Trump imposes sanctions on top Russian oil companies

General market commentary

US equities recorded notable declines on Wednesday, with volatility persisting through October. Weakness among major technology companies weighed on the Nasdaq Composite, which fell 0.9% to 22,740.40, while the S&P 500 slipped 0.5% to 6,699.40 and the Dow Jones Industrial Average lost 0.7% to 46,590.41 after reaching a record high the previous session. Losses in consumer discretionary and industrial shares offset gains in energy, healthcare and consumer staples. Netflix tumbled 10% after reporting quarterly earnings below expectations, while Tesla and Texas Instruments also fell following disappointing results. Amazon declined 1.8% amid reports of discussions between Alphabet’s Google and Anthropic over a multi-billion-dollar computing partnership, while investors remained cautious ahead of further developments in US-China trade negotiations.

In broader markets, the sell-off in equities spurred a modest rally in US government bonds, with the yield on the 10-year Treasury easing to 3.95%, its lowest level since April. Oil prices climbed sharply, with West Texas Intermediate crude rising 4.2% to $59.62 a barrel following reports of new sanctions on Russia aimed at curbing its energy exports. Gold prices steadied after recent volatility but remained about 6% below their recent peak. Despite lingering concerns over trade policy and the prolonged government shutdown, early signs from the US third-quarter earnings season offered some reassurance, with the majority of companies reporting better-than-expected results so far, suggesting underlying economic resilience.

Latest market and economic update

Asian equities mostly declined on Thursday, led by losses in Japan and China, after reports that Washington may tighten export restrictions on Beijing, reigniting trade tensions. Japan’s Nikkei fell 1.3% following recent record highs, while South Korea’s KOSPI hit a new peak as the central bank held rates steady. Investors awaited key US inflation data.

US equity futures were mostly flat overnight following a weaker Wall Street session, with S&P 500 futures down 0.2% at 6,726.25, Nasdaq 100 futures off 0.2% at 24,986.75, and Dow futures 0.3% lower at 46,641. Tesla extended after-hours losses by 4% following weaker net income, while Apple and IBM also fell in extended trading.

European shares fell 0.2% on Wednesday, dragged by weak earnings from major companies including L’Oreal, Hermes, and UniCredit. Technology-related equities, particularly semiconductor firms, also declined, while energy shares provided support amid rising oil prices. Overall sentiment remained cautious ahead of upcoming ECB and Fed policy decisions.

The US dollar edged higher against major currencies today ahead of delayed US consumer inflation data, supported by trade tensions with China. The dollar index rose 0.05% to 98.979, while sterling and the euro weakened, with the euro slipping 0.06% to $1.1604. Traders largely viewed trade threats as negotiation tactics rather than immediate risks.

Oil prices surged in early Asian trade after US President Donald Trump imposed sanctions on Russia’s major oil firms Lukoil and Rosneft, raising concerns over global supply. Brent rose 3% to $64.44 a barrel and WTI to $60.26. Prices were further supported by a surprise US inventory draw and improved demand sentiment.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Tesla reported record third-quarter revenue of $28.1 billion, beating estimates, driven by strong EV sales ahead of a US tax credit expiry. Profit fell short at 50 cents per share, weighed down by tariffs, R&D costs, and declining regulatory credits. Shares fell 3.8% as the company introduced lower-cost models and highlighted its pivot to AI, robotics, and robotaxis.

SAP reported third-quarter revenue of €9.08 billion, below analysts’ estimates, with cloud revenue growth slowing to 22%, its weakest since late 2023. Non-IFRS operating profit rose 14% to €2.57 billion, slightly above forecasts. Shares were flat in after-hours trading, recovering earlier losses. SAP expects 2025 cloud revenue at the lower end of its guidance.

Lam Research forecast second-quarter revenue of $5.2 billion, above Wall Street estimates, driven by strong demand for semiconductor equipment used in AI chip production. The company reported third-quarter revenue of $5.32 billion and adjusted profit of $1.26 per share, beating expectations. Shares were flat in after-hours trading despite strong AI-driven chip demand.

IBM posted third-quarter revenue of $16.33 billion, beating estimates, driven by AI-powered mainframe sales, while growth in its hybrid cloud unit slowed to 14% from 16%, raising investor concerns. The company’s AI business reached $9.5 billion. Shares fell 6.5% in after-hours trading, though IBM raised its full-year revenue outlook to over 5% growth.

Kering reported third-quarter revenue of €3.42 billion, down 5% but beating expectations, as smaller brands like Yves Saint Laurent and Bottega Veneta offset a 14% decline at Gucci. Under new CEO Luce de Meo, the group is focusing on debt reduction, Gucci’s revival, and strategic sales, including a €4.7 billion deal for its beauty arm.

