Netflix slides on earnings miss

General market commentary

Major U.S. equity markets were mixed on Tuesday following a sharp rally on Monday, with the Dow Jones outperforming the S&P 500 and the technology-heavy Nasdaq. The Dow rose 0.5% to 46,924.7, reaching a new closing high, while the S&P 500 ended largely flat at 6,735.4 and the Nasdaq slipped 0.2% to 22,953.7. Gains were supported by solid third-quarter earnings, with 83% of companies exceeding expectations, above the 10-year average of 75%. Consumer discretionary equities outperformed, while utilities lagged, and broader market sentiment was supported by expectations of Federal Reserve policy easing and a potential U.S.-China trade deal.

Among major movers, 3M shares jumped 7.7% after reporting better-than-expected results and raising its full-year earnings guidance. Coca-Cola shares rose 4.1% on strong revenue and pricing gains, while General Motors climbed nearly 15% after lifting its full-year outlook. Warner Bros. Discovery surged 11% after initiating a review of strategic alternatives, including a potential sale. Meanwhile, precious metals fell sharply, with gold down 5.5% and silver sliding 7%, as Treasury yields declined and the dollar strengthened.

Latest market and economic update

Asian markets slipped on Wednesday, led by tech weakness, as investors weighed Japan’s trade deficit and new Prime Minister Sanae Takaichi’s economic policies. Japan’s Nikkei fell 0.5%, while China, Hong Kong, and Australia also declined. South Korea and Indian futures rose. Attention focused on US-China tensions, India-US trade talks, and upcoming US CPI data.

U.S. equity futures edged lower overnight, with S&P 500 futures down 0.1%, Nasdaq 100 futures falling 0.2%, and Dow futures slipping 0.1%. In after-hours trading, Netflix shares dropped over 6% after weak results, while Mattel fell 5%. Investors now await Tesla’s earnings and key U.S. inflation data later this week.

European shares closed slightly higher on Tuesday, with the STOXX 600 up 0.2%, led by French equities LVMH and Hermès, and industrials Airbus and Safran, which boosted the broader market. Other major European shares also saw modest gains, reflecting cautious investor optimism amid mixed corporate earnings.

The dollar index hovered around 98.9 on Wednesday after a sharp rise in the previous session, supported by a softer yen amid expectations of Japan’s expansionary fiscal policies. EUR/USD traded at 1.1609. Investors weighed the US economic outlook amid the ongoing government shutdown, optimism over a possible China trade deal, and focus on Friday’s CPI ahead of a likely Fed rate cut.

Oil prices edged higher in Asian trade after a planned Trump-Putin summit fell through, signalling continued Ukraine conflict and potential supply disruptions. Brent rose 0.3% to $61.53, WTI 0.4% to $57.47, supported by a US inventory draw of 2.98 million barrels, easing some concerns over high supplies and sluggish demand.

A planned Trump-Putin summit in Hungary has been put on hold as Russia rejects an immediate Ukraine ceasefire, demanding control of the Donbas region. Preparatory meetings were postponed, with Washington unwilling to proceed without concessions. European leaders stress fighting must stop at current lines, while both sides leave the possibility of a future summit open.

India and the U.S. are close to a trade deal that could cut tariffs on Indian exports to 15–16% from 50%, the Mint reported. Talks focus on energy and agriculture, with India likely to reduce Russian oil imports. Some issues, including dairy, remain unresolved, with an announcement possible at the ASEAN Summit.

Equities on the move

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

Netflix missed Q3 earnings expectations due to a $619 million Brazilian tax expense, with net income at $2.5 billion and EPS $5.87 versus $3 billion and $6.97 forecast. Revenue met estimates at $11.5 billion. Shares fell 6.5% after-hours. Netflix expects slightly stronger Q4 revenue and EPS, while expanding in advertising, video games, and major content releases.

OpenAI launched ChatGPT Atlas, an AI-powered web browser, challenging Google Chrome’s dominance. The browser lets ChatGPT summarise content, compare products, and complete tasks via “agent mode.” Initially on macOS, it expands OpenAI’s reach into users’ online behaviour. Analysts say it could divert search ad revenue from Google, which leads with 71.9% market share.

Samsung launched its Galaxy XR extended reality headset, priced at $1,799, leveraging Google’s AI to combine virtual and mixed reality. Powered by Android XR and Qualcomm chips, it offers immersive video, gaming, and interactive features. Despite a challenging VR market, Samsung aims to compete with Meta and Apple, targeting consumer and enterprise users.

Apple’s foldable iPad project is facing development challenges, potentially delaying its launch from 2028 to 2029 or later. The $3,000 device has encountered engineering issues related to weight, features, and display technology. Apple is working with Samsung Display on an 18-inch panel designed to minimise the crease, similar to its upcoming foldable iPhone.

L’Oreal posted weaker-than-expected Q3 growth, with sales up 4.2% to €10.3 billion, below the 4.9% forecast, weighed down by North America. China demand showed early recovery, while fragrances growth slowed to 6%. The company plans to expand via innovation and acquisitions, including a $4.7 billion deal for Kering’s beauty business, including Gucci.

GE Aerospace raised its 2025 profit forecast, driven by strong demand for aftermarket maintenance amid a shortage of new jets. LEAP engine deliveries are expected to grow over 20%. Q3 operating profit rose 35% to $2.44 billion, with revenue up 27%. Adjusted EPS beat expectations at $1.66, reflecting high-margin parts and services.

