cent. The index is thus at its lowest level since the beginning of February. The continued strength of the yen, which is sought after as a "safe haven" and with the hawkish statements of the Bank of Japan (BoJ), is also weighing on the index.

Bonds
In the U.S. bond market, treasuries moved sharply higher amid renewed concerns about the economic outlook. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 13.3 basis points to 3.976 percent.

Analysis
UBS upgrades Siltronic to Neutral (Sell) – Target EUR 77 (67)
JP Morgan raises T-Mobile US target to USD 220 (200) – Overweight
Citi lowers Just Eat Takeaway target to EUR 19.50 (21) – Buy

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