Key Takeaways
- Fitch Ratings predicts elevated U.S. corporate capital spending through 2026, primarily driven by investments in Artificial Intelligence (AI) and increasing energy demand.
- U.S. Treasury Secretary Bessent emphasized ongoing efforts to rebalance the U.S.-China trade relationship, expressing displeasure over China's continued purchase of Russian oil and its manufacturing surplus.
- Royal Caribbean (RCL) CEO anticipates potential for further outperformance in the second half of 2025, buoyed by strong demand and strategic initiatives.
- Kering (KER) CFO expects second-half gross margins to be similar to the first half, following a significant decline in first-half recurring operating income.
Fitch Ratings forecasts that U.S. corporate capital spending will remain high through 2026, largely fueled by the burgeoning demand for Artificial Intelligence (AI) and rising energy needs. This acceleration in capital expenditure (capex) is expected to see the aggregate capex margin for North American corporates rise to 8% in 2025, up from 7.5% in 2024. The utilities sector is noted for having both the largest and fastest-growing capex, driven by grid modernization and the transition to renewable energy, with electricity demand projected to grow 2.0% to 2.5% annually until 2030 due to data center expansion.
Meanwhile, U.S. Treasury Secretary Bessent has been actively engaged in discussions with China, aiming to address economic imbalances. He reiterated that China's significant manufacturing surplus is impacting the global economy and expressed dissatisfaction with China's continued purchase of Russian oil. Bessent also clarified that export controls are maintained separately from trade discussions and that TikTok was not a subject of recent talks with China. A further meeting with China is anticipated in approximately 90 days. USTR Greer noted that no deal has been reached on export controls, and further discussions depend on resolving "magnet issues," indicating a desire for a continuous magnet supply from China.
In the cruise industry, Royal Caribbean (RCL) CEO is optimistic about the second half of 2025, projecting potential for more outperformance. The company's Q2 2025 earnings report is expected to show a Zacks Consensus Estimate of $4.10 in EPS, a 27.7% year-over-year increase, and $4.55 billion in projected revenue. This positive outlook is supported by strong demand, fleet modernization, and the success of exclusive destinations.
Conversely, luxury conglomerate Kering (KER) faces challenges, with its CFO anticipating second-half gross margins to be "quite similar" to the first half. The company reported an 11% decline in first-half sales and a significant 42% plunge in recurring operating income, primarily due to struggles with its flagship brand, Gucci. Despite this, Kering Eyewear has shown strong performance.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.