Lockheed Martin raised its 2025 revenue and profit forecasts, boosted by strong demand for fighter jets and munitions amid global tensions. Third-quarter revenue rose 8.8% to $18.61 billion, with profit per share of $6.95, beating estimates. The company secured major Pentagon contracts, including $12.5 billion for F-35 jets, and now expects 2025 EPS of $22.15–$22.35.

General Motors raised its 2025 adjusted core profit forecast to $12–13 billion, driven by robust demand for pickups and SUVs, which offsets the impact of U.S. tariffs and the end of the $7,500 federal EV tax credit. Q3 revenue dipped slightly to $48.6 billion, with trade headwinds expected to cut annual profits by $4–5 billion.

Philip Morris’ shares fell 3.8% after revealing $100 million spent on promotions and price support for its nicotine pouch brand Zyn, despite strong third-quarter growth. U.S. shipment volumes rose 37% to 205 million cans. PMI trimmed the top of its annual profit forecast to $7.46–$7.56 per share amid higher marketing costs and competition concerns.

Coca-Cola beat third-quarter expectations, driven by strong demand for zero-sugar drinks, Fairlife milk, and select international sodas. Revenue reached $12.46 billion, with volumes up 1% and prices rising 6%. The company maintained annual guidance, expanding lower-cost cane sugar Coke in the U.S. while navigating competition, health trends, and recovering from a boycott.

3M raised its 2025 profit forecast for the second time this year, aided by higher-margin products and cost controls. Third-quarter adjusted profit was $2.19 per share on $6.32 billion revenue, beating estimates. The company launched 70 new products, cut administrative costs, and plans further divestitures, while expecting 2025 adjusted profit of $7.95–$8.05 per share.

Adidas raised its 2025 operating profit guidance to around €2 billion, up from €1.7–1.8 billion, after mitigating some costs from higher U.S. tariffs. Third-quarter revenues rose 12% in currency-neutral terms, with operating profit increasing to €736 million from €598 million last year. The company has also increased U.S. prices on top-selling Samba sneakers.

BNP Paribas will make no provisions for Sudan-related litigation in its Q3 results, CFO Lars Machenil said, describing a $20.5 million jury verdict for three plaintiffs as erroneous and likely to be overturned. He emphasised the case is private, non-precedential, and that further claims would require separate trials under Swiss civil law.

LVMH is reportedly exploring the sale of its 50% stake in Fenty Beauty, co-owned with singer Rihanna, with Evercore advising on the transaction. Launched in 2017 via LVMH’s Kendo Brands, Fenty Beauty generated around $450 million in 2024 and could be valued at $1–2 billion. The brand focuses on inclusive makeup for a wide range of diverse skin tones.

Novo Nordisk’s controlling shareholder, the Novo Nordisk Foundation, moved to take control of the board, proposing former CEO Lars Rebien Sorensen as chair. The shake-up follows disputes over U.S. market focus and company strategy, prompting the resignation of current chair Helge Lund and six independent directors. The move aims to boost sales of Wegovy and investor confidence.

Airbus, Thales, and Leonardo are close to merging their space businesses into a €10 billion joint venture, “Project Bromo,” with Airbus holding 35% and the others 32.5% each. Airbus may receive compensation for its smaller stake despite contributing half the turnover. The deal aims to consolidate fragmented European aerospace assets, following MBDA’s model.

GE Vernova will acquire the remaining 50% of transformer-maker Prolec GE from Xignux for $5.28 billion, funded equally by cash and debt, with completion expected by mid-2026. The deal aligns with rising U.S. grid equipment demand driven by AI, crypto, and household use. Prolec GE employs 10,000 staff across seven sites globally.

DraftKings is acquiring predictions platform Railbird ahead of the planned launch of its new DraftKings Predictions mobile platform. The deal leverages Railbird’s CFTC licence for faster market entry and expands DraftKings beyond sports betting, potentially opening significant new revenue streams. Financial terms of the acquisition were not disclosed.

Capital Economics warns gold may be in a bubble, with prices far above historical peaks and outpacing inflation. Traditional drivers like bond yields and inflation don’t justify the surge, suggesting speculative factors are driving gains. While some structural trends may support gold, a sharp correction remains likely.

Wedbush maintained an Outperform rating on Apple with a $310 price target, citing strong iPhone 17 sales in China and the U.S. as a driver for a Q4 topline beat. Analysts expect EPS of $1.76 on $101.7 billion revenue and see potential AI monetisation adding $75–$100 per share, supporting Apple’s record-high shares.

Morgan Stanley named Spotify a Top Pick with an $800 target, citing AI tailwinds, strong pricing momentum, and accelerating growth. Revenue and EBIT are expected to rise, supported by improvements to free and Premium tiers, upcoming US price increases, and a 14–15% CAGR to 2028, with potential 40% EBIT growth.

KeyBanc initiated coverage of Hims & Hers with a Sector Weight rating, citing growth potential from international expansion and new treatments but limited margin expansion in 2026. The company has 2.4 million subscribers and offers products in sexual health, dermatology, mental health, weight loss, and hormone support. Revenue is forecast to rise to $3.34 billion by 2027.

Upcoming data and events

Today, attention is on the EIA Crude Oil Inventories report and the UK inflation rate for September. Q3 2025 earnings reports are due from Tesla, SAP, IBM, Hermès, AT&T, Thermo Fisher, GE Vernova, Boston Scientific, and CME Group, while Lam Research will report Q1 2026 results.

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