Markets cautious ahead of key US jobs data

General market commentary

Equity markets weakened on Monday after a positive start to the session, as selling pressure built through the day and extended the declines seen late last week. The technology-heavy Nasdaq Composite led the losses, falling 0.6 percent, weighed down by further weakness in large technology equities such as Broadcom and Oracle following recent earnings-related concerns. The S&P 500 slipped 0.2 percent, while the Dow Jones Industrial Average was marginally lower. Technology, energy and communication services were the weakest sectors, while health care, utilities and consumer discretionary equities provided some support.

Smaller companies also came under pressure, with the Russell 2000 index down 0.7 percent on the day, although it remains higher for the month, reflecting a recent rotation away from large capitalisation technology equities. In fixed income markets, government bonds rallied modestly, with shorter dated US Treasury yields falling as investors positioned cautiously ahead of key economic data releases later in the week. Overall sentiment was restrained, as investors weighed profit taking after strong gains earlier in the year against uncertainty around upcoming labour market and inflation data.

Latest market and economic update

Asian equities fell on Tuesday, extending recent losses as technology shares remained under pressure from concerns over stretched artificial intelligence valuations. Weak cues from Wall Street, caution ahead of key US and regional economic data, and fears of a more hawkish Bank of Japan weighed on sentiment, with losses across Japan, China, Hong Kong and South Korea.

Wall Street futures edged lower overnight as technology shares stayed under pressure and investors turned cautious ahead of key US labour market and inflation data. Recent weakness in tech, driven by profit taking and concerns over AI valuations, weighed on sentiment, with markets closely watching nonfarm payrolls and CPI for clues on Federal Reserve policy.

European equities rose, with the Euro STOXX 50 up 0.7% and STOXX Europe 600 gaining 0.8%, recovering from Friday’s tech-led selloff. Broad-based gains were offset by losses in defense shares, including Rheinmetall, Hensoldt, and Renk, after Ukraine signalled a potential shift on NATO membership. Investors also positioned ahead of European central bank meetings.

The US dollar edged lower in Asian trade, continuing a decline following the Federal Reserve’s recent rate cuts and commencement of $40 billion in monthly short-term Treasury purchases. Markets remained cautious ahead of November nonfarm payrolls and CPI data, with the dollar under modest pressure against major currencies, including the euro, as investors priced in a dovish Fed outlook.

Oil prices edged lower in Asian trade this morning, weighed down by expectations of a supply glut in 2026. Markets focused on potential progress in Russia Ukraine ceasefire talks, which could boost Russian exports, while largely overlooking rising tensions with Venezuela and awaiting key US labour market and inflation data.

Equities on the move

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

PayPal has applied to become a US bank, seeking approval from the FDIC and Utah regulators to form a Utah-chartered industrial loan company. If approved, PayPal Bank would boost small-business lending, expanding the company’s financial services beyond payments and supporting growth and capital access for US businesses.

Ford will take a $19.5bn writedown as it scales back larger electric vehicle plans, including the F-150 Lightning, shifting to extended-range EVs, hybrids and petrol models amid weaker demand and reduced US policy support. The company raised its 2025 EBIT guidance to $7 billion, redeploying capital into higher-return areas, US manufacturing, battery storage, and smaller, affordable EVs.

ServiceNow shares fell over 11% yesterday after reports it is in advanced talks to acquire cybersecurity firm Armis for up to $7 billion, potentially its largest deal of 2025. Armis, with $300 million annual revenue, would strengthen ServiceNow’s OT security offerings, though the size of the transaction raised investor concerns about sustaining 20%+ growth.

Nasdaq plans to submit SEC paperwork to launch near 24-hour trading, extending sessions from 16 to 23 hours across five days. The move, aimed at global investors, would introduce a Day Session, a one-hour maintenance break, and a Night Session. NYSE and Cboe have announced similar expansions, signalling a shift in US market structure.

Elon Musk has become the first person to reach a $600 billion net worth, driven by his 42% stake in SpaceX, which could go public next year at an $800 billion valuation, potentially adding $168 billion to his wealth. His fortune is also supported by Tesla shares and AI venture xAI, seeking $15 billion funding at a $230 billion valuation.

Citigroup set a 2026 year-end S&P 500 target of 7,700, citing strong corporate earnings and AI-driven investment tailwinds. The brokerage expects AI adoption to shift from enablers to users, projecting index EPS of $320. Citi sees potential volatility, with a bull-case of 8,300 and a bear-case of 5,700, reflecting ongoing market uncertainties.

Jefferies upgraded KLA Corp. to Buy, citing accelerating AI-driven spending and strong demand for leading-edge and advanced packaging. The firm raised its 2026 revenue forecast to $14 billion and 2027 to $15.5 billion, with a price target of $1,500, highlighting KLA’s strong exposure to wafer fab equipment and AI-related capacity growth.

Macquarie initiated coverage of Pony.ai with an Outperform rating, highlighting 2026 as a key inflection year for robotaxi commercialisation in China. The broker expects the fleet to triple, hardware costs to fall, and profitability to improve through asset-light partnerships, regulatory approvals, and operational scaling, setting a price target of $29.

Upcoming data and events

Key economic data on Tuesday includes UK unemployment and PMI readings, Germany’s ZEW Economic Sentiment and HCOB Manufacturing PMI, and a slew of US reports. In the US, focus is on November nonfarm payrolls, unemployment, wages, retail sales, housing starts, building permits, industrial and manufacturing production, capacity utilisation, and S&P Global flash PMIs for December.

This information is provided solely for educational and informational purposes and should not be construed as investment advice, advice on specific investments or investment decisions, tax advice, legal advice, or any other form of professional or regulatory advice. The information does not take into account your personal circumstances and is provided to you on the express understanding that it does not constitute advice and should not be relied upon in making any investment decision. Investing in financial instruments involves risk. You should conduct your own research before making any investment decisions and seek the assistance of a licensed financial advisor if you are unsure. No person should act on any opinion or information contained in this document without first obtaining appropriate professional advice. Calamatta Cuschieri Investment Services Limited does not accept liability for any actions, proceedings, costs, demands, expenses, damages, or losses suffered as a result of reliance on the information herein.