Equities cautious as Nvidia earnings test looms

General market commentary

Friday’s session saw US equities recover after a sharply lower open, supported by a rebound in major technology names. The S&P 500 ended close to unchanged, while the Nasdaq’s earlier losses were largely pared back. Treasury yields drifted higher across the curve, with the ten year finishing near 4.15 per cent. Sentiment remained cautious after hawkish remarks from Federal Reserve officials cast doubt on the likelihood of a December rate cut, with futures now assigning the probability at about 45 per cent, down from 70 per cent earlier in the week. Elsewhere, Asian and European equities weakened following disappointing Chinese industrial production figures and ongoing concerns over the durability of global growth momentum.

Over the course of the week, the S&P 500 eked out a modest rise, while the Nasdaq slipped as investors continued to reassess stretched valuations in growth focused sectors. A rotation into areas such as health care, energy and materials gained traction, reflecting a broader search for resilience after a strong year for technology and AI linked shares. European markets contributed positively to global performance, helped by renewed economic momentum following recent policy easing, while several emerging markets continued to benefit from robust technology exposure and a softer US dollar. In the United States, the end of the record length government shutdown offered some reassurance, though it is still expected to dampen fourth quarter activity before conditions improve in early 2026. Looking ahead, investors will be focused on housing, PMI and sentiment data as delayed government reporting begins to return to a more regular schedule.

Latest market and economic update

Asian equities slipped on Monday as weak Japanese GDP data, tensions between China and Japan and caution ahead of Nvidia’s earnings weighed on sentiment. Japan led declines, while Chinese and Hong Kong shares also fell. Technology-related concerns persisted across the region, though South Korea’s KOSPI outperformed with a strong rebound driven by chipmakers.

US equities futures rose overnight as investors prepared for a series of delayed economic data and major earnings, including Nvidia, Home Depot, Target, Walmart, Palo Alto Networks, and Intuit. S&P 500 and Nasdaq 100 futures gained 0.2% and 0.4%, while Dow futures were flat. Fed rate cut expectations fell below 50% for December.

European shares fell on Friday as hawkish U.S. comments dampened hopes of a December rate cut, despite the STOXX 600 posting its strongest weekly gain since September. Technology equities fell, while luxury group Richemont and Siemens Energy, which announced its first dividend in four years and raised its mid-term outlook, rose. Eurozone growth remained modest.

The US dollar strengthened slightly in Asian trading as investors awaited key economic data following the end of the government shutdown, seeking clarity on the Federal Reserve’s December rate outlook. Against the euro, the dollar held firm, with the euro down 0.11% to $1.1607, amid subdued currency moves ahead of the release of nonfarm payrolls and other economic indicators.

Oil prices fell in Asia this morning after Russia’s Novorossiysk port resumed crude loadings, easing immediate supply concerns. Brent fell 0.9% to $63.80 and WTI 1% to $59.47 per barrel. Markets remain cautious, however, with ongoing Ukrainian attacks on Russian refineries, tightening US sanctions and geopolitical tensions in the Gulf adding risks to global supply.

Bitcoin fell to a six-month low of $93,043 on Monday, dropping 1.6% as expectations for a December Federal Reserve rate cut faded. The decline follows three weekly losses and a prolonged data blackout from the US shutdown. Ethereum and other altcoins also weakened, while Japan considers reclassifying cryptocurrencies as financial products with a flat 20% tax.

Equities on the move

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

Alphabet Inc shares surged over 4% in after-hours trading after Warren Buffett’s Berkshire Hathaway disclosed a $4.3 billion stake, making it the firm’s tenth-largest US holding. The investment comes despite concerns over stretched tech valuations and follows Alphabet’s strong earnings and plans to spend $40 billion on new AI-focused data centres in Texas.

Samsung Electronics has raised memory chip prices by up to 60% amid strong demand from AI data centre builds, boosting shares of Samsung, SK Hynix and US chipmakers. DDR5 module costs for servers and other devices have surged, while Samsung plans a new production line in South Korea. The shortage is driving panic buying and higher product costs.

A California jury ruled that Apple must pay Masimo $634 million for infringing a patent on blood-oxygen monitoring technology in Apple Watches, which Apple plans to appeal. Meanwhile, Apple is intensifying succession planning as Tim Cook may step down next year, with John Ternus seen as a likely successor, though no CEO announcement is expected before January.

