Category: Market News

Bank of America has raised its year-end S&P 500 target to 7,400 from 7,100 while introducing a 12-month forecast of 7,800, reflecting expectations for limited gains in US equities despite projected earnings growth.

The revised year-end target implies approximately 3% downside from current market levels, while the 12-month projection represents potential upside of about 2%.

Strategist Savita Subramanian said in a note this week that investors could encounter a more favourable entry point following a market pullback.

She noted that US equities have experienced only one correction of at least 5% this year, occurring in March, compared with an average of three in a typical year. Approximately half of the bank’s bear-market indicators have also been triggered.

BofA identified several risks to its outlook, including inflation, Federal Reserve interest-rate policy, corporate earnings quality and credit conditions.

Subramanian highlighted a difference between current equity valuations and the bank’s inflation projections, noting that the market’s price-to-earnings multiple implies substantially lower inflation than BofA anticipates.

The strategist also drew a historical comparison with the 1970s, when inflation risks, a weaker US dollar and Federal Reserve rate increases accompanied a stock market decline of more than 40%.

Regarding the US midterm elections, Subramanian downplayed the potential impact of a Democratic sweep on capital expenditure, arguing that state governments are largely driving investment in artificial intelligence infrastructure.

Her longer-term outlook for equities remains positive, supported by expectations that companies will achieve productivity gains by replacing labour with scalable business processes.

BofA projects S&P 500 earnings growth of 33% in 2026 and 12% in 2027, although its index targets suggest that higher corporate earnings may not translate into equivalent gains in share prices over the forecast period.

The bank’s equity preferences include large-cap value stocks, selected opportunities among small- and mid-cap companies and the equal-weighted S&P 500 rather than the market-capitalisation-weighted benchmark.

The forecasts reflect BofA’s expectation of a potential near-term pullback followed by limited gains over the next 12 months, alongside continued earnings expansion.

Capital Economics expects the S&P 500 to decline to 6,500 by the end of 2027, down approximately 21% from its forecast of 8,250 for the end of 2026, as the firm assesses the potential consequences of a reversal in artificial intelligence-related stock valuations.

Chief economic adviser John Higgins said in a note this week that he believes the AI investment cycle is approaching the later stages of a bubble, with US equities likely to experience the largest impact if valuations reverse.

Higgins estimates that the eventual decline in the S&P 500 from its peak to its trough could reach at least 30%, exceeding the difference between the firm’s two year-end forecasts.

He pointed to historical market performance, noting that declines of 30% or more have occurred seven times over the past century. The collapse of the dot-com bubble provides the closest comparison in his assessment.

Although Capital Economics expects a downturn in US equities to spread to other stock markets, the firm anticipates a smaller impact internationally, reflecting the generally lower weighting of technology companies in markets outside the United States.

The implications for government bonds could also differ from those observed following the dot-com collapse.

Capital Economics expects developed-market 10-year sovereign bond yields to decline modestly by the end of 2027 but does not anticipate a Treasury rally comparable to the one that followed the earlier technology downturn. The firm attributes this difference to more limited potential for a reduction in term premia.

In corporate credit markets, Higgins expects US bonds to face some pressure because credit spreads are currently very low. Nevertheless, he forecasts a smaller impact than during the dot-com collapse.

The US dollar is another market that Capital Economics expects to be affected. Higgins considers the currency more overvalued than it was during the dot-com period and anticipates that it will weaken if the AI bubble bursts.

The firm’s outlook therefore combines a potential substantial decline in US equities with more moderate movements in sovereign bonds, some pressure on corporate credit and depreciation of the dollar. These remain forecasts based on its assessment of AI-related market risks.

Time To ACT plc (AQSE:TTA) announced the creation of a new Thermal Processing division, with the core group trading profitably over the summer and expecting strong orders in September.

Chris Heminway, CEO: “This update hopefully marks the moment in time from which we can shift investor focus from looking in the rear-view mirror to instead looking through the front windscreen — at a period of profitable growth and value creation.” Read more

Majestic Corporation Plc (AQSE:MCJ) reported interim results with revenue doubling to US$37m and profit before tax up 450% to US$3.3m for the six months ended June 2026.

Peter Lai, Chairman and CEO: “Doubling revenue and a substantial uplift in profitability show that the decisions we have taken are now paying off, as we said they would.” Read more

Coinsilium Group Limited (AQSE:COIN) announced a convertible loan facility and strategic advisory agreement with BeatingHeart, an AI-powered advertising content platform founded by global fashion brand Blvck Paris.

