Global equity markets were under pressure last week, with the MSCI AC World Index down 2.1% in USD. The S&P 500 and the STOXX 600 both finished the week down 2.4% in USD as the euro weakened. In the US, the “Mag 7” declined 2.5%, with Apple the weakest performer, falling almost 5% over the week. Smaller-cap stocks underperformed, with the Russell 2000 down 3.3%, and the energy sector was the weakest, finishing the week down 4.2%. China fell 3.3%, with Chinese technology stocks under heavy pressure, while Japan gained 2.7% in local currency and declined only 0.6% in USD making it an outperformer.

Markets sold off as trade tensions resurfaced between the US and China, while a trade deal has still not been reached. Tensions escalated after China announced potential restrictions on rare earth exports, launched an antitrust investigation into US chipmaker Qualcomm, and announced curbs on shipments of certain battery components. The potential rare earth restrictions could have significant implications for global supply chains, as China mines about 70% of these minerals and currently accounts for 90% of global refining capacity. Rare earth materials are critical in the manufacturing of smartphones, electric vehicles, and military equipment, among other applications. Although the tone softened over the weekend, these developments highlight the relatively balanced power dynamic between the US and China, as the latter has been preparing for this trade confrontation for years.

Last week, AMD (+30.5%) rallied after it and OpenAI announced a multiyear agreement under which AMD will supply AI chips (GPUs) to OpenAI, deploying 6 gigawatts of compute over time. Most other semiconductor names declined during the week, with semiconductor equipment maker KLA down 10.8% and Qualcomm down 9.2%, also affected by the investigation news flow in China. Meanwhile, Oracle sold off early in the week on news that profitability would be lower than expected in its AI cloud business but recovered in the second half of the week as investors anticipated margins to improve with scale. The debate continues amongst investors about the AI circular economy. There is also more companies such as Oracle or CoreWeave that rely on debt to fuel their organic growth.

In Europe, ABB sold its Robotics division to SoftBank, underscoring that robotics is increasingly dominated by Asian players. BMW (-9.2%) issued a profit warning, revising its 2025 automotive EBIT margin to 5–6% from 5–7% due to US tariffs and continued headwinds in China. Ferrari (-19.4%) sold off after presenting medium-term targets at its capital markets day that fell short of expectations, particularly regarding its fully electric vehicle lineup. Defense stocks were also under pressure in Europe, as were technology names such as ASML.

The second-quarter earnings season will begin this week, with S&P 500 earnings expected to grow 7% year over year. This would mark the ninth consecutive quarter of year-over-year earnings growth for the index. The Technology and Healthcare sectors are expected to exhibit the strongest growth during the quarter. Investors’ focus will be on the resilience of consumer spending and how corporates are navigating the impact of tariffs.

In contrast, the near-term outlook in Europe is less encouraging, with earnings projected to contract 2% year over year in the second quarter (and still -1% excluding energy). The automobile and construction sectors are expected to show the weakest growth.