Equities rebound as tech rebound gathers momentum

General market commentary

US equity markets began the holiday shortened week on a positive footing, supported by lighter trading volumes and growing optimism around a year end rally. Small caps and value oriented equities led early gains, while sentiment towards technology improved after Micron’s strong earnings last week helped ease concerns about an AI slowdown. Broader tech recovered December losses, although by the end of the session cyclical sectors such as financials, energy and materials were the strongest performers. Major US equity indices closed higher across the board, with the S&P 500, Nasdaq Composite and Dow Jones Industrial Average all rising around half a percent, despite below average volumes ahead of early market closures for Christmas.

In commodities, oil prices advanced sharply as geopolitical tensions increased following US action involving Venezuela, providing support to energy equities. Precious metals also rallied strongly, with both gold and silver reaching fresh record highs and remaining on course for their strongest annual performance in decades. US Treasury yields edged higher, while economic data showed modest improvement but remained below expectations. Overall, the recent market action suggests improving breadth beyond large cap technology, reinforcing the case for a balanced and diversified equity approach as investors look beyond the end of the year.

Latest market and economic update

Asian equity markets edged higher this morning, tracking Wall Street gains as technology shares rebounded and inflation concerns eased. Trading volumes were thin due to year-end holidays. China, Hong Kong, South Korea and Singapore posted modest gains, while Australia outperformed on higher commodity prices. Japan’s markets were mixed amid currency watch.

US equity futures were mostly flat overnight following a strong start to the shortened trading week. Dow futures rose less than 0.01%, S&P 500 futures 0.03%, and Nasdaq 100 futures 0.1%. Technology stocks led after-hours gains, with Nvidia, Oracle, and Micron advancing, as investors awaited second estimates of Q3 GDP and updates on the PCE price index.

European equities closed slightly lower on Monday, with the STOXX 50 down 0.2% and the STOXX 600 down 0.1%. Investor caution was driven by global rate concerns, AI valuation worries, and renewed Ukraine-Russia tensions. Key decliners included AB InBev, Pernod Ricard, and Stellantis, hit by tariffs and regulatory scrutiny, while trading lacked fresh catalysts.

The US dollar softened in thin holiday trading as investors awaited key GDP and inflation data. The pullback allowed major currencies to firm, with the euro modestly stronger against the dollar. Overall, subdued volumes limited moves, but the near-term bias for the dollar remained slightly weaker.

Crude oil prices edged lower on Tuesday, with Brent down 0.16% and WTI falling 0.11%, as trading remained subdued amid thin year-end volumes. Modest movements reflected cautious investor sentiment, with few participants willing to take large positions during the holiday period. Overall, the market showed limited momentum, typical of year-end trading conditions.

Equities on the move

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

The FDA approved Novo Nordisk’s 25 mg oral semaglutide pill, Wegovy, for chronic weight management in adults with obesity or related conditions. The drug, showing 16.6% average weight loss in trials, strengthens Novo’s position against Eli Lilly, broadens the patient pool, and targets a global weight-loss market projected at $150 billion annually by 2035.

Warner Bros Discovery said it will consider an amended takeover bid from Paramount Skydance, backed by Larry Ellison’s $40 billion personal guarantee, while maintaining its recommendation for Netflix’s $27.75 per-share offer. Paramount’s all-cash $30-per-share bid values Warner at $108.4 billion, with the reverse termination fee raised to $5.8 billion in the latest filing.

Nvidia plans to ship H200 AI chips to Chinese clients before mid-February, marking the first deliveries under the recent policy allowing sales with a 25% fee. Initial orders will use existing stock, with 5,000–10,000 modules, while new production for 2026 is planned. Shipments remain subject to Beijing’s approval, with demand from Alibaba and ByteDance.

ByteDance plans to boost AI investment in 2026, targeting around 160 billion yuan ($23 billion), up from 150 billion yuan this year. Half will fund advanced semiconductors, including AI processors, despite US export restrictions on Nvidia chips. The company may increase spending if restrictions ease, while leasing overseas data centres to support AI development.

Wedbush expects Microsoft to see strong AI-driven growth in 2026, citing underestimated Azure expansion and Copilot deployments. The firm maintains an Outperform rating with a $625 target, projecting AI and cloud momentum could add ~$25 billion to revenue. Microsoft is viewed as a leading enterprise AI player, poised to benefit from the next tech growth wave.

Upcoming data and events

Today’s US economic calendar includes Q3 second estimates for GDP, real consumer spending, corporate profits, and the PCE price index, alongside October durable goods and industrial production data. New home sales from September to November and consumer confidence are also scheduled, with US Treasury auctions and API crude oil stock changes completing the day’s key releases.

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