Tech slide continues ahead of CPI data

General market commentary

U.S. equity markets ended lower on Wednesday, led by a sharp sell off in technology equities. The Nasdaq Composite fell 1.8%, its worst session in nearly four weeks, as concerns around data centre financing weighed on mega cap technology names. Oracle dropped more than 5% following reports that financing for a major data centre project may be at risk, while Nvidia, Apple and Cisco also declined. The S&P 500 slid 1.2%, marking its fourth consecutive daily fall, and the Dow Jones Industrial Average eased 0.5%. Most sectors finished in negative territory, with technology down over 2%.

Energy was the clear outperformer, rising around 2% as oil prices jumped following President Trump’s announcement of a blockade on Venezuelan sanctioned oil tankers. West Texas Intermediate crude gained nearly 3%, supporting energy equities amid concerns about reduced global supply. Bond yields were little changed, with the 10 year Treasury hovering near 4.15%, while investors largely looked ahead to the upcoming U.S. CPI inflation report. Elsewhere, Asian markets advanced on strong Japanese export data, while European equities were mixed after softer than expected UK inflation figures.

Latest market and economic update

Most Asian equities fell as technology shares extended their decline amid concerns over stretched AI valuations and caution ahead of key interest rate decisions. Japanese markets weakened on expectations of a hawkish Bank of Japan, while broader regional sentiment tracked losses on Wall Street, with investors remaining wary before US inflation data.

U.S. equity futures steadied after strong earnings and guidance from Micron, which surged over 7% on AI-driven demand. Wall Street fell on tech losses, while Instacart slid amid an FTC probe and Coinbase rose on equity-trading plans. Investors await November CPI data, with inflation and labour market trends influencing Federal Reserve interest rate decisions.

European equities rebounded, with the STOXX 50 up 0.4% and STOXX 600 rising 0.3%. Banking and financial shares led gains, including HSBC, UBS, and Deutsche Bank, while defence and energy shares also advanced. ASML rose 1.5%. Luxury shares underperformed, with LVMH, Hermès, and L’Oréal retreating, as investors awaited key central bank decisions on Thursday.

The dollar index held near 98.4 on Thursday, maintaining gains ahead of November’s CPI data, with mixed U.S. labour market reports doing little to shift expectations. The euro traded at 1.1744, reflecting steady dollar strength amid anticipation of at least one Fed rate cut next year and divergent Fed policymaker views.

Oil prices rose in Asian trading after Donald Trump ordered a blockade on sanctioned Venezuelan oil tankers, heightening supply concerns. Prices were further supported by reports of possible tougher US sanctions on Russia’s energy sector. Gains came despite US data showing a smaller than expected fall in crude inventories.

Donald Trump announced a $1,776 cash payment for eligible US military personnel ahead of Christmas. He also signalled plans to appoint a Federal Reserve chair who favours much lower interest rates, promised sweeping housing reforms next year, and defended his economic record, ahead of closely watched US inflation data.

Equities on the move

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

Micron Technology forecast second-quarter profit nearly double Wall Street estimates, driven by strong demand and high prices for memory chips, especially high-bandwidth memory for AI data centres. The company plans higher 2026 capital expenditure, prioritises AI supply, and projects $18.7 billion revenue, highlighting tight memory markets and ongoing supply constraints.

Oracle confirmed that equity talks for its Michigan data centre project remain on schedule, excluding Blue Owl Capital, after stalled negotiations caused shares to drop 5%. The more than 1-gigawatt project, part of its Stargate AI initiative with OpenAI, is set to begin construction in early 2026. Blackstone has held talks as a potential partner, though no deal is confirmed.

Warner Bros Discovery rejected Paramount Skydance’s $108.4 billion hostile bid, citing financing risks, high debt, and operational concerns, favouring Netflix’s $27.75-per-share cash-and-stock offer. Paramount claims its all-cash bid offers superior value. Shares fell as the takeover battle continues, with Warner Bros questioning Paramount’s creditworthiness and certainty of its financing.

OpenAI is reportedly in early talks to raise up to $100 billion at a valuation of around $750 billion, a 50% increase from its October valuation, ahead of a potential IPO that could value the company near $1 trillion. Strong AI demand drives multibillion-dollar deals with Nvidia and Oracle, though investors remain cautious about sustaining growth and returns.

Activist investor Elliott Management has acquired over $1 billion in Lululemon and is considering Jane Nielsen, ex-Ralph Lauren executive, as CEO. Following Calvin McDonald’s January departure, the company faces potential board disputes amid declining market share and share price, while founder Chip Wilson pushes for an urgent CEO search to refocus on product excellence.

Coinbase has expanded its platform to include traditional equity trading and prediction market contracts through a partnership with Kalshi. U.S. clients can now trade equity denominated in USDC and speculate on outcomes in areas such as politics, sports, and economic indicators. The move broadens Coinbase’s offerings and positions it more directly against established brokerages.

Instacart shares fell 8.2% in after-hours trading after reports that the FTC is investigating the company for AI-driven price discrimination via its Eversight pricing tool. A study found price differences of up to 23% for the same groceries between customers, prompting calls from lawmakers for scrutiny amid rising U.S. grocery costs and increased competition.

Morgan Stanley maintained Microsoft as its Top Pick in large-cap software, citing strong demand across business lines and potential for operating margin expansion. Azure AI, with gross margins possibly reaching 30–40% by FY29, and efficient AI investments underpin durable mid-teens top-line growth and high-teens EPS CAGR, which the firm says is undervalued at current share levels.

Morgan Stanley raised Apple’s price target to $315, keeping it Overweight, citing stronger FY27 earnings driven by iPhone volumes and pricing that offset higher memory costs. Despite cutting gross margin assumptions, Apple remains a core 2026 pick amid a cautious hardware sector outlook, with memory inflation seen as the main headwind.

Truist initiated coverage of Robinhood Markets at Buy, citing strong product expansion, scale economics, and growth potential. Analyst David Smith highlighted rising revenue, higher average revenue per user, and balanced growth across crypto, options, and interest income. New products and a fixed-cost base enable high margins, supporting upside potential.

JPMorgan upgraded Palo Alto Networks to Overweight with a $235 December 2026 target, highlighting its comprehensive cybersecurity platform, exposure to SecOps, SASE, and cloud security, and strong profitability. The bank noted the company’s second consecutive quarter of operating margins above 30% and free cash flow targets of 38–39%, aiming for 40%+ by FY28.

Upcoming data and events

Today’s economic calendar features central bank announcements from the European Central Bank and the Bank of England, followed by US data releases including the Consumer Price Index, initial jobless claims, and the Philadelphia Fed Manufacturing Index. Earnings reports are expected from Nike, FedEx, and Accenture.

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