Equity markets tumble on waning rate cut bets

General market commentary

US equities fell sharply on Thursday, with the Nasdaq sinking 2.3% to 22,870.4, the S&P 500 dropping 1.7% to 6,737.5 and the Dow Jones Industrial Average sliding 1.7% to 47,457.2. Technology shares led the retreat, with Tesla down 6.6% and Palantir Technologies falling 6.5%, as investors reassessed growth valuations amid a sharp fall in the perceived odds of a December interest rate cut. Disney shares also fell 8% after quarterly revenue missed estimates. Rising Treasury yields added further pressure to long-duration assets, while small cap equities lagged and only the energy and consumer staples sectors avoided declines. Sentiment was further weighed down by uncertainty over delayed economic data releases, even as the government reopened following the longest shutdown in US history. Comments from several Federal Reserve officials underscored that inflation remains stubborn, making additional monetary easing far from assured.

Broader market trends showed that enthusiasm for artificial intelligence continues to drive long-term investment themes, although increased scrutiny of valuations has amplified volatility, particularly among mega cap technology shares such as Nvidia. While the pullback highlighted the risks of overconcentration in growth sectors, market leadership has begun to broaden, with value-oriented areas such as health care, materials, financials and energy showing relative resilience. Analysts continue to emphasise the importance of maintaining balanced exposure between growth and value, especially for portfolios that may have become heavily tilted toward technology after several years of strong performance.

Latest market and economic update

Most Asian equities fell on Friday as expectations for a US interest rate cut in December faded, with technology shares leading losses. South Korea’s KOSPI dropped 2.5%, Japan’s Nikkei 225 fell 1.6%, and Hong Kong’s Hang Seng lost 0.7%. Weak Chinese industrial production and AI-related tech sell-offs, including SoftBank, Samsung and SK Hynix, weighed on markets.

Wall Street futures edged higher overnight, with S&P 500 Futures rising 0.2% to 6,773, Nasdaq 100 Futures gaining 0.2% to 25,137.5, and Dow Jones Futures up 0.2% at 47,640. The modest after-hours rebound followed steep intraday losses as investors scaled back expectations for a December rate cut and weighed ongoing weakness in the technology sector.

European shares closed lower on Thursday as investors focused on upcoming U.S. economic data following the end of the government shutdown. The STOXX 600 fell 0.6%, Germany’s DAX lost 1.4% and the FTSE 100 dropped 1.1%. Siemens slumped 9.4% after a disappointing profit outlook, while Merck rose on positive third-quarter earnings.

The US dollar remained subdued on Friday, trading near 99.2 and set for a second weekly decline amid uncertainty over the economic impact of the recent government shutdown. EUR/USD hovered around 1.1640, reflecting dollar weakness, as markets sharply reduced expectations for a December Fed rate cut to roughly 50%, down from over 95% a month ago.

Oil prices surged in Asia this morning after a Ukrainian drone attack damaged a Russian Black Sea oil depot, while upcoming U.S. sanctions on Russia’s largest oil firms also supported crude. Brent rose 2% to $64.26 a barrel and WTI 2.1% to $59.84. Oversupply concerns for 2026 and rising U.S. inventories, however, limited further gains.

Chinese industrial production rose 4.9% year-on-year in October, below expectations of 5.5% and down from September’s 6.5%, as domestic demand remained weak and trade tensions with the US weighed on exports. Fixed asset investment fell 1.7%, while retail sales grew 2.9%, slightly above forecasts, supported by Golden Week and early Singles Day spending.

Equities on the move

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

Applied Materials warned that U.S. export controls will curb chipmaking equipment sales to China in 2026, though strong memory demand from AI investments may partially offset the impact. The company forecast current-quarter revenue of $6.85 billion and profit per share of $2.18. Shares fell over 4% in after-hours trading, reflecting limits on its China market access.

Walt Disney missed quarterly revenue expectations as declines in its TV business, including a YouTube TV blackout, outweighed growth in streaming and parks. Shares fell almost 8%. The company added 12.5 million streaming subscribers, raised its dividend 50%, doubled its buyback plan, and is exploring AI for content creation, while traditional TV profit and film revenue lagged.

Siemens Energy raised its mid-term targets through 2027/28 after strong performance in gas turbines and grid technology. Comparable revenue is now expected to grow at a high double-digit annual rate, up from prior high single- to low double-digit projections. Adjusted profit margins are forecast at 14–16%, exceeding analyst expectations of 13.5%.

