Trump ends record US government shutdown

General market commentary

US equity markets ended mostly higher on Wednesday as investors focused on the potential end of the government shutdown, with the House of Representatives expected to vote on a spending bill to extend federal funding through January. The Dow Jones Industrial Average rose 0.7% to a record high of 48,254.82, supported by gains in healthcare, financials and materials. The S&P 500 edged up less than 0.1% to 6,850.92, while the Nasdaq Composite slipped 0.3% to 23,406.46 as weakness in the Magnificent Seven weighed on sentiment. Value-oriented sectors outperformed, while communication services, energy and consumer discretionary equities lagged. Bond yields declined, with the 10-year Treasury yield falling to 4.07%.

Investors rotated away from high-growth technology names amid concerns over lofty valuations and rising short interest in semiconductor companies. Meta Platforms fell 2.9% after raising its 2025 capital expenditure guidance, while Palantir dropped 3.6% as enthusiasm around artificial intelligence cooled. In contrast, Advanced Micro Devices surged 9% after setting ambitious long-term financial targets. Market sentiment was supported by optimism over the spending bill’s passage, strong earnings updates and growing expectations of a Federal Reserve rate cut in December, with futures markets pricing in more than a 65% chance of a 25-basis-point reduction.

Latest market and economic update

Asian equities were mixed on Thursday as investors rotated out of technology shares amid valuation concerns. Hong Kong’s Hang Seng and South Korea’s KOSPI fell, while Japan’s TOPIX gained on strength in non-tech sectors. Mainland Chinese markets advanced, and Australia’s ASX 200 slumped after strong jobs data reduced expectations of further Reserve Bank rate cuts.

Wall Street futures turned positive after the House approved a bill to end the 43-day government shutdown. S&P 500 Futures rose 0.1% to 6,882.50, Nasdaq 100 Futures gained 0.2% to 25,684.50, and Dow Jones Futures climbed 0.2% to 48,449. After-hours, Cisco rallied 7.6% on stronger-than-expected earnings, driven by AI-related demand.

European equities closed at record highs on Wednesday, with the STOXX 50 up 1.1% and the STOXX 600 rising 0.7%, supported by optimism over a US government reopening and potential Fed rate cuts. RWE shares surged over 9.0% after reporting strong nine-month profits, Infineon rose 7.0%, Bayer gained 6.0%, LVMH reached €647.20, Intesa Sanpaolo €5.94, while E.ON slipped 3.6%.

The U.S. dollar index stabilised around 99.5 on Thursday, moving sideways after the end of the historic government shutdown. EUR/USD traded at 1.1589 as the market digested mixed economic signals, including private job losses and uncertainty over October’s data, while the release of a backlog of reports remains pending.

Oil prices fell to a three-week low on Thursday as OPEC+ forecast a small supply surplus in 2026, amid rising production and lower demand projections. Brent fell to $62.54 a barrel, WTI to $58.31. The end of the US government shutdown offers some clarity on fuel demand, while a strong US dollar also weighed on global crude prices.

US President Donald Trump signed a bill late on Wednesday to end the record 43-day government shutdown after the House approved the measure 222 to 209. The bill, funding the government until 30 January, faced strong Democratic opposition over healthcare subsidy cuts. The shutdown caused major federal service disruptions, including widespread flight cancellations.

Equities on the move

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

Cisco Systems reported fiscal first-quarter results exceeding Wall Street estimates, with adjusted EPS of $1 versus $0.98 expected and revenue up 8% to $14.88 billion. Networking sales rose 10%, driven by $1.3 billion in AI infrastructure orders. Shares rose 7.5% after hours. The company raised its fiscal 2026 outlook, citing strong AI-driven demand.

Delta Air Lines expects a strong fourth quarter despite flight disruptions caused by the US government shutdown, CEO Ed Bastian said. While the disruptions have impacted the industry and economy, they will not eliminate Delta’s profits. Operations have largely recovered, with cancellations falling ahead of the House vote to end the historic shutdown.

Chevron plans to grow free cash flow and earnings per share by over 10% annually through 2030, while increasing oil and gas production 2–3% yearly. The company aims to reduce costs and capital expenditure, expand exploration in key regions, and develop new projects, including an AI-powered natural gas data centre, preparing for potential market headwinds.

RWE AG shares rose over 9.0% after the company’s CFO highlighted growth potential from data centre partnerships, with around ten new projects in the pipeline. Valuations are estimated at €1 million per megawatt, varying by site. The CFO noted rising hyperscaler activity in Europe, while RWE’s flexible generation and capital plans support planned US projects through 2029.

Morgan Stanley warned that surging AI demand could create a US power shortfall of up to 20%, or 13–44 GW, for data centres through 2028. Analysts highlighted “time-to-power” solutions, including gas turbines, fuel cells, and nuclear projects, while Bitcoin miners repurposing facilities and new cloud leasing models may help meet demand and create value amid energy constraints.

UBS maintains an overweight stance on Chinese equities for the second consecutive year, citing attractive micro and flow dynamics despite weak macro conditions. The bank expects slower EM returns in 2026, with MSCI EM earnings projected to grow 15%/10% over two years. China, Indonesia, and Brazil are favoured, while broad dollar stability may limit EM tailwinds.

Citi raised its price target on Eli Lilly to $1,500, maintaining a Buy rating, citing strong potential for its oral GLP-1 drug orforglipron. The bank expects 2026 sales of $1.8 billion, boosted by broad Medicare coverage and lower prices, and raised 2030 forecasts to $18.2 billion, highlighting Lilly’s underappreciated obesity and diabetes pipeline.

Deutsche Bank upgraded Sea Ltd. to Buy, raising its target to $170, citing long-term benefits from logistics and fulfilment investments. Revenue rose 38% and Shopee’s GMV expanded 28%, aided by AI engagement and YouTube collaboration. Adjusted EBITDA reached $186 million, while Monee revenue grew 61%, with profitability affected by higher delivery and fulfilment costs.

KeyBanc upgraded AT&T to Overweight after a 15.5% pullback, citing accelerating adjusted EBITDA from 3% in 2025 to nearly 5% by 2027–2028. Growth drivers include fiber expansion, mobile/broadband convergence, cost savings, and wholesale revenue monetisation. A $30 price target implies 19% upside, supported by strong dividends and share repurchases.

J.P. Morgan downgraded Hensoldt AG to Neutral from Overweight, citing slower near-term growth despite strong long-term prospects. Sales and EBITDA improvements are now “back-end loaded,” while EPS and free cash flow forecasts were cut due to high investment spending, SAP rollout costs, and capacity constraints. The December 2026 price target was reduced to €100.

Upcoming data and events

Today’s US key economic releases include the Consumer Price Index, initial jobless claims, and EIA crude oil inventories. Earnings highlights feature Disney, Brookfield, Applied Materials, Nu Holdings, and Deutsche Telekom.

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