Eddy Travia, CEO: “BeatingHeart enables brands to create and adapt professional advertising and product content using hyperreal AI-generated models and environments, materially reducing the time, cost and complexity associated with conventional photography and film production.” Read more

Ajax Resources PLC (AQSE:AJAX) announced the appointment of a Qualified Person for its Pereira Velho Gold Project in Brazil, with drilling expected to commence in November 2026. Read more

Ethtry PLC (AQSE:ETHY) signed binding agreements to acquire Dunbar Energy, establishing a US data centre and energy platform with existing shareholders and vendors each set to hold 50% on completion.

Mike Murphy, Executive Chairman: “I see this as a defining opportunity for Ethtry. We are taking a decisive step towards building a US data centre and energy business, giving our existing shareholders the opportunity to participate in its development through the Company they already own.” Read more

All Aquis Stock Exchange Announcements

US equity futures indicated a strong start to Thursday’s session as falling oil prices and lower Treasury yields offered some relief following Wednesday’s late sell-off.

The prospective gains came after the Dow Jones Industrial Average ended the previous session at a three-month closing low, while the S&P 500 recorded its weakest close in more than a month.

Market attention remained focused on the Federal Reserve’s latest interest-rate increase and the possibility of further tightening before the end of the year.

Lower Oil Prices Support Pre-Market Sentiment

US crude futures declined 2.5% on Thursday, moving below $100 a barrel after falling more than 3% on Wednesday.

Oil prices retreated amid reports that Saudi Arabia was taking steps to prevent supply disruptions following the closure of its key East-West pipeline.

The decline helped alleviate some concerns about the inflationary impact of elevated energy costs.

Treasury yields also moved lower during the morning, with the benchmark 10-year yield retreating after finishing the previous session little changed.

Together, the movements in oil and government bonds provided a more favourable backdrop for US stock futures ahead of the opening bell.

Major Indices Reverse Earlier Gains on Wednesday

Wall Street had initially advanced on Wednesday as investors returned to equities following losses in the preceding two sessions.

The rally faded late in the day, however, as markets responded to the Federal Reserve’s interest-rate announcement and comments from Chair Kevin Warsh.

The Dow dropped 631.21 points, or 1.2%, to close at 51,461.90, its lowest closing level in three months.

The S&P 500 lost 33.92 points, or 0.5%, ending at 7,551.81, its weakest close in more than a month.

The Nasdaq Composite was comparatively resilient but still finished lower, slipping 3.15 points, or less than 0.1%, to 25,978.42.

The late reversal left all three benchmarks in negative territory despite their earlier advances.

Fed Signals Further Tightening Could Follow Rate Increase

The Federal Reserve raised its target range for the federal funds rate by a quarter of a percentage point to 3.75%–4%, marking its first increase since July 2023.

In its policy statement, the central bank said inflation remained elevated and indicated that the rate increase was intended to support progress towards its 2% target.

Updated projections showed that most Fed officials expected interest rates to stand above 4% at the end of 2026, pointing to at least one further increase this year.

Warsh reinforced the central bank’s focus on inflation during his post-meeting press conference.

“Our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high, and has been for too long,” he said.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”

His comments coincided with increased selling pressure in equities during the final part of Wednesday’s session.

Banks and Oil Services Stocks Record Sharp Losses

Several sectors contributed to Wednesday’s market decline.

The Philadelphia Oil Service Index dropped 3.1% as crude prices weakened, reaching its lowest intraday level in more than a month.

Banking shares also came under pressure, sending the KBW Bank Index down 2.9% to its lowest closing level in two months.

Brokerage firms, housing-related companies and gold stocks weakened later in the session, adding to the broader decline.

Thursday’s rise in index futures suggested that US equities could recover some of those losses at the open. Subsequent trading remained dependent on developments in commodity markets, bond yields and expectations for the Federal Reserve’s next policy moves.

Gold prices recovered on Thursday morning after initially declining in response to the Federal Reserve’s first interest-rate increase in three years, although expectations of further monetary tightening continued to affect the market.

December gold futures fell to $4,290 immediately following Wednesday’s announcement before recovering to $4,353.

Spot gold also rebounded, rising to $4,314 an ounce after touching a post-decision low of $4,252.

The Federal Open Market Committee (FOMC) unanimously approved a 25-basis-point increase in the benchmark federal funds rate, bringing its target range to 3.75%–4.00%.

