Earnings, trade, and shutdown optimism lift markets

General market commentary

U.S. equities extended last week’s gains on Monday as easing credit concerns and optimism over the government shutdown lifted sentiment. The Dow Jones rose 515.97 points, or 1.12%, to 46,706.58, the S&P 500 gained 71.12 points, or 1.07%, to 6,735.13, and the Nasdaq Composite added 310.57 points, or 1.37%, to 22,990.54. The small-cap Russell 2000 outperformed, rising 2%, while technology shares led the rally, with Apple hitting a record high. Communication services recorded the largest sector gains, while consumer staples and utilities lagged. Advancing equities outnumbered decliners across both the NYSE and Nasdaq.

Investor sentiment was further supported by encouraging earnings results and positive developments in the trade and policy backdrop. Boeing advanced 1.8% after FAA approval to increase 737 MAX production, and WeightWatchers surged 9.3% on a partnership announcement with Amazon. The Philadelphia Semiconductor Index reached a record high, reflecting strength in the tech-heavy Nasdaq. Market activity remained robust, with 345 new highs on the NYSE and 77 on the Nasdaq, while overall trading volume was 17.50 billion shares, slightly below the 20-day average of 20.21 billion.

Latest market and economic update

Asian shares rose on Tuesday as easing U.S.-China trade tensions and the likely appointment of Sanae Takaichi as Japan’s prime minister boosted sentiment. The Nikkei hit a record high, while China, Hong Kong, and Australian equities gained, supported by expected U.S. rate cuts, the approaching end of the government shutdown, and strong corporate earnings forecasts.

U.S. equities futures held steady overnight, as easing concerns over regional banks and optimism about a possible end to the government shutdown lifted sentiment. Zions Bancorporation climbed 3% after hours on stronger-than-expected earnings, extending a 5% session rally. Attention now turns to a busy earnings week, with Netflix and GE Aerospace set to report later today.

European shares closed higher on Monday, with the Stoxx 600 up around 1%. Germany’s DAX (+1.9%) and Italy’s FTSE MIB (+1.5%) led gains, while U.K. and French indices rose modestly. Defence equities surged, including Thyssenkrupp (+7.9%), Hensoldt (+8%) and Rheinmetall (+5.9%). Kering advanced 4.8% on a L’Oreal deal, while BNP Paribas fell 7.7% over a court ruling.

The US dollar rose to 98.7, near a one-week high, as investors assessed the government shutdown, trade tensions, and Fed policy moves. EUR/USD stood at 1.1635, reflecting broad dollar strength. Hopes for a shutdown resolution and a US-China trade deal continue to support market sentiment ahead of Friday’s key CPI report.

Oil prices fell in Asia this morning, hovering near five-month lows amid oversupply worries and weak demand. Brent slipped to $61.0 and WTI to $57.45 a barrel. A stable Israel-Hamas ceasefire reduced geopolitical risk, while reports suggesting the U.S. may ease pressure on Russia further dampened prices and reinforced bearish market sentiment.

Equities on the move

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

Amazon Web Services restored normal operations on Monday after a major outage disrupted thousands of sites, including Snapchat, Reddit, and Venmo. The issue originated from a network health monitor in its US-EAST-1 region, previously linked to outages. The disruption exposed global reliance on AWS infrastructure, affecting banks, telecoms, and major online platforms worldwide.

BNP Paribas shares fell to a six-month low in Paris, dropping over 7% after losing a court case over allegations it helped finance genocide in Sudan. The $20 million verdict affects three plaintiffs in a class action of 23,000. Other French banks also declined, while BNP Paribas announced plans to appeal, strongly disputing the ruling.

Zions Bancorp reported a rise in third-quarter profit to $221 million, or $1.48 per share, boosted by stronger interest income despite a $50 million loss on two California loans. Executives described the losses as isolated, with remaining net charge-offs minimal. The results helped calm investor concerns and lifted U.S. regional bank shares in after-hours trading.

BHP reported resilient global iron ore demand despite cooling growth in China, with first-quarter output at 70.2 Mt, slightly below estimates due to Port Hedland maintenance. Copper production rose 4% to 493.6 kt. The company maintained its 2026 output forecasts for iron ore and copper, and progress continues on Canada’s Jansen potash project, with Stage 1 73% complete.

AppLovin fell Monday as state attorneys general in Delaware, Oregon and Connecticut probed its data collection practices, while the SEC investigated potential investor misinformation. The decline followed the shutdown of its “Array” product amid consent concerns and short-seller allegations of improper user tracking for targeted advertising.

AeroVironment shares rose almost 4% after winning a U.S. Army contract for its Kinesis mission planning software, supporting the HMIF Increment 1 program. The system integrates ground and air robotic units to enhance soldier safety and decision-making, offering interoperability, autonomy management, and third-party software integration, with financial terms undisclosed.

Shares of submarine specialist TKMS surged in their Frankfurt debut following its carve-out from Thyssenkrupp, reflecting strong investor interest amid Europe’s rising defence budgets. Valued at €3.8 billion, the shares opened at €60 and closed at €81.10. TKMS, retaining a 51% Thyssenkrupp stake, is poised to benefit from rising demand for submarines, vessels, and underwater systems.

Forvia shares fell over 4% despite Q3 sales of €6.12 billion, in line with expectations, as mixed divisional performance and regional headwinds weighed on trading. Electronics and Clean Mobility grew, while Seating, Interiors and Lighting declined. The company confirmed FY25 guidance and maintained a Buy rating on resilient order intake and higher-margin areas.

Loop Capital and Evercore highlighted strong momentum for Apple, citing robust iPhone 17 demand, Services growth, and potential upside for December. Loop expects record shipments through 2027 and success in China, while Evercore notes late-quarter iPhone momentum and double-digit App Store revenue. Loop raised its target to $315, with Evercore maintaining $290.

JP Morgan downgraded Goldman Sachs to Neutral from Overweight, citing fairly valued shares and cheaper European peers like Barclays and Deutsche Bank. Despite strong market share and wealth management growth, Goldman’s 2027 revenue outlook remains challenging. U.S. deregulation supports a Neutral stance, with shares up 33% so far in 2025.

Bank of America highlighted strong momentum in cybersecurity, driven by robust enterprise security spending. It maintained a Buy rating on Palo Alto Networks, raising its price target to $240, citing solid fundamentals and success in software-based firewalls, while also lifting CrowdStrike’s target to $535, reflecting confidence in continued growth across key cybersecurity segments.

UBS upgraded global equities to Attractive, citing ongoing AI investment, supportive U.S. policy, and a strong macro backdrop. The bank raised S&P 500 earnings forecasts for 2025 and 2026, highlighting resilient consumer spending and corporate earnings. It favours tech, AI, innovation, power, longevity, Japan, global banks, and China’s tech sector for growth and catalyst potential.

Morgan Stanley said it is too early to fully commit to equities amid unresolved trade tensions, softer earnings momentum, and tight liquidity. While its rolling recovery thesis remains intact for 6–12 months, analysts warned clearer trade de-escalation, stable EPS revisions, and ample liquidity are needed. Volatility persists, creating a selective, share-picking market environment.

Upcoming data and events

Markets will today focus on Federal Reserve speeches and the API Weekly Crude Stock report for insights on monetary policy and oil trends. Key corporate earnings today include Netflix, GE Aerospace, Coca-Cola, Lockheed Martin, Intuitive Surgical, Philip Morris, and L’Oréal, offering updates on consumer demand, industrial performance, and healthcare and technology sectors.

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