Before the bell: Strong demand for Chinese and Japanese stocks this morning

Global stock indices hit new highs on strong earnings, low inflation, and hopes for a US rate cut

IPositive market sentiment continues. In Europe, Maersk (+5.4%) and DHL Group (+2.4%) were among the top gainers as investors grew more optimistic about the logistics sector. In the US, both the S&P 500 (+1.1%) and Nasdaq (+1.4%) closed at record levels following the release of the US inflation report. Inflation data showed no significant increase despite trade tariffs. While not surprising, this fueled optimism as it now seems almost certain the US Federal Reserve will cut interest rates next month. United Airlines (+10.2%) also benefited from weak results at low-cost rival Spirit Airlines (-19%) and from July airline ticket prices rising by 4 percent.

In Japan, buying momentum remains strong: the Nikkei (+1.3%) and Topix (+0.8%) both reached new records. In Hong Kong, Tencent (+3.1%) and Alibaba (+4.4%) led gains, with the Hang Seng Index up 2 percent. Later today, markets will watch for a reaction to the takeover bid Alphabet has received for its Google Chrome browser. Perplexity has offered 34.5 billion dollars to acquire it.

In the Benelux, Avantium stood out: the plant-based plastics maker secured more time to repay its debt and a lower interest rate, but will issue shares as part of the deal. Investors will also be watching for after-market earnings from Ascencio, the retail park operator. Cisco, JD.com, and Nextensa are also set to report.

Doing it yourself pays off

Everyone knows Alibaba as one of the major e-commerce players, but JD.com is often overlooked. In terms of revenue, JD.com is one of China’s largest retailers, selling electronics, home appliances, clothing, beauty products, and more. The company will report its quarterly results this afternoon, with focus on profitability and whether Chinese consumers are spending more again. JD.com stands out in China because it owns its entire logistics network—including warehouses, distribution centers, and delivery—allowing it to sell directly to customers without intermediaries. This is interesting if you believe in e-commerce players that can benefit from the upcoming AI boom. At Spaarvarkens, however, we still prefer Alibaba. While it has a similar e-commerce division, Alibaba is much more than that: its rapidly growing cloud division accounts for a significant share of profits, and its artificial intelligence potential is substantial. Still, JD.com’s results will be worth following for insight into Chinese consumer purchasing power.

Just Google Perplexity

34.5 billion dollars—that’s how much start-up Perplexity wants to pay for Alphabet’s Google Chrome browser. The bid comes at an inconvenient time for the tech giant, which is currently facing court scrutiny over its dominant position in the online search market. Later this month, the court will propose potential remedies, making the unsolicited offer particularly awkward. Google is unlikely to want to sell its flagship product, the world’s most widely used browser. However, Perplexity may not be the only interested party—could a higher offer emerge? We are not worried about Alphabet, but Apple is another story. Apple receives roughly 20 billion dollars each year from Google to make its search engine the default in the Safari browser. If the court forces Alphabet to end that deal, Apple could lose substantial revenue and profit. Still, Alphabet would likely delay any changes for years through legal appeals.

Did you know…

The US start-up Perplexity previously offered 50 billion dollars to acquire TikTok’s US division? So far, there is no information on whether TikTok will be sold in the US, or to whom.

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