Federal Reserve Chair Kevin Warsh reinforced the central bank’s focus on inflation during the press conference that followed.

“This summer’s inflation data doesn’t tell me that underlying trends have significantly improved,” Warsh said.

His remarks were interpreted as a signal that additional interest-rate increases remained possible.

Treasury Yields Climb as Dollar Strengthens

The Fed’s decision and accompanying commentary prompted movements in US bond and currency markets.

The yield on two-year US Treasury securities reached its highest level since July 2024, while the dollar index climbed above 100 for the first time since late July.

Both developments contributed to pressure on gold.

Elias Haddad, global head of market strategy at Brown Brothers Harriman, attributed the decline in gold prices to the stronger US currency and higher inflation-adjusted bond yields.

“The U.S. central bank’s hike is hitting gold through a stronger dollar and higher real yields,” Haddad said.

Because gold does not pay interest, higher yields on competing assets can make the metal less attractive to investors.

Dollar appreciation can also increase the cost of purchasing gold for investors holding other currencies.

Most Fed Officials Expect Further Tightening This Year

The Federal Reserve’s updated interest-rate projections indicated that most policymakers anticipated at least one additional increase before the end of 2026.

Of the 18 officials who submitted projections, 16 expected further tightening.

Four projected two more rate increases, while only two anticipated no additional moves following Wednesday’s decision.

Warsh did not provide an individual rate projection.

The projections showed no further increases in subsequent years, with one reduction indicated for 2028 and at least one for 2029.

The estimates represent individual policymakers’ expectations and do not commit the Federal Reserve to a predetermined policy path.

Inflation Outlook Revised Upwards

Alongside the interest-rate decision, Federal Reserve officials raised their inflation forecasts for 2026.

Headline inflation, measured by the consumer price index, is projected to reach 3.7%, while core inflation, excluding food and energy, is expected to stand at 3.4%.

Both forecasts were increased by 0.1 percentage points compared with the June projections.

For 2027, policymakers expect headline inflation to decline to 2.3% and core inflation to ease to 2.5%.

The latest projections nevertheless indicate that inflation will not return to the central bank’s target before 2029.

Gold’s recovery from its initial post-announcement losses therefore took place against a backdrop of higher US interest rates, stronger Treasury yields and expectations of further monetary tightening.

Oil prices moved lower on Thursday as investors assessed reports of measures by Saudi Arabia to maintain crude shipments and restore disrupted export infrastructure.

Despite the decline, Brent and West Texas Intermediate (WTI) futures continued to trade above $100 per barrel amid ongoing uncertainty surrounding oil supplies from the Middle East.

At 08:18 GMT, Brent futures were down 0.9% at $104.85 a barrel, while WTI futures declined 0.6% to $101.85.

The latest price movements followed reports that Saudi Arabia was taking steps to address disruptions affecting oil exports through the Red Sea.

Advances by Houthi forces along Yemen’s western coastline have raised concerns about access to the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden and forms an important shipping route for Saudi crude exports.

Reuters reported that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.

The arrangement would allow some oil shipments to continue despite the military tensions affecting established export routes.

Separately, Bloomberg reported that Saudi Arabia was working to restore approximately half the capacity of its main east-west oil pipeline within days.

Operations at the pipeline had been halted the previous week following attacks by Houthi forces.

UBS analysts indicated that the reported measures could support an increase in Saudi Arabian oil exports.

US-Houthi Talks and Iran Conflict Remain in Focus

Diplomatic developments also attracted attention following reports of discussions between US representatives and the Iran-backed Houthis.

According to Reuters, the two sides met in Oman over the weekend.

The Houthis reiterated their commitment to a ceasefire agreed in 2025 and pledged not to target US or Israeli vessels, the report said.

US President Donald Trump also repeated his assertion on Wednesday evening that Iran was seeking a peace agreement.

Trump said the United States was “hopefully toward the end” of the war.

However, disagreements between Washington and Tehran over the Strait of Hormuz remained unresolved, and shipping activity through the waterway continued at substantially reduced levels.

Kpler data cited by Reuters showed that three commodity vessels passed through the Strait of Hormuz on Wednesday, down from 12 on Tuesday.

Traffic through the Bab el-Mandeb Strait also declined, with 21 vessel crossings recorded on Wednesday compared with 24 the previous day.

The reported efforts to maintain Saudi crude exports provided a potential source of supply relief as oil prices declined. Nevertheless, reduced shipping activity through the region’s major maritime routes continued to highlight uncertainty over the availability and transportation of crude.