Wall Street hits new highs as Alphabet boosts AI confidence

Good morning. Here's what happened overnight and what you need to know today.

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1.

Market records: The S&P 500 and Nasdaq hit fresh record highs as Alphabet’s results boosted confidence in artificial intelligence investments ahead of Intel earnings and next week’s Federal Reserve meeting. Microsoft, Nvidia and Amazon also rose, while Tesla sank after Elon Musk warned of “a few rough quarters”. Intel, which is due to report earnings after the close, beat a shareholder lawsuit over a USD32 billion stock plunge. American Airlines slashed its outlook after deep domestic travel discounts, while UnitedHealth confirmed it is cooperating with a Department of Justice probe into its Medicare practices. President Trump said he would not go below 15% on reciprocal tariffs ahead of the 1 August deadline and continued pressuring the Fed, which is expected to hold rates steady next week. The president is inspecting the renovations of the Federal Reserve headquarters today. Jobless claims fell for a sixth straight week to 217,000, the lowest since mid-April. (Bloomberg)(WSJ)(Reuters)(Capital Brief)

2.

Rough ahead: Tesla shares fell more than 8% after CEO Elon Musk warned the company could have a few rough quarters and described it as being in a transition period. The warning followed a 13% drop in global deliveries for the first half of 2025 and a 12% decline in second-quarter revenue, the steepest since at least 2012. At the earnings call Musk urged investors to look beyond falling electric vehicle sales to Tesla’s progress in autonomy, including a robotaxi service launched in late June in Austin. “There are some teething pains as you transition from a pre-autonomy to a post-autonomy world,” Musk said. The service, which uses Model Y SUVs equipped with an advanced version of Full Self-Driving software, remains invite-only, limited to a geofenced area, and not available to the general public. (Reuters)(Bloomberg)(WSJ)

3.

Border conflict: Thailand scrambled an F-16 fighter jet to bomb targets in Cambodia after artillery volleys from both sides killed at least 11 civilians, as border tension boiled over into rare armed conflict between the Southeast Asian countries. The clash followed a downgrade in diplomatic ties after a Thai soldier lost a limb to a landmine Thailand alleged was recently laid by Cambodian troops. Cambodia condemned what it called reckless and brutal military aggression and urged the UN Security Council to act. Thailand reported 12 fatalities, including a soldier, and at least 31 injuries. Cambodian casualties were unclear. More than 40,000 people were evacuated from Thai border areas. (Capital Brief)(Reuters)(NYT)(AP)

4.

ECB holds: The European Central Bank left interest rates unchanged for the first time in more than a year, with President Christine Lagarde saying it is in a “wait-and-see” mode amid US trade uncertainty. The deposit rate was held at 2%, as expected, following eight cuts since June 2024. Lagarde said the euro zone economy is growing mostly in line with or a little better than expectations, with inflation running at 2%. The ECB offered no guidance on future steps, citing a lack of clarity on the eventual level of tariffs. Markets trimmed bets on another rate cut this year, now seeing a 70% probability, down from about 90% earlier. (Reuters)(Bloomberg)

5.

Mandala manoeuvre: Apple commissioned Labor-linked Mandala Partners for a report warning against Treasury’s proposed competition laws that would force it to allow third-party app stores on iPhones. In an escalation of its opposition, the Mandala report urges Australia not to follow the European Union’s Digital Markets Act, arguing that digital platforms in Europe have already been degraded and made less secure. Written by Mandala partner Adam Triggs, the paper argues that conduct-based or ex post regulatory regimes are the default in Australia and a more sensible path. Apple has previously submitted arguments against the reforms to both the ACCC and Treasury. (Capital Brief)

6.

Super rethink: Geoff Wilson has pitched an alternative to Treasurer Jim Chalmers’ plan to tax high-value superannuation funds, proposing a progressive surcharge that would apply only to realised capital gains. In a two-page submission to the Treasurer’s Economic Reform Roundtable, Wilson proposed a “Progressive Super Surcharge and Tax Offset”, which applies a progressive surcharge on realised gains only for super balances above $3 million. The plan, provided to Capital Brief by Wilson, claims to be budget positive, raising an estimated $2.4 billion in revenue, and includes a tax offset to cover administrative and technology costs. Wilson argues his plan is more equitable and would keep patient capital invested, supporting productivity, jobs and economic growth. Chalmers has not budged on the government’s Division 296 proposal, describing it as a “modest” change based on Treasury advice that would affect just 0.5% of the population. That proposal imposes higher taxes on super balances of $3 million or more, including a tax on unrealised gains. (Capital Brief)

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TikTok count: TikTok’s Australian headcount reached 777 employees by the end of 2024, up from “over 500” in July that year, according to regulatory and government filings. A person familiar with the platform’s local operations told Capital Brief the number is now higher, following a sustained period of recruitment in early 2025. LinkedIn data, which includes some creators and former employees, lists 1,042 Australian staff. The ByteDance-owned video platform is currently hiring for 80 local roles. Among them, it is recruiting a new local policy lead as it works to soften a federal proposal introducing age restrictions for under-16s, due to take effect in December. TikTok reported a group profit of $31.1 million in 2024, nearly triple the $11.3 million recorded the year before, and paid $11.1 million in tax. New board appointments include Amy Bradshaw, leading TikTok’s Australian operations through the global business solutions team, Connor Taylor, overseeing partnerships, and Simon Bates, heading ANZ content operations. (Capital Brief)

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Merging lanes: North America’s largest railroad Union Pacific and its smaller rival Norfolk Southern have confirmed they are in advanced discussions about a potential merger that would be the industry’s largest deal ever. The combination would create a single US freight railroad with service stretching from the East to the West Coast and require approval from the Surface Transportation Board. Union Pacific has a market value of about USD135 billion ($204 billion), more than twice the size of Norfolk Southern’s USD64 billion. Both companies said there is no assurance an agreement will be reached. The proposed tie-up would reduce the number of major U.S. freight railroads from six to five and could face a lengthy regulatory process under rules designed to protect competition. (Joint statement)(Bloomberg)(NYT)(AP)