Several US quantum computing firms, including IONQ, Rigetti, and D-Wave, are reportedly in talks to offer the Commerce Department equity stakes in exchange for at least $10 million each in federal funding. The move, led by Deputy Commerce Secretary Paul Dabbar, extends Washington’s strategy of taking ownership in key sectors after its recent Intel investment.

Apple is reportedly “drastically” cutting production of its new iPhone Air due to weak consumer demand, shifting focus to iPhone 17 Pro and Pro Max models, Nikkei reported. KeyBanc noted minimal interest in the Air and foldable devices, with growth expected from higher average selling prices and healthy demand for the broader iPhone 17 lineup.

Thermo Fisher Scientific beat Q3 expectations with adjusted EPS of $5.79 and $11.12 billion revenue. Operating margin rose to 23.3%. The company launched new products, made strategic acquisitions, repurchased $1 billion of shares, and partnered with OpenAI, highlighting strong performance and ongoing growth.

CME Group beat third-quarter profit estimates, earning $966.1 million or $2.68 per share, aided by lower expenses despite a 10.5% drop in trading volumes. Energy markets softened, while cryptocurrency trading hit a record high. The exchange is expanding into retail and digital assets, including a FanDuel tie-up and 24/7 crypto trading plans.

Moody’s raised its annual revenue and profit forecasts, driven by strong momentum in its analytics unit and robust bond issuance. Third-quarter profit rose to $646 million, with revenue from its investor services business up 11% to $2 billion. The company now expects adjusted EPS of $14.50–$14.75 and high-single-digit revenue growth.

Hermes reported Q3 sales of €3.88 billion, up 9.6% but slightly below forecasts, with leather goods rising 13.3%. The company cited modest improvements in China and stronger US store traffic, while limited inventory and controlled production continue to constrain growth. Clothing, jewellery, and silk scarves also saw modest gains.

Heineken expects 2025 beer volumes to decline modestly amid weaker macroeconomic conditions, further lowering its previous guidance. Q3 saw soft demand in Europe and Latin America, partially offset by market share gains in Brazil, Mexico, and Vietnam. Net revenues fell 0.3% and volumes 4.3%, with full-year profit expected at the lower end of guidance.

Oklo Inc. shares fell 13.9% after the Financial Times scrutinised its $20 billion valuation despite having no revenue or licences. The nuclear startup, developing small modular reactors for AI data centres, has surged 500% this year. Concerns over political ties and overvaluation have attracted short sellers, raising debate over an AI energy bubble.

Barclays downgraded BNP Paribas to “equal weight” from “overweight” following a $20.75 million US jury verdict linked to Sudan-era banking, citing litigation uncertainty. Shares fell sharply in recent days, erasing €9.6 billion in value. The bank plans to appeal, while Barclays noted the shares remain cheap at 6x 2026 earnings, though near-term upside is likely limited.

Wells Fargo initiated coverage of Adyen with an Overweight rating and €1,753 target. Growth prospects for 2026 are improving as tariff headwinds ease and new merchant contributions outperform 2024. Long-term growth is supported by product innovation, disciplined pricing, and expansion into new markets despite strong competition.

KeyBanc says the fintech sector is stabilising after a valuation reset, with selectivity still key. Visa, Mastercard, Fiserv, and Block were rated Overweight due to strong earnings prospects. “Big 7” fintech valuations are at decade lows, with potential for modest expansion as companies complete turnarounds and adopt automated digital transaction trends.

RBC Capital Markets initiated coverage on Caterpillar and Deere, rating the former at Sector Perform with a $560 target and the latter at Outperform with a $542 target. Caterpillar benefits from mid-cycle demand and growth in data centre construction, while Deere leads in precision agriculture and digital farming, expected to recover earnings through 2026 after a 2025 cycle trough.

Deutsche Bank initiated coverage of AppLovin with a Buy rating and $705 target, highlighting its dominance in mobile game advertising and expansion into e-commerce. The bank cited AppLovin’s AI-powered Axon model as a driver to boost ad conversions, broaden revenue streams, and potentially exceed market expectations.

Upcoming data and events

Today’s key macroeconomic data come from the US with the release of initial jobless claims and existing home sales. Meanwhile, market attention remains on corporate earnings, with major companies reporting results, including tech giant Intel, automotive leader Ford Motor Co, mining heavyweight Newmont, and telecom firm T-Mobile US.

This information is provided solely for educational and informational purposes and should not be construed as investment advice, advice on specific investments or investment decisions, tax advice, legal advice, or any other form of professional or regulatory advice. The information does not take into account your personal circumstances and is provided to you on the express understanding that it does not constitute advice and should not be relied upon in making any investment decision. Investing in financial instruments involves risk. You should conduct your own research before making any investment decisions and seek the assistance of a licensed financial advisor if you are unsure. No person should act on any opinion or information contained in this document without first obtaining appropriate professional advice. Calamatta Cuschieri Investment Services Limited does not accept liability for any actions, proceedings, costs, demands, expenses, damages, or losses suffered as a result of reliance on the information herein.