German insurer Allianz raised its full-year profit guidance after reporting strong operating results for the first nine months of 2025. Operating profit rose to €13.1 billion from €11.8 billion a year earlier. Allianz now expects 2025 operating profit of €17–17.5 billion, above its previous €15–17 billion range, ahead of a full results release this morning.

S&P Global aims for medium-term double-digit growth in adjusted diluted earnings per share and plans to expand adjusted operating margins by 50–75 basis points. The financial information and analytics firm also announced a new share repurchase programme, authorising the buyback of up to 30 million shares, supporting shareholder returns.

Hims & Hers Health is expanding into lab testing as part of its preventive healthcare focus, offering tests at over 1,000 Quest Diagnostics locations. Customers can receive results and personalised care plans via the platform. Pricing ranges from $199 to $499, covering 50–120 biomarkers. CEO Andrew Dudum expects the service to attract new users and grow into a $1 billion business.

Merck is close to acquiring flu treatment maker Cidara Therapeutics, reportedly outpacing rivals in a bidding war, with a deal potentially announced Friday. Cidara shares rose nearly 39% after hours, while Merck fell 1.6%. The acquisition aims to offset future Keytruda revenue losses and follows Merck’s recent $10 billion purchase of Verona Pharma.

Paramount, Comcast and Netflix are preparing bids for Warner Bros. Discovery, with non-binding first-round offers due by November 20. Paramount aims to acquire the entire company, while Comcast and Netflix target the movie and TV studios plus HBO Max, excluding cable networks such as CNN, TNT and Discovery Channel. The auction is expected to conclude by year-end 2025.

CoreWeave shares fell 8.3% after The Verge reported the company sits at "the heart of the AI bubble," raising concerns over its business model and heavy reliance on Nvidia. Originally a crypto miner, CoreWeave now leases Nvidia-powered AI data centres to firms like Meta and OpenAI. The full investigative report is expected next week.

Wedbush added Meta Platforms to its Best Ideas list, citing improved investor sentiment after Q3 results. Revenue rose 26%, while operating costs climbed 32%, and a $16 billion one-off charge hit profits. Analysts highlighted strong core advertising growth, AI investments, and upcoming hardware launches, seeing compelling risk/reward. Capex is expected at $70–72 billion for 2025.

Morgan Stanley named Micron Technology its top pick, raising the price target to $325, citing a 2018-style DRAM supply shortage driving strong pricing and earnings. The firm forecasts $25 EPS in 2026, with DDR5 spot prices tripling and double-digit margin gains expected, while AI demand supports further upside despite elevated valuations.

Wedbush upgraded DoorDash and Booking Holdings to Outperform after recent declines. DoorDash retains a leading U.S. position, with initiatives expanding its global footprint despite short-term margin pressure. Booking benefits from strong travel demand, alternative lodging gains, cost efficiencies, and robust liquidity, supporting long-term growth and valuation upside.

Wells Fargo upgraded Nike to Overweight, raising its price target to $75, citing improved earnings visibility and stabilising sales. Positive earnings are expected in six to nine months, with fiscal 2026–27 EPS of $1.70–$2.40. Classics headwinds are easing, non-Classics footwear growth exceeds 20%, and gross margins are supported by better pricing, lower liquidations, and China recovery.

Morgan Stanley downgraded DHL to “equal-weight” from “overweight,” citing persistent revenue weakness despite cost-cutting gains. Shares have risen 17% YTD, but structural headwinds in Express and tepid e-commerce limit upside. FY26–27 EBIT is projected below targets, with growth reliant on volume recovery. The 4.6% dividend offers primary downside protection.

Kepler Cheuvreux downgraded RWE to Reduce, citing unsustainable valuations after a sharp rally driven by data-centre demand optimism. Shares fell over 2% Thursday. Analyst Ingo Becker warned the shares have moved into premium territory, with fundamentals unlikely to support the price. Despite raising the target to €43.50, RWE trades above reasonable valuation.

Bernstein remains positive on the cruise sector despite 16–27% share declines, forecasting Q4 yield growth of 3.5–4.3% and a strong 2026 outlook. They highlight long-term demand, slowing supply, and favourable demographics, citing Royal Caribbean as a preferred pick with potential for double-digit core income growth and improved margins next year.

Upcoming data and events

Today’s economic calendar features key productivity figures, continuing jobless claims, and multiple speeches from Federal Reserve officials, including Atlanta Fed President Raphael Bostic. Earnings season continues with notable reports from European firms such as Allianz, Richemont and Swiss Re.

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