Before the bell: Bel20 hits highest level since 2007

Quarterly results from Tesla and Alphabet came in mixed, with Tesla notably disappointing. Meanwhile, several global stock indices are reaching record highs.

18 years. That’s how long Belgian investors have waited to see the Bel20 return to these price levels. The index is now just 160 points away from setting a new all-time high. Could a trade deal between the European Union and the United States push it across the finish line? It’s certainly possible. Yesterday, Japan’s Topix index surged 3% on news of a similar deal between Japan and the U.S. Belgian stocks felt the ripple effects: the chemicals sector led the charge with Azelis (+3.0%), Syensqo (+2.4%), and Solvay (+2.0%) all rising. However, the chip sector struggled after ASMI reported a disappointing order book, dropping 10.4%, and dragging down peer Melexis by 3.8%.

In Asia, the Topix is setting fresh records again today, although Japanese interest rates have also climbed to levels not seen since 2008. Investors are watching how markets react to the first earnings results from the Magnificent 7. IT firm Econocom reported solid operational results, but net profit plunged due to a large write-down on one of its sold divisions. Pharma giant Roche also reported strong figures this morning. Attention now shifts to the ECB interest rate meeting this afternoon.

Tesla braces for a transitional year

“A transitional year.” When a CEO uses those words, it’s often a red flag for investors. The question is whether that also applies to Tesla. During yesterday’s earnings call, Elon Musk warned that the company is facing a few tough quarters. On the one hand, Tesla is set to lose government subsidies for electric vehicles in Q4. On the other, it remains to be seen how the trade war will impact operations. Revenue fell 12% year-on-year to 22.5 billion dollar, while earnings per share landed at just 0.40 dollar. Still, Tesla can redirect focus to the upcoming launch of its Robotaxi, which may offer investors a ray of hope in the months ahead. A lower open is likely today.

Alphabet prepares to spend big

10 billion dollar. That’s how much more Alphabet—Google’s parent company—plans to invest this year to stay ahead in the race for AI dominance. Its quarterly results were otherwise strong: revenue came in at 96.4 billion dollar, beating analyst expectations by 2.4 billion dollar, and earnings per share hit 2.31 dollar, also beating the consensus by 12 cents. But the wildcard is how investors will respond to the 10 billion dollar AI bill. In total, Alphabet expects to spend a hefty 85 billion dollar this year. Whether that will lead to additional revenue is still unclear. For example, Google is now defaulting to its new Gemini AI search interface, which generates elaborate answers to user queries. But here’s the catch: ads are often nowhere to be seen because users stay within Gemini instead of clicking through traditional search results. It’s now up to Alphabet to prove that its AI investments are not just about staying relevant, but also about generating future profits. The company’s CFO noted yesterday that AI-related investments will rise even further in 2025.

Did you know…

that the ECB is widely expected to hold rates steady at today’s meeting? Economists believe we are nearing the end of the current rate-cutting cycle in Europe.

This article was translated from Dutch and was originally published on Spaarvarkens.be.