Equities shrug off Nvidia slip to close higher

General market commentary

Equities pushed higher on Tuesday as weaker-than-expected retail sales, declining consumer confidence and softening labour market indicators strengthened expectations of a December interest-rate cut. The Dow Jones Industrial Average climbed 1.4%, while the S&P 500 rose 0.9% and the Nasdaq Composite added 0.7% in a broad advance led by healthcare, consumer discretionary and communication services. Investors were encouraged by falling Treasury yields, with the 10-year touching 4.0%, which helped support equity valuations. Reports that Ukraine had accepted a US-backed peace framework also contributed to a calmer geopolitical backdrop and a softer US dollar, improving overall market sentiment.

Corporate news added nuance to sector performance. Shares in Nvidia slipped 2.6% after reports that Meta may consider using Google-designed AI chips, while Advanced Micro Devices tumbled 7.4%, making it the weakest performer on both the S&P 500 and the Nasdaq. Despite these tech-sector headwinds, stronger gains elsewhere, particularly among major healthcare names and leading consumer brands, helped to lift the broader indices. Mixed producer price data, showing headline inflation holding firm but core inflation easing, reinforced the view that price pressures are gradually moderating. Combined with signs of economic cooling and rising odds of a December rate cut, this backdrop contributed to a notable decline in market volatility, with the VIX falling nearly 10% during the session.

Latest market and economic update

Asian equities mostly advanced on Wednesday as expectations of a December US rate cut boosted sentiment, lifting technology shares across Japan and South Korea. Australia gained despite hotter inflation, while Hong Kong lagged on Alibaba’s decline. Mainland China saw modest gains, and regional futures pointed to a broadly supportive backdrop.

Wall Street futures steadied overnight after strong gains on rising expectations of a December Fed rate cut, with S&P 500, Nasdaq 100 and Dow Jones futures holding flat. Alphabet and Meta extended gains, while Nvidia and AMD slid further. After-hours trade saw Nvidia down 0.6% and AMD off an additional 1%, reflecting tech-sector caution.

European shares rose on Tuesday despite weak growth, with Germany’s DAX up 1% and France’s CAC 40 gaining 0.8%, supported by hopes of a U.S. rate cut. EasyJet upgraded its holiday business target after exceeding profit expectations, while Compass Group projected 10% fiscal 2026 profit growth, amid continued focus on German economic stagnation.

The US dollar eased further today after soft economic data and expectations of a December rate cut, with markets also factoring in the likely dovish stance of frontrunner Fed chair Kevin Hassett. Against a weaker greenback, the euro rose to $1.1567, supported by progress on the US-backed Ukraine peace plan, while sterling remained largely steady ahead of the UK budget.

Oil prices steadied in Asian trade after Tuesday’s sharp drop, as a smaller-than-expected fall in US crude inventories and rising fuel stockpiles signalled softer demand. Hopes of progress on a Russia-Ukraine peace framework also pressured sentiment by raising the prospect of higher future supply, keeping Brent and WTI near their lowest levels in over a month.

Ukraine has accepted the terms of a revised US-backed peace plan, now 19 points without amnesty or military-size limits. Zelenskiy confirmed ongoing talks after Ukraine’s team returned from Geneva. The US also met Russian officials in Abu Dhabi. Zelenskiy updated Germany’s Chancellor Merz and thanked the US and President Trump for their efforts.

U.S. retail sales rose less than expected in September, suggesting consumer caution amid a weak labour market, tariffs and data delays from the government shutdown. The soft figures, alongside subdued core PPI, strengthened expectations of a December Fed rate cut. Consumer confidence also fell sharply in November as households worried about jobs, finances and politics.

Kevin Hassett, White House National Economic Council Director, is emerging as the frontrunner to become the next Federal Reserve chair, according to sources cited by Bloomberg. Hassett, a close ally of President Trump, is seen as likely to pursue the president’s preferred approach of cutting interest rates, though the final decision remains uncertain, the White House said.

Equities on the move

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

OpenAI expects at least 220 million ChatGPT users to pay for subscriptions within five years, with total users exceeding 800 million, mostly on the free tier. The company currently has around 35 million paid subscribers and offers plans from $5 to $200 monthly, including an ultra-low-cost ChatGPT Go tier, targeting enterprise clients and markets in India and Southeast Asia.

