Earnings season heats up

General market commentary

Equity markets ended Friday on a mixed note after a volatile week marked by concerns over rising credit risk among regional banks, ongoing trade uncertainty, and the continuing U.S. government shutdown. Major indices initially fell around 1% in premarket trading but recovered by the close, helped by better-than-expected earnings from Fifth Third Bancorp, which eased investor fears about the health of smaller lenders. Consumer staples led gains, while utilities lagged. The 10-year Treasury yield rebounded to 4%, gold prices retreated from record highs, and the dollar strengthened as risk sentiment improved. President Trump’s comments suggesting that current tariffs on China were “not sustainable” and his confirmation of an upcoming meeting with President Xi Jinping also boosted market confidence and helped ease trade-related tensions.

For the week overall, markets were unsettled as worries about bad loans at smaller regional banks and the potential economic impact of the U.S. government shutdown weighed on sentiment. The regional-bank index had dropped around 6% earlier in the week following disclosures of loan losses at Zions Bank and Western Alliance, though the sector later regained some ground. Despite this turbulence, larger banks and diversified financial firms continued to report solid earnings, and corporate profits across the broader market generally exceeded expectations. The technology sector remained supported by strong demand for AI-related infrastructure, while volatility rose, with the VIX climbing above 20 for the first time in months. Although the rally in equities showed signs of fatigue, most analysts view the recent weakness as a temporary pause rather than the start of a deeper downturn.

Latest market and economic update

Asian equities mostly advanced on Monday, led by Japan’s Nikkei hitting a record high on optimism over Sanae Takaichi’s expected premiership. Chinese shares rose after better-than-expected GDP data, while Hong Kong’s Hang Seng rebounded on tech strength. South Korea’s KOSPI also gained, with chipmakers rallying. Other regional markets saw modest or holiday-affected trade.

U.S. equities futures edged higher on Sunday as hopes for renewed China trade talks eased tensions. S&P 500 and Nasdaq 100 futures rose slightly, following Friday gains after President Trump signalled tariffs were unsustainable. Focus shifts to major Q3 earnings this week, including Tesla and Netflix, amid concerns over trade, regional bank credit, and a government shutdown.

European shares fell on Friday amid U.S. regional bank credit concerns, though the STOXX 600 still gained 0.4% for the week. Banks slumped 2.5%, with Deutsche Bank, Barclays, Unicredit, and BNP Paribas down 3–6.5%. Luxury equities, led by EssilorLuxottica and LVMH, buoyed France’s market, while Continental rose 11.3%, and Novo Nordisk and Sabadell fell sharply.

The dollar index held around 98.5 on Monday, supported by easing US-China trade tensions and Trump’s comments on unsustainable tariffs. Investors await Friday’s September CPI amid the government shutdown. EUR/USD traded near 1.1668. The market anticipates a 25-basis-point Fed rate cut next week, with further easing possible later this year and into 2026.

Oil prices fell in Asia this morning, extending last week’s losses amid weak demand and fears of oversupply. Brent and WTI hovered near five-month lows despite renewed Israel-Hamas clashes, with the ceasefire seen holding. Concerns over slowing global demand, rising OPEC+ output, and U.S.-China trade tensions continued to weigh on sentiment.

China’s economy grew 4.8% year-on-year in Q3 2025, slightly above expectations but the slowest in a year, as exports supported growth amid weak consumer spending and investment. Quarterly growth beat forecasts, keeping GDP on track for Beijing’s 5% target. Analysts said resilience relied on stimulus, with risks from disinflation and U.S. trade tensions.

S&P Global unexpectedly downgraded France’s credit rating from AA- to A+ with a negative outlook, citing political instability and its potential impact on investment, consumption, and growth. Finance Minister Roland Lescure called for collective government and parliamentary action to meet the EU’s 3% deficit target by 2029. Moody’s and DBRS maintained stable ratings.

Equities on the move

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

Kering is reportedly close to a $4 billion deal with L’Oréal to sell its beauty division, including fragrance brand Creed and rights to develop products for labels such as Gucci, Bottega Veneta, and Balenciaga. The sale, potentially announced next week, would help new CEO Luca De Meo address Kering’s €9.5 billion net debt.

Samsung Chairman Jay Y. Lee’s mother and two sisters plan to sell 17.7 million shares, worth 1.73 trillion won ($1.22 billion), to cover inheritance taxes and loan repayments. The sale, managed by Shinhan Bank and to be completed by April, comes as Samsung shares hit record highs following chip-supply deals with Tesla, OpenAI, and Nvidia.

