Megacaps push markets into further record territory

General market commentary

US equity markets advanced on Tuesday, with gains once again led by mega-cap technology companies ahead of a key wave of earnings reports. A 1.3% rise across the “Magnificent Seven” helped push major large-cap indices to fresh record highs, while most other sectors finished the session lower, leaving the equal-weighted S&P 500 in negative territory. The Nasdaq Composite rose 0.8% to 23,827.5, the Dow Jones Industrial Average added 0.3% to 47,706.4, and the S&P 500 gained 0.2% to close at 6,890.9. Outside the US, European markets traded mixed as materials equities came under pressure from weaker commodity prices, while Asian equities also edged lower. In the bond market, US Treasury yields were little changed, with the 10-year note hovering around 4%, while oil prices slipped below $60 per barrel and gold extended its decline to trade under $4,000 per ounce.

Corporate earnings continued to provide a positive backdrop, with several companies posting stronger-than-expected results. UPS surged 8% after upbeat guidance, while UnitedHealth Group lifted its outlook and PayPal gained nearly 4% after announcing a partnership with OpenAI to integrate its payment system into ChatGPT. Tech names remained in focus as investors awaited quarterly results from Microsoft, Alphabet, and Meta, due Wednesday, followed by Apple and Amazon later in the week. Meanwhile, sentiment was underpinned by optimism over AI developments, including Microsoft’s agreement to take a 27% stake in OpenAI. Markets are now turning their attention to the Federal Reserve’s policy decision, with expectations for a further 25-basis-point rate cut as the central bank navigates limited economic data amid the ongoing US government shutdown.

Latest market and economic update

Asian equities were mixed this morning, lifted by record highs on Wall Street but weighed by weaker Australian shares after hotter inflation data reduced prospects of near-term rate cuts. Japan’s Nikkei and South Korea’s KOSPI hit record highs on AI optimism, while China’s markets edged higher and Hong Kong’s Hang Seng slipped slightly.

U.S. equity futures were largely unchanged overnight after Wall Street’s major indexes closed at record highs for a third consecutive session. S&P 500 and Nasdaq 100 futures rose 0.1%, while Dow futures slipped 0.1%, as investors awaited the Federal Reserve’s expected rate cut and monitored US-China trade developments and upcoming tech earnings.

European equities closed slightly lower on Tuesday following record highs, weighed down by mixed earnings. Pharmaceutical firms led losses, with Novartis down 4.3% and Roche and Novo Nordisk falling 2.5%. BNP Paribas also declined 3.5%. Gains were seen in HSBC, Iberdrola, and notably Nokia, which surged 20% after Nvidia announced a $1 billion investment.

The US dollar held steady ahead of the Fed’s widely anticipated 25-basis-point cut, with markets focused on Chair Powell’s comments for guidance on future monetary policy and potential market impact. EUR/USD traded around 1.1656, supported by cooling US inflation and expectations of continued Fed easing amid moderate risk sentiment.

Oil prices edged higher in Asia as renewed Israel-Hamas clashes raised concerns over Middle East supply disruptions, while U.S. sanctions on Russia and a surprise draw in U.S. inventories offered support. However, gains were limited ahead of the Federal Reserve’s rate decision and amid worries about rising OPEC+ production and oversupply.

Equities on the move

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

US President Donald Trump said he would discuss Nvidia and its flagship AI chip, Blackwell, with Chinese President Xi Jinping during their upcoming meeting in South Korea. His remarks boosted Wall Street futures, while Nvidia’s shares hit record highs after CEO Jensen Huang praised Trump and emphasised the company’s expanding US investments despite export restrictions to China.

Microsoft and OpenAI announced a restructuring deal allowing OpenAI to operate more like a traditional company while remaining controlled by a nonprofit. Microsoft retains a 27% stake and a $250 billion Azure contract. The move removes capital and compute constraints, paves the way for a potential IPO, and supports CEO Sam Altman’s ambitious AI and data centre expansion plans.

Booking Holdings beat third-quarter revenue and profit estimates, driven by steady travel demand and increased customer bundling. Gross bookings rose 14% to $49.7 billion, while adjusted profit reached $99.50 per share, surpassing forecasts of $95.66. Total revenue of $9.01 billion also exceeded expectations, sending shares up nearly 4% in after-hours trading.

Visa narrowly beat fourth-quarter profit estimates, reporting adjusted net income of $5.80 billion and revenue of $10.72 billion, driven by strong consumer spending in the US. Global payments volume rose 9%, while cross-border growth slowed to 12%. The company expects low double-digit revenue growth in FY 2026, and shares rose about 0.3% in after-hours trading.

Mondelez International cut its annual profit forecast as higher cocoa costs and price-conscious consumers weighed on chocolate and snack sales in North America and Europe. Volumes fell 7.5% in Europe and 1.8% in North America. The company raised prices and adjusted its 2025 earnings per share decline to around 15%, while quarterly revenue slightly beat estimates.

