In the United States, equities traded within a narrow but positive range last week, as developments in the Middle East and corporate earnings continued to drive market direction. Markets rose earlier in the week amid increasing hopes of a sustained ceasefire, with a planned meeting between the US and Iran scheduled for Wednesday in Islamabad. However, the meeting did not take place, although Donald Trump announced an extended ceasefire with no defined end date. Markets later lost momentum as the US blockade of the Strait of Hormuz continued, alongside threats to destroy any Iranian vessel approaching the area. Iran also seized two ships on Thursday; that said, the US did not consider this a breach of the ceasefire, as the vessels were not American. For the week, both the S&P 500 and the NASDAQ Composite closed higher, rising by 0.75% and 1.84%, respectively.
In corporate developments, one of the most significant stories was the announcement of a new CEO at Apple Inc. John Ternus, a two-decade veteran of the company, will succeed Tim Cook, who has led the business since 2011 after taking over from founder Steve Jobs. During Cook’s tenure, Apple experienced substantial growth, with its market capitalisation increasing from approximately $300bn to over $4tn. He also oversaw the expansion of manufacturing in China and the transition towards a more services and cloud-based business model. Ternus, formerly head of engineering, is regarded as a more product-focused innovator compared to Cook, who came from an operational background. One of the key challenges facing Ternus will be the development and implementation of artificial intelligence, with Apple perceived to be lagging behind peers such as Meta Platforms and Alphabet Inc. Elsewhere, USA Rare Earth is set to acquire Serra Verde, a Brazilian miner and processor of rare earth minerals, in a deal valued at $2.8bn. The transaction is strategically significant, with the White House having pledged $1.6bn to support the company’s ambition to become a leading domestic supplier of rare earth materials, with plans to mine minerals and develop magnets within the US. This is particularly notable given that Brazil holds the second-largest reserves of rare earth minerals globally, behind China. Serra Verde operates the only active rare earth production facility in Brazil, and its Pela Ema site is considered the only location outside Asia capable of supplying all four key magnetic rare earth elements—neodymium, praseodymium, dysprosium, and terbium, at scale. These materials are widely used in the production of electric vehicles, wind turbines, robotics, and defence systems.
Finally, shareholders of Warner Bros. Discovery voted to accept an offer from Paramount Global to acquire the studio for $110bn, bringing an end to one of the most high-profile takeover sagas in recent years. While Netflix had initially been expected to acquire the business, Paramount ultimately prevailed with a series of improved offers. The deal remains subject to regulatory approval due to potential competition concerns.
In the technology sector, Anthropic and Amazon agreed a major partnership, with Anthropic committing to spend over $100bn on chips and computing capacity from Amazon over the next decade. This investment will provide the AI firm with access to five gigawatts of computing power for its Claude model, which has rapidly become one of the most advanced globally. The partnership builds on earlier agreements with Alphabet Inc. and Broadcom, as AI firms seek to secure increasing levels of computing power to meet rising demand. Anthropic has already experienced several service outages this year, as demand for its model has outpaced available capacity. Power availability is expected to remain a critical constraint for AI development, with requirements set to grow as more data centre capacity is deployed for model training.
In Europe, equity markets declined last week as uncertainty surrounding Iran persisted. Despite the extension of the ceasefire on Tuesday night, the targeting of vessels by both the US and Iran indicated that a clear resolution to the conflict remained out of reach. At the same time, European earnings were mixed. Shares in L’Oréal rose by 9% on Thursday after the company reported its strongest results in two years. In contrast, EssilorLuxottica shares fell by 4% following a decline in revenues compared with previous quarters. For the week, both the Euro Stoxx 50 and the STOXX Europe 600 closed lower, down -1.79% and -1.71%, respectively.
In the United Kingdom, the FTSE 100 declined last week amid ongoing tensions between the US and Iran and the absence of any meaningful breakthrough. Defence and pharmaceutical companies recorded the largest declines during the week, while Fresnillo, the world’s largest silver producer, also weakened due to a fall in silver prices. For the week, the FTSE 100 fell by -2.18%.
In corporate developments, Associated British Foods announced plans to demerge Primark after 65 years, paving the way for the retailer to list independently on the FTSE 100. The planned separation is expected to take place towards the end of 2027 and would rank among the largest demergers in UK history, allowing Primark to operate as a standalone company. Primark currently operates more than 480 stores across 19 countries and began as a single store in Dublin in 1969.
