AI trade roars back

US equity markets advanced on Monday as optimism grew that Congress was close to ending the country’s longest-ever government shutdown. The S&P 500 rose 1.5 per cent, while the Nasdaq Composite surged 2.3 per cent, led by strong gains in the technology and communication services sectors. The Dow Jones Industrial Average climbed 0.8 per cent, with all but three sectors higher on the day. A more positive tone in European and Asian markets earlier contributed to improved risk sentiment. As investors moved back into riskier assets, bonds sold off, pushing the yield on the US 10-year Treasury note up by around two basis points to 4.11 per cent, while the dollar weakened and commodities such as gold and oil gained.

Investor enthusiasm was fuelled by progress in the Senate towards a bipartisan deal to reopen the government after weeks of political deadlock. Technology names led the advance, with Nvidia shares jumping 6.3 per cent after UBS suggested the company could exceed its revenue outlook, and Palantir Technologies gaining 8.8 per cent as the artificial intelligence trade regained momentum. Other major technology firms including Apple and Microsoft also advanced, reflecting renewed appetite for growth equities. Treasury yields moved higher across the curve, with the two-year rate up nearly four basis points to 3.6 per cent. Market participants expect the first key data release following the shutdown to be the September employment report, while earnings season remains supportive, with S&P 500 companies reporting annual profit growth of more than 12 per cent so far.

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Asian equities were mixed on Tuesday, with Japan’s Nikkei 225 up 0.6% and South Korea’s KOSPI rising 1.5% as technology shares extended their rebound. In contrast, Chinese markets lagged, with the CSI 300 and Shanghai Composite down 0.7% and 0.4%. Hong Kong’s Hang Seng slipped 0.2%, while Singapore outperformed and Australia edged lower.

Wall Street futures steadied overnight, supported by a rebound in technology shares, particularly Nvidia and Palantir, which also advanced in after-hours trading. S&P 500 Futures rose 0.1% to 6,860.75, Nasdaq 100 Futures gained 0.1% to 25,737.25, and Dow Jones Futures edged up to 47,484, as investors awaited the Senate vote on ending the government shutdown.

European shares rose on Monday, with the STOXX 600 up 1.4%, boosted by optimism over a potential end to the U.S. government shutdown. Technology shares, banks, and Diageo led gains, while earnings surprises from Salzgitter and Novo Nordisk supported the market. Siemens Energy and Commerzbank also saw notable increases after broker upgrades.

The dollar index remained largely unchanged around 99.6 on Tuesday as investors awaited progress on ending the 40-day US government shutdown. Euro/dollar was steady at 1.1561. Mixed US data, including job losses and weakening consumer sentiment, has strengthened expectations of a December Fed rate cut, with traders pricing in a 64% chance of 25bps.

Oil prices fell in Asian trade this morning, with Brent down 0.3% to $63.89 and WTI at $59.88, as markets remained wary of a looming supply glut and a resilient dollar. While Ukrainian strikes on Russian energy infrastructure offered some support, concerns over OPEC+ production increases and weakening global demand continued to weigh on the market.

The U.S. Senate approved a bill on Monday to end the longest-ever government shutdown, voting 60-40 in favour. The measure, now headed to the House of Representatives, would fund the government until 30 January 2026 and requires the president’s signature. The shutdown, lasting 41 days, has caused widespread service disruptions, including flight cuts at major airports.

President Trump warned of an economic and national security disaster if the Supreme Court blocks his broad tariffs, estimating potential repayments could exceed $2 trillion. He proposed a $2,000 dividend for lower- and middle-income Americans from tariff revenues, with the remainder reducing debt, while inflation has eased slightly but tariffs continue to push up consumer prices.

Equities on the move

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

Apple will not release the next iPhone Air in autumn 2026 as initially planned, following weaker-than-expected sales, according to the Information. Launched in 2025 as a thinner, lighter alternative in the iPhone lineup, the model compromises on battery and camera features. It is currently sold in China with eSIM-only connectivity.

Sony Corp reported a 19.7% rise in net income to 311.4 billion yen for July–September, with sales up 5% to 3.108 trillion yen, driven by strong music and imaging sensor performance. Gaming sales rose but margins were pressured by yen appreciation. The company raised its fiscal 2025 forecast to 12 trillion yen in sales and 1.05 trillion yen in net income.

