Shareholders approve Musk’s $1 trillion Tesla pay package

General market commentary

US equity markets finished lower on Thursday, led by declines in consumer discretionary and technology shares. The Nasdaq Composite fell 1.9% to 23,054, marking its lowest close since late October, while the S&P 500 and Dow Jones Industrial Average dropped 1.1% and 0.8% respectively. Apart from the energy and health care sectors, all others ended in negative territory, with consumer discretionary and technology shares posting the steepest losses. The weakness followed a report showing a sharp increase in job cuts, heightening investor concerns about slowing economic momentum and stretched valuations within the technology sector.

Several major technology names saw notable declines, including Nvidia, Amazon, Microsoft, Palantir Technologies and Advanced Micro Devices, as enthusiasm over artificial intelligence cooled amid growing fears of an investment bubble. Elsewhere, DoorDash and CarMax both fell sharply following disappointing earnings updates, while Datadog outperformed, surging after it raised its full-year outlook. Overall, sentiment remained cautious as investors weighed mixed corporate earnings, labour market weakness and ongoing uncertainty from the government shutdown, which has delayed key economic data releases.

Latest market and economic update

Asian equity markets fell sharply on Friday, led by steep declines in Japan and South Korea, as a global technology sell-off deepened amid valuation concerns and renewed US-China tensions. Weak Chinese trade data and reports of fresh technology export curbs added to investor caution, while most regional indices headed for significant weekly losses.

US equity futures edged higher overnight after Wall Street losses, as investors continued selling AI-linked shares amid valuation concerns. The pullback coincides with the prolonged government shutdown, surging layoffs and trade uncertainties. Tesla shareholders approved Elon Musk’s $1 trillion pay package, while Airbnb and Affirm saw strong post-earnings gains.

European equities fell as technology shares came under pressure amid mixed earnings and disappointing eurozone retail sales, with the STOXX 600 down 0.7%. Healthcare shares rose, led by AstraZeneca and Novo Nordisk, while Legrand, Schneider Electric, and Siemens Energy declined. Zalando and DHL gained, though Commerzbank saw heavy losses.

The dollar index remained below 100 after a sharp decline, as signs of a cooling US labour market and 153,000 October job cuts fuelled expectations of a December Federal Reserve rate cut. EUR/USD traded at 1.1536, supported by dollar weakness, while investors sought safety in the yen amid delayed official US employment and inflation data.

Oil prices rose slightly in Asian trade this morning, supported by a softer US dollar, but remained on track for a second weekly decline amid concerns over oversupply and weakening demand. Brent and WTI were set to lose around 2% for the week, pressured by higher OPEC+ output, rising inventories and a prolonged US government shutdown.

China’s trade balance shrank in October as exports fell 1.1% year-on-year, the first drop in 18 months, amid high US tariffs and weak demand. Imports also slowed, rising 1%. Despite a late-October US-China agreement, weak domestic consumption and limited investment left growth sluggish, prompting Beijing to consider more stimulus.

The Trump administration added 10 minerals, including copper, metallurgical coal, uranium, boron, and silver, to its critical list essential for the US economy and security. The move aims to boost domestic mining, reduce import reliance, and guide federal incentives, though environmentalists warn it may prioritise profits over community and ecological protections.

Equities on the move

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

Tesla CEO Elon Musk won shareholder approval for the largest corporate pay package in history, potentially worth $1 trillion in shares over the next decade. Backed by over 75% of voters, the package ties payouts to ambitious milestones, including 20 million vehicles, 1 million robotaxis, AI chip production, and $8.5 trillion company valuation.

Meanwhile, Musk said Tesla may need to build a “gigantic chip fab” to produce its fifth-generation AI chips, potentially in collaboration with Intel. The chips, powering autonomous driving, will be energy-efficient, low-cost, and optimised for Tesla software. Initial production is planned for 2026, with high-volume output expected by 2027–2028.

The Trump administration plans to block Nvidia from selling its B30A AI chips to China, even less powerful models, amid ongoing US-China trade tensions. Nvidia, previously restricted from selling China-specific chips, now faces renewed obstacles as Beijing pushes for AI self-reliance. CEO Jensen Huang has halted China forecasts while navigating the delicate balance between markets.

