Ferrari shares tumble as guidance disappoints

General market commentary

Equity markets closed slightly lower on Thursday as investors took a pause following recent record highs for the S&P 500 and Nasdaq. Sentiment was weighed by a lack of fresh guidance from the Federal Reserve after meeting minutes revealed divisions among policymakers on the pace of future rate cuts. Fed Chair Jerome Powell offered no new insights, while officials expressed differing views on how persistent inflation might prove to be. The mixed messaging, combined with rising Treasury yields, dampened risk appetite. The Dow Jones Industrial Average fell 0.5%, the S&P 500 slipped 0.3%, and the Nasdaq edged down less than 0.1%, with industrials, energy, and materials among the weakest performers.

Meanwhile, geopolitical developments and shifting commodity prices added to market uncertainty. Gold retreated from record highs following reports of a ceasefire agreement between Israel and Hamas, while oil prices also fell. The US dollar extended its rally, supported by global political uncertainty and expectations of continued policy divergence. Despite the cautious tone, individual company results provided some bright spots, with Delta Air Lines and PepsiCo rising sharply after posting stronger-than-expected earnings and upbeat outlooks. Overall, the day reflected a modest pullback in equities as investors reassessed monetary policy expectations and awaited further clarity on the US government shutdown and upcoming corporate earnings.

Latest market and economic update

Most Asian equities fell on Friday as investors took profits in technology shares following Wall Street’s pullback. Japan and China declined amid inflation concerns and renewed tech weakness, while Hong Kong was dragged lower by chipmaker and biotech losses. In contrast, South Korea outperformed, with the KOSPI hitting record highs on strong semiconductor gains.

US equity futures inched higher overnight after the S&P 500 and Nasdaq Composite fell from record highs on Thursday. Investors weighed the AI-driven rally, potential rate cuts, and the ongoing government shutdown, which has delayed key economic data. Focus now shifts to third-quarter earnings, with major banks reporting next week, while Delta and PepsiCo rose on strong results.

European equities fell from record levels yesterday, with the Stoxx 50 and Stoxx 600 down around 0.4 per cent. Banks, led by HSBC, declined over 1 per cent, while luxury and consumer goods shares fell sharply, including Ferrari, LVMH, Hermès, and L’Oréal. Novo Nordisk also dipped on its US acquisition plans, while attention centred on France’s political developments.

The US dollar index remained above 99.3 this morning, poised for a 2 per cent weekly gain, its strongest in a year, supported by weakness in the euro and yen. The euro fell to around 1.1570, down about 1.5 per cent amid political turmoil in France, while uncertainty from the US government shutdown and rate cut expectations continued to influence sentiment.

Oil prices steadied in early Asian trade on Friday after a ceasefire between Israel and Hamas reduced the geopolitical risk premium, while fresh US sanctions on Iran signalled tighter future supplies. Brent rose to $65.30 and WTI to $61.14 a barrel. Markets remained cautious amid high supply, weak demand, and expectations of softer US fuel consumption this winter.

San Francisco Fed President Mary Daly said the recent rate cut reflected signs of a slowing economy, easing inflation, and a softening labour market that could worsen without action. She noted policy remains modestly restrictive and hinted at further cuts. Daly also said AI could accelerate productivity gains as firms adopt it amid weaker demand.

ECB officials agreed that the current policy stance remains aligned with the 2 per cent medium-term inflation target, despite differing views on upside and downside risks. While the eurozone economy is relatively strong, growth is weak and faces geopolitical and fiscal challenges. Borrowing costs were cut by 200 basis points, with rates expected to remain stable in the near term.

Equities on the move

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

Ferrari’s shares plunged over 15% after its 2030 financial targets disappointed, wiping €13.5 billion from its market value. Revenue guidance of €9 billion fell short, while EV ambitions were scaled back to 20% fully electric. The Elettrica EV was unveiled, with plans for four new models yearly, expanded lifestyle stores, and global client engagement initiatives.

Latin American e-commerce giant MercadoLibre will enter Brazil’s online pharmaceutical market through its newly acquired drugstore, marking its first step in the sector. The company aims to enable small and medium-sized pharmacies to sell via its platform rather than compete directly. Future expansion and regulatory updates will depend on the initial store’s performance.

