Summary of AI Trade and Luxury Stocks Surge

Date: 15 July 2026

Author: Kathleen Brooks, Research Director UK

Key Takeaways

• ASML alleviates concerns regarding the sustainability of the AI trade.
• Emergence of a two-tier AI trade landscape.
• The US economy experiences a "Goldilocks moment".
• Disappointing growth figures from China.
• US wealth drives sales at European luxury brands.
• Shift in luxury consumer base from China to the US.

Market Overview

Oil prices have risen due to the reinstatement of the US naval blockade of the Strait of Hormuz, with Brent crude trading above $86 per barrel. While European stock futures are down, US futures, particularly the Nasdaq, are expected to gain.

ASML's Positive Outlook

ASML, a leading supplier of chip-making equipment, reported a 21% sales growth last quarter, reaching EUR 9.3 billion, surpassing forecasts. The company anticipates sales growth of EUR 43 billion to EUR 45 billion for the year, significantly above the expected EUR 39.6 billion. ASML's strong demand for lithography machines indicates a robust future for the AI sector, easing fears about the sustainability of the AI rally.

The Two-Tier AI Trade

The positive outlook from ASML has boosted South Korea's Kospi index, despite a recent sell-off. In contrast, IBM's stock plummeted nearly 25% after it reported lower sales due to canceled orders, highlighting a competitive environment where companies lagging in AI are penalized by investors.

The US's Goldilocks Moment

The June US Consumer Price Index (CPI) report suggests a stable economic environment, alleviating fears of imminent rate hikes by the Federal Reserve. This stability may support a broader stock market rally.

China's Economic Disappointment

China's Q2 growth came in at 4.3%, below expectations and the government's target range. The disparity between the thriving tech sector and a sluggish domestic economy, compounded by a property downturn, has negatively impacted Chinese equities and European markets.

Luxury Market Dynamics

Swiss luxury brand Richemont reported a 20% increase in sales, driven by a 27% rise in the US market. This shift indicates that US consumers, buoyed by stock market gains, are now the primary drivers of luxury sales, surpassing previous reliance on Chinese consumers.

Conclusion

The enthusiasm for AI remains a dominant theme in the market, with implications for various sectors. A less hawkish Federal Reserve could provide relief to underperforming sectors, while the dollar remains weak against other major currencies.