Enphase Energy forecast fourth-quarter revenue below Wall Street expectations, citing US tariffs that cut margins by around 5 percentage points, sending shares down over 8% after hours. The solar inverter maker beat third-quarter estimates with a 29% US revenue rise and 90 cents per share profit, but ongoing trade tariffs and clean energy policy changes weigh on outlook.

South Korea’s SK Hynix reported a record Q3 operating profit of 11.4 trillion won, driven by strong AI-driven demand for memory chips. The company has sold out all production for next year, plans to boost investment, and expects DRAM and high-bandwidth memory (HBM) supply constraints to sustain a prolonged “super cycle,” with shipments set to grow over 20% in 2026.

PayPal shares rose 4% after announcing a partnership with OpenAI, enabling ChatGPT users to buy products via its platform. The company raised its full-year adjusted EPS forecast to $5.35–$5.39 and declared its first-ever dividend of 14 cents per share. Q3 revenue grew 6% to $8.4 billion, with EPS at $1.34.

UnitedHealth Group raised its 2025 profit forecast to at least $16.25 per share and aims for accelerating growth in 2026 and 2027 under CEO Stephen Hemsley. Third-quarter adjusted earnings beat estimates at $2.92 per share, despite ongoing Medicaid challenges and high medical costs. Optum Rx revenue rose 16%, while Optum Health remained flat.

United Parcel Service beat third-quarter profit and revenue estimates, reporting $1.74 per share and $21.4 billion in revenue, as cost-cutting and a 48,000-job reduction boost margins. Shares rose 8%. Despite lower volumes from Amazon, UPS projects strong fourth-quarter revenue of $24 billion, driven by holiday deliveries and ongoing operational restructuring.

Royal Caribbean forecast fourth-quarter profit below expectations, citing higher fuel, maintenance, and drydocking costs, sending shares down 8.5%. Fourth-quarter adjusted EPS is $2.74–$2.79 versus $2.89 expected. Fiscal 2025 EPS guidance of $15.58–$15.63 also missed forecasts, though third-quarter results beat estimates and cruise demand remains strong among higher-income customers.

Cameco shares rose 23% after the U.S. announced an $80 billion partnership with Brookfield to accelerate Westinghouse nuclear reactor construction, jointly owned by both. The deal includes financing, permits, workforce expansion, and potential IPO plans, positioning Cameco as a key beneficiary of renewed nuclear investment and boosting long-term uranium and fuel services prospects.

Nordex shares surged 23% after the German wind turbine maker raised its 2025 core income margin guidance to 7.5–8.5%, citing strong project and service execution. Q3 preliminary core profit reached €136 million with an 8% margin, up from €72 million a year ago. Full-year sales are projected at €7.4–7.9 billion.

Thermo Fisher is reportedly close to an all-cash acquisition of US-based Clario, potentially valuing the clinical trial data management firm at around $10 billion. If completed, it would be Thermo Fisher’s largest purchase since its $17.4 billion PPD takeover in 2021, following recent acquisitions and a raised profit and revenue forecast.

Uber and Stellantis announced a partnership to deploy one of the world’s largest autonomous vehicle networks, using NVIDIA’s AI-driven DRIVE AGX Hyperion platform. Stellantis will supply at least 5,000 Level 4 vehicles, while Uber manages operations. The initiative includes a robotaxi data factory to collect over 3 million hours of driving data, advancing safer, efficient urban mobility.

Eli Lilly is partnering with Nvidia to build a supercomputer for AI-driven drug discovery, accelerating development and expanding research. Biotech firms can access proprietary models via Lilly TuneLab while protecting data. Applications include drug discovery, manufacturing, medical imaging, and enterprise AI, reflecting a shift to AI as a scientific collaborator.

Tesla is considering internal CEO candidates if Elon Musk departs, amid uncertainty over a $1 trillion pay plan at next week’s shareholder meeting, Bloomberg reported. Board chair Robyn Denholm urged support for the package to retain Musk, who remains central to Tesla’s identity and self-driving and robotics ambitions, despite a shallow management bench.

Jefferies upgraded Nokia to “buy” from “hold,” raising its price target to €6.60, citing rising AI-driven data centre demand. Strong Optical Networking and Cloud & Network Services performance, along with the Infinera merger, supports revenue growth and higher margins. Network Infrastructure and AI investments are expected to drive steady growth through 2027.

Upcoming data and events

Today promises a busy schedule, with the US Fed set to announce its interest rate decision and hold a press conference, alongside housing, trade, and inventory data, plus EIA crude and fuel stock updates, while major companies including Microsoft, Alphabet, Meta, Caterpillar, and ServiceNow release earnings, offering insights into tech, industrials, and consumer demand.

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