Delta Air Lines reported stronger-than-expected third-quarter profits, boosted by high-end travel demand and reduced domestic seat capacity, which lifted ticket prices. The airline expects record earnings and revenue growth of 2 to 4 per cent in the December quarter. Premium travel accounted for 43 per cent of passenger revenue, supporting plans to expand premium offerings.

PepsiCo exceeded third-quarter revenue and profit expectations, driven by strong demand for snacks, sodas, and healthier drinks in the US and international markets. The company appointed Walmart’s Steve Schmitt as CFO, plans new product launches, and aims to cut costs, including closing plants and reducing product lines, while maintaining organic growth and margin targets.

TSMC reported third-quarter revenue of $32.47 billion, up 30% year-on-year and exceeding analyst forecasts, driven by strong demand for AI-related chips. The result sits within its July guidance of $31.8–$33 billion. TSMC, which supplies Nvidia and Apple, has benefited from AI growth, offsetting weaker consumer electronics demand, with shares up 34% year-to-date.

Levi Strauss raised its full-year profit forecast but missed Wall Street expectations due to costs from US import tariffs, sending shares down 7.7 per cent in extended trading. Strong third-quarter sales and demand for wide-leg denim helped offset some pressure, while the company prepared holiday inventory and raised prices to mitigate ongoing tariff impacts on margins.

Citigroup rejected Grupo Mexico’s $9.3 billion bid for its Mexican retail unit, Banamex, opting to proceed with a prior deal instead. Citi plans to sell a 25 per cent stake to billionaire Fernando Chico Pardo for around $2.3 billion, aiming to responsibly divest the unit and maximise shareholder value, while exploring other local interest.

Porsche delivered 212,509 vehicles in the first nine months of 2025, with electrified models rising to 35.2% of total sales. Macan deliveries surged 18%, over half fully electric. Taycan and Cayenne fell, while North America and Emerging Markets saw growth. China and Germany declined. Porsche emphasises supply management and expanding EV adoption globally.

NVIDIA shares rose 1.8 per cent to a 52-week high after Cantor Fitzgerald raised its price target to $300, citing strong AI growth. Analyst C.J. Muse highlighted partnerships with OpenAI, full-stack AI solutions, and market dominance potential. EPS forecasts are $8 for 2026 and $11 for 2027, underpinning a projected 60 per cent near-term upside.

Morgan Stanley highlighted Microsoft as the leading beneficiary of Generative AI spending, citing its strong alignment with CIO priorities, cloud dominance, and extensive AI infrastructure. Surveyed CIOs expect Microsoft to gain the largest incremental GenAI and IT budget share through 2025–2028. Azure leads public cloud growth, supporting the bank’s Overweight “Top Pick” rating.

BMO Capital Markets raised its price target for Alphabet shares to $294, citing the company’s growing AI leadership across Search, Cloud, and YouTube. The bank highlighted AI-driven revenue gains, stronger Google Cloud growth, and monetisation benefits for publishers. BMO maintained an Outperform rating, noting AI integrations and creator support as key drivers of future growth.

Baird Equity Research initiated coverage of Oracle with an “Outperform” rating and a $365 price target, citing its strong position in AI, cloud, and data infrastructure. Oracle’s revenue is expected to rise from $57.4 billion in fiscal 2025 to $67.1 billion in 2026, driven by 40% cloud growth, despite rising competition and high capital spending.

Deutsche Bank upgraded Burberry and LVMH to “buy” amid third-quarter sales gains in European luxury shares, raising target prices to 1500p and €635. Richemont and Kering remained on “hold,” while Hermes slightly lowered its target. The bank highlighted early recovery and potential upside from a Chinese rebound in 2026.

Berenberg upgraded DraftKings to Buy, citing an overreaction to its recent 20% share drop amid continued growth and margin improvement. The brokerage set a $43 target, noting weak September sports results slightly impacted estimates. With U.S. online gambling still under-penetrated, DraftKings’ long-term prospects remain strong, and the sell-off is seen as unjustified.

Upcoming data and events

Today, the University of Michigan Sentiment and the September Federal Budget Balance will provide key economic indicators. In earnings, European automakers BMW and Porsche are leading market focus with important updates.

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