Airbnb reported third-quarter revenue of $4.10 billion, driven by strong bookings in Latin America and Asia Pacific. Gross bookings rose 14%, with notable growth in Japan and India. The company expects fourth-quarter revenue of $2.66–$2.72 billion, above Wall Street estimates, while expanding regional payment options, local marketing, and early-stage services offerings.

The Trump administration struck a deal with Eli Lilly and Novo Nordisk to cut GLP-1 weight-loss drug prices for Medicare, Medicaid, and cash payers, lowering costs to $149–$350 per month. The move expands access to millions of Americans, caps Medicare co-pays at $50, and exempts the companies from tariffs, while boosting domestic investment and government coverage.

Comcast is pursuing expansion in both the US and UK media markets, exploring a bid for Warner Bros Discovery’s studio and streaming businesses while engaging Goldman Sachs and Morgan Stanley, and reportedly negotiating to acquire ITV’s media and entertainment unit for around $2 billion. The moves follow unsolicited offers to Warner Bros Discovery and reflect strategic growth amid industry challenges.

AstraZeneca beat third-quarter earnings expectations, driven by strong cancer and cardiovascular drug sales, though it maintained full-year guidance. Revenue rose 10% to $15.19 billion and core earnings increased 12% to $2.38 per share. The company expects continued growth through 2026, relying on new drug launches and a U.S. pricing deal to offset patent expiries.

ConocoPhillips raised its quarterly dividend 8% to $0.84 per share and lifted its full-year 2025 production forecast to 2.375 million boepd, despite higher costs at its Alaska Willow project, which added $1.5 billion to capital expenditure. Third-quarter adjusted earnings of $1.61 per share beat estimates, supported by higher U.S. onshore production and cost-cutting measures.

Under Armour forecast full-year revenue and profit below Wall Street estimates, citing weaker demand and higher tariff costs. The company expects annual revenue to fall 4–5% and adjusted profit of 3–5 cents per share. CFO David Bergman will step down, replaced by Reza Taleghani, as the sportswear maker navigates external pressures and internal challenges.

Ralph Lauren raised its full-year revenue forecast to 5–7% growth on a constant currency basis, up from a previous low- to mid-single-digit estimate, citing strong demand for high-priced Polo shirts and cotton cable knit sweaters. The luxury brand continues to benefit from full-price sales and loyalty among its affluent customer base despite economic uncertainty.

Monster Beverage exceeded Wall Street estimates in third-quarter revenue and profit, driven by strong demand for sugar-free Monster Energy Ultra and new flavours. Net sales rose 16.8% to $2.20 billion, while adjusted earnings reached 56 cents per share. The company plans to launch FLRT, a female-focused brand, in early 2026 to target a growing demographic.

US rare earths miner MP Materials reported a wider third-quarter loss after halting sales to China under a US government agreement, though results beat expectations. CEO Jim Litinsky highlighted a “new Cold War” centred on critical materials. The company plans to start commercial magnet production in Texas by year-end and commission a heavy rare earth facility in 2026.

Datadog forecast fourth-quarter earnings above Wall Street estimates, driven by strong demand for its AI-focused cloud security products. Third-quarter revenue rose 28% to $885.65 million, with adjusted earnings of 55 cents per share, both beating expectations. The company expects Q4 revenue of $912–916 million and profit of 54–56 cents per share, surpassing analyst forecasts.

KeyBanc Capital Markets downgraded Duolingo to Sector Weight from Overweight, citing weaker growth and reduced forecasts after its fourth-quarter outlook. Management’s focus on improving teaching effectiveness may aid long-term growth but pressures near-term bookings and EBITDA, limiting upside for the language-learning app until growth rebounds.

Piper Sandler downgraded e.l.f. Beauty to Neutral from Overweight, citing slowing organic growth, declining profitability, and weak international expansion. The firm cut its price target to $100, highlighting core U.S. sales growth of just 3–4% and an expected 200bps EBITDA margin decline, warning the stock’s premium valuation may be unsustainable without a rebound.

Upcoming data and events

Today’s key economic indicators include the University of Michigan’s preliminary consumer sentiment, Baker Hughes rig count, and consumer credit figures, offering insight into consumer confidence, oil activity, and household borrowing. Earnings from well-known companies such as Duke Energy, KKR, and Constellation Energy are also due, potentially influencing market movements.

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.