Dell forecast fourth-quarter revenue and profit above Wall Street estimates, driven by strong demand for AI-optimised servers using Nvidia chips. Shares rose 3.5% after-hours. Annual revenue guidance was raised to $111.2–$112.2 billion with adjusted EPS of $9.92, supported by record AI server orders and deals with xAI, G42, and the US Department of Energy.

Alibaba beat Q2 revenue estimates on strong growth in cloud services and one-hour delivery, though adjusted profit missed forecasts and net profit fell 53% due to heavy investments. The company plans further AI spending, aiming to build long-term advantages. Singles’ Day sales surged, while China’s instant retail and consumer AI markets remain highly competitive.

Abercrombie & Fitch raised the lower end of its fiscal 2025 profit forecast to $10.20 per share from $10.00, citing strong demand for Hollister dresses, jeans, and jackets. Shares rallied over 37% as shoppers snapped up on-trend apparel at deeper discounts during early holiday promotions, boosting expected net income to $10.20–$10.50 per share.

Tesla’s European sales plunged 48.5% in October to 6,964 vehicles, cutting its market share to 0.6%, while Chinese rival BYD sold 17,470 cars, capturing 1.6% of the market. Overall EU car sales rose 4.9%, led by hybrids. Tesla’s new low-cost models failed to revive demand amid stiff competition and political controversies.

Warner Bros Discovery has invited improved buyout offers by December 1, following preliminary bids from Paramount, Comcast, Skydance and Netflix. Paramount, backed by Larry Ellison, aims to acquire the entire company, combining HBO Max with Paramount+ and boosting its cinema market share. The board previously rejected Paramount’s $60 billion cash offer.

Supply-chain AI firm o9 Solutions has sued SAP in Dallas federal court, alleging trade secret theft by former o9 executives who joined the German software giant. The complaint claims SAP copied o9’s software design and implementation, seeking to prevent further use and secure damages. SAP’s shares fell 1.3% following the news.

Yardeni Research suggests the early-November equity pullback may be ending, aided by rising expectations of a December Fed rate cut. AI-linked shares, including Alphabet and Nvidia, rebounded, while Bitcoin recovered. Foreign investment in U.S. assets remains strong, with record private equity and Treasury purchases, supporting market stability despite prior volatility.

UBS upgraded Applied Materials to Buy and lifted its target to $285, citing a far stronger outlook for wafer fab equipment. It expects a major DRAM-driven spending surge in 2026 and sees China demand as underappreciated. UBS says Applied Materials will be the biggest beneficiary, regain share, and deliver higher-than-consensus 2027 earnings.

Macquarie initiated coverage of ServiceNow with a Neutral rating and $860 target, noting strong SaaS operations but limited upside at 10.8x forward revenue versus peers. It highlighted growth in AI adoption, workflow automation, and FY24 subscription revenue of $10.65B, while cautioning on integration risks and weak sentiment toward large SaaS equities.

Argus downgraded Coinbase to Hold from Buy, citing a stretched valuation at 39x 2026 EPS versus 24–27x for peers. Despite rising earnings, increased trading volumes, and growth in USDC and derivatives, risks include crypto volatility, higher costs, and recent share declines. Q3 EPS rose to $1.50; 2025–26 EPS forecasts cut.

Rothschild sees global Beauty stabilising and returning to 4–4.5% growth next year, with faster-changing trends favouring diversified, innovation-led groups. It upgraded L’Oréal to Buy, reiterated Beiersdorf, and downgraded Estée Lauder on weak margin prospects. Puig and Coty were initiated at Neutral amid slowing fragrance growth and limited margin upside.

UBS upgraded its view on Eurozone equities to Attractive, citing a recent pullback as a buying opportunity. Strategists highlight improving cyclicals, structural reforms, and valuation appeal, with the Stoxx 50 seen reaching 6,200 by year-end 2026. Sector picks include Industrials, IT, Utilities, and banks, supported by fiscal stimulus, ECB policy, and robust profit growth.

Upcoming data and events

Key U.S. economic data on Wednesday includes jobless claims, GDP, building permits, durable goods orders, new home sales, core PCE inflation, and EIA crude oil inventories, offering insights into employment, housing, manufacturing, inflation, and energy. Major earnings focus on Deere & Co, reporting before the open.

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