Nvidia-backed CoreWeave cut its 2025 revenue forecast to $5.05–5.15 billion after a third-party data centre delay, despite third-quarter revenue more than doubling to $1.36 billion. Shares fell by 6% in after-hours trading. The company, a key AI cloud partner for Meta and OpenAI, faces margin pressure from rising AI chip costs, competition, and rapid infrastructure expansion.

Occidental Petroleum beat third-quarter profit expectations with adjusted earnings of 64 cents per share, supported by record U.S. production of 1.46 million barrels of oil equivalent per day, despite lower oil prices. The company benefited from its CrownRock acquisition and debt reduction efforts, including the $9.7 billion OxyChem sale to Berkshire Hathaway.

eToro beat Q3 profit estimates with adjusted earnings of 60 cents per share and net contribution up 28% to $215 million, driven by strong retail investor activity and trading volumes. Assets under administration rose 76% to $20.8 billion. The company announced a $150 million share buyback and plans to expand into prediction markets in late 2026.

TSMC reported strong revenue growth in October, rising 16.9% year-on-year and 11% month-on-month. Year-to-date revenue for January–October reached T$3.13 trillion, up 33.8%. The world’s largest contract chipmaker continues to benefit from robust AI-driven demand, with Nvidia requesting additional chip supplies to support expanding data centre and server needs.

Visa and Mastercard agreed to a revised $38 billion settlement with merchants over alleged excessive swipe fees, aiming to end 20 years of litigation. The deal cuts standard consumer fees by over 25% for eight years and allows surcharges, potentially saving merchants $38 billion by 2031. Some merchant groups, however, say it doesn’t fully address anti-competitive concerns.

Banco Santander has appointed Citigroup and Goldman Sachs to help sell its remaining 13% stake in Polish unit Santander Bank Polska, valued at 6.8 billion zloty ($1.9 billion), as part of its strategic refocus on core markets. The timing and final decision for the sale are not yet set. This follows a May agreement to sell a 49% stake to Erste Group.

Investor Michael Burry has warned that major tech companies may be understating depreciation by extending the useful life of computing assets, artificially boosting earnings. He estimates $176 billion could be understated between 2026-2028, projecting Oracle and Meta to overstate earnings by 26.9% and 20.8% respectively. Short sellers like Jim Chanos have raised similar concerns.

UBS expects the S&P 500 to reach 7,500 in 2026, driven by around 14% earnings growth, with nearly half from technology shares. The bank forecasts a global economic acceleration later in the year, while short-term headwinds persist. U.S. equities are expected to outperform Europe and emerging markets, with gains mainly from earnings rather than valuation expansion.

Wall Street strategists at Wolfe Research, Bank of America, and Citi remain bullish on Nvidia, citing strong growth and AI-driven demand. Analysts expect 2026 data centre revenue to exceed forecasts, with potential EPS around $8. Concerns over China export restrictions are seen as irrelevant near-term, while valuations remain attractive ahead of Nvidia’s November 19 results.

Leerink Partners upgraded Eli Lilly to Outperform, citing strong adoption of obesity treatments and raising its price target to $1,104. Analysts forecast 15% revenue CAGR and 20% EPS CAGR through 2030, supported by Medicare access in 2027, new drugs including orforglipron, retatrutide, and eloralintide, and lower pricing pressures, with 2030 revenue expected at $125 billion.

Jefferies upgraded Siemens Energy to “buy,” raising its target to €134, citing strong positioning in electricity demand, renewables, nuclear, and grid modernisation. Analyst Lucas Ferhani highlighted pricing power, record backlogs, 40% expected EBITDA CAGR, and growth in Gas Services, Siemens Gamesa, and Grid Technologies, with margin expansion and €14 billion buybacks.

Mizuho Securities maintained an Outperform rating and $265 price target on Micron Technology. Analyst Vijay Rakesh highlighted strong high-bandwidth memory demand through 2026–2027, potential revenue and margin gains in DRAM, benefits from Chinese capacity restrictions, and robust AI-driven growth in HBM and NAND flash memory segments.

Commerzbank was upgraded to “buy” by Deutsche Bank following stronger-than-expected Q3 2025 results, with the target price raised to €37. Analysts highlighted improving net interest income, projected 15% return on tangible equity by 2028, and double-digit capital returns. EPS is expected to grow at a 27% CAGR, while shares offer an above-12% yield.

Upcoming data and events

The economic calendar is light today, featuring UK Unemployment, Germany’s ZEW Economic Sentiment, and US NFIB Business Optimism. Among corporate results, SoftBank Group reports Q2 2025 earnings, while Sea Limited and Munich Re release Q3 2025 figures.

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