The White House has accused Alibaba of providing technological support to the Chinese military in operations against US targets, according to a Financial Times report citing a national security memo. Alibaba and the Chinese embassy denied the claims, calling them false and unverified. US-traded Alibaba shares fell 3.8% following the report.

Barrick Mining is considering splitting into two entities, separating North American assets from African and Asian operations. The move could include selling African assets and the Reko Diq mine in Pakistan. Investors see North American mines, especially Nevada’s Fourmile, as more stable, while African operations carry higher political risk, prompting a potential strategic refocus.

Siemens Energy shares surged over 10% after strong Q4 results and upgraded mid-term targets, despite continued losses in its onshore Gamesa wind division. CEO Christian Bruch highlighted robust growth in gas turbines and grid technologies, proposed the first dividend in four years, and guided for low-teens CAGR and 14–16% 2028 margins, exceeding market expectations.

CMA CGM expects a challenging year as new vessels boost capacity while demand slows. Third-quarter core EBITDA fell 40.5% year-on-year to $2.96 billion. Freight rates are set to normalise, with 2026 likely difficult. The group, poised to become the world’s second-largest container line by 2027, is also diversifying into logistics, ports, and retail.

Russia’s Lukoil is negotiating the sale of its foreign assets after UK and U.S. sanctions and the collapse of a Gunvor deal. The company aims to maintain operations, safeguard jobs, and ensure energy supply during the transfer. Final agreements await regulatory approvals, with talks ongoing amid continued pressure from U.S. sanctions.

Wedbush sees current tech weakness as a short-term panic, not systemic risk, citing strong AI fundamentals. Cloud results from Microsoft, Amazon and Alphabet, rising capex from Meta, and projected AI infrastructure spending of $550–600 billion in 2026, up from $380 billion this year, support resilience. NVIDIA remains a bellwether, with investments boosting the wider tech ecosystem.

Billionaire investor Ron Baron forecasted an ultra-bullish trajectory for Tesla, predicting five- to seven-fold gains over the next decade, driven by Elon Musk’s AI and robotics ambitions, especially the Optimus humanoid robot. He highlighted production plans of up to one billion units annually and described the technology as transformative, reshaping labour and living standards.

Billionaire investor and PayPal co-founder Peter Thiel has fully exited his Nvidia stake, selling over 537,000 shares worth nearly $100 million amid concerns over an AI-driven tech bubble. He also reduced Tesla holdings while buying Apple and Microsoft. Thiel’s move follows similar exits by major investors, highlighting growing caution over stretched technology valuations.

Morgan Stanley expects Nvidia to deliver a breakout quarter as its Blackwell AI platform scales, raising its price target to $220 and maintaining an Overweight rating. Analyst Joseph Moore highlighted strong demand, resolved supply issues, and growth constraints shifting to hardware, predicting faster growth than consensus and a momentum shift for the company.

Stifel downgraded Home Depot to Hold from Buy ahead of third-quarter results, citing near-term pressure in the home-improvement sector. The analyst flagged potentially stagnant or declining sales, lowered forecasts for Home Depot and Lowe’s, and warned weaker-than-expected same-store sales could heighten scrutiny of Home Depot’s $20 billion-plus Complex Pro business investments.

JPMorgan upgraded MP Materials to Overweight, citing its “underappreciated national security importance” and strong earnings visibility. Analyst Bill Peterson set a December 2026 target of $74, highlighting the company’s DoD deal and vertical integration as a U.S.-based ex-China leader in rare earths. Shares are seen as attractive despite near-term retail-driven volatility.

Jefferies upgraded Gap Inc. to Buy, citing strong momentum across its brands and potential upside to revenue and margins. The firm highlighted Gap’s turnaround, Old Navy’s value positioning, and Athleta’s recovery, raising fiscal 2027 revenue and EPS estimates. Jefferies sees a path to 9%+ operating margins and a price target of $30, with an upside of $50.

Upcoming data and events

With the US government shutdown over, investors eye a packed week of economic data and earnings. Key releases include US flash PMIs, existing home sales, ADP jobs, and retail earnings from Nvidia, Walmart, Target, and Home Depot. Fed and RBA meeting minutes, Eurozone and Asia PMIs, Japan GDP, inflation, and global GDP/CPI updates will also influence markets.

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