What's going on?

Global microchip maker ASML announced better-than-expected quarterly results on Wednesday, which could herald better times ahead for the global economy.

What does this mean?

The Netherlands� ASML is a major supplier to TSMC and, notably, Samsung, which just revealed a better-than-expected second quarter. And that means keen-eyed investors might�ve known there�d be good news to come from ASML itself.


They were spot on: the company said that despite some issues in the first half of the year � understandably given, well, everything � things quickly went back to normal. In fact, the increase in remote-working � and the boost it gave technology and internet companies � actually helped ASML since it led to a surge in demand for its microchips. That could be why the company still reckons it�ll be able to grow both its revenue and profit this year.

Why should I care?

For markets: Typical.

The semiconductor industry has a couple of hallmarks. For one, it�s pretty homogeneous, in that good or bad news for one company generally affects them all to some degree. Optimistic investors, then, might see ASML�s relative strength as a sign that the sector as a whole is holding up okay. For another, the industry is considered �early cyclical�, meaning it tends to experience surprisingly high growth during the recovery from a downturn. And since demand for semiconductors � which are used in practically every sector � is still going strong, it could suggest cyclical customers aren�t doing as badly as expected either.

Zooming out: Very discreet.�

Consumer discretionary stocks are also early cyclicals, but you wouldn�t have known it to look at British luxury brand Burberry on Wednesday. The company reported sales that were down 20% in June, and down 45% last quarter as a whole from a year ago. That tallies with the UK economy�s 1.8% growth in May compared to April � a much slower recovery than economists, forecasting a 5.5% increase, had hoped for.