Porsche AG has appointed Dr. Michael Leiters as CEO from January 1, 2026, succeeding Dr. Oliver Blume, who will remain Volkswagen Group CEO. Leiters, former McLaren CEO and ex-Ferrari CTO with extensive Porsche experience, will lead amid market challenges in the US and China. Blume oversaw record performance, IPO completion, and strategic growth during his ten-year tenure.

BBVA abandoned its €16.32 billion hostile takeover of Sabadell after insufficient shareholder support, ending an 18-month pursuit. The bank will now accelerate capital returns, starting a €1 billion share buyback and planning further buybacks pending ECB approval. The bid aimed to create Europe’s third-largest lender and strengthen BBVA’s domestic banking presence.

Continental AG’s Q3 earnings beat expectations, led by its tire division. Strong product mix, pricing, and cost efficiency boosted margins, while ContiTech also exceeded forecasts. Free cash flow and group profitability outperformed, with sustainable tire momentum and the planned ContiTech disposal in early 2026 seen as key positives.

American Express raised its 2025 profit and revenue forecasts as affluent customers continue strong holiday spending. Q3 revenue hit a record $18.4 billion, with EPS exceeding expectations. Upgrades to the Platinum card drove robust new account growth, while the company’s focus on high-credit-score cardholders limits exposure to lower-income borrowers and credit risk.

Activist investor Starboard Value, which holds a 9% stake in Tripadvisor, is set to discuss potential changes at the travel-review firm during an industry conference on Tuesday. Led by Jeff Smith, Starboard has been engaging with Tripadvisor for weeks. The investor, known for pushing operational improvements, has recently secured board seats at several major firms.

Hims & Hers Health shares dropped nearly 16% on Friday after President Trump signalled potential price cuts for popular weight-loss drugs, including Ozempic. The telehealth company, which offers GLP-1 medications, faces investor concern over the impact of lower prices on its business model, despite strong demand in the growing obesity treatment market.

Apple announced a five-year partnership with Formula One, bringing all U.S. races exclusively to Apple TV from 2026. The deal includes comprehensive coverage, free select sessions, and integration across Apple’s ecosystem. F1 The Movie will debut on Apple TV in December, supporting the sport’s rapidly growing U.S. fanbase.

Oklo Inc. partnered with European developer newcleo to develop advanced nuclear fuel infrastructure in the U.S., potentially attracting $2 billion in investment. The collaboration may repurpose surplus plutonium and co-locate facilities, supporting energy independence, advanced reactor deployment, and job creation under the U.S. American Energy Dominance Agenda.

Jefferies and UBS both reiterated Buy ratings on Oracle, raising price targets to $400 and $380, respectively, citing strong AI and cloud momentum. Analysts highlight Oracle’s FY2030 revenue of $225 billion, cloud revenue of $166 billion, EPS of $21, robust margins, and upside potential, underpinned by the integrated “One-Oracle” strategy despite capex considerations.

Barclays expects UniCredit and Intesa to report steady third-quarter results, with capital and dividend distribution as key focuses. UniCredit’s CET1 is projected toward 14%, while Intesa is likely to deliver a solid quarter, with more detailed guidance deferred to its February business plan. Sector-wide, net interest income is down slightly, but earnings resilience remains.

Bank of America raised its price target on Advanced Micro Devices to $300 and maintained a Buy rating, citing strong AI demand from its OpenAI partnership. AMD could capture half of OpenAI’s 6 GW GPU deployment, boosting sales and EPS by 2027, while its MI450 rack systems gain traction with major clients, despite execution and margin risks.

HSBC upgraded Freeport-McMoRan to Buy and raised its price target to $50, citing strong copper and gold prices supporting earnings despite operational disruptions at the Grasberg mine. While production forecasts were cut, higher metal prices offset revisions. Analysts view Grasberg’s issues as temporary, highlighting Freeport’s attractive valuation and potential upside of nearly 17%.

UBS upgraded Deere & Co to Buy from Neutral, citing signs that the agricultural machinery downcycle is nearing its end. While FY26 earnings are expected to remain under pressure at $17.90 EPS, a recovery to $23.20 in FY27 is anticipated, supported by improving farm incomes, dealer restocking, easing interest rates, and potential policy support.

Legendary investor Bill Gross warned that gold has become a "momentum/meme asset" and advised buyers to wait, while cautioning that U.S. regional bank troubles could impact shares and bonds. Gold hit a record near $4,390 before easing to $4,250 amid safe-haven demand, as Zions and Western Alliance shares plunged on loan charge-offs.

Upcoming data and events

This week, investors will focus on US CPI, S&P Global flash PMIs, existing home sales, and earnings from Tesla, Netflix, P&G, Coca-Cola, IBM, and Intel. Europe, the UK, and Japan will release inflation, trade, and PMI data, offering key insights into global economic momentum.

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