US indices break five session winning streak

General market commentary

U.S. equity markets opened December on softer ground, with the S&P 500 down 0.5 per cent, the Nasdaq lower by 0.4 per cent and the Dow Jones Industrial Average slipping 0.9 per cent. The Russell 2000 fell 1.1 per cent, and trading volumes across the major benchmarks were well below average. Sentiment weakened as U.S. Treasury yields climbed, following a sharp global bond sell-off sparked by signals from the Bank of Japan that a rate hike may be approaching. Japan’s Nikkei index fell nearly two per cent, adding to the cautious tone in U.S. trade. A broad pullback across most equity sectors and a sharp slide in cryptocurrencies, with bitcoin and ether both down heavily, deepened the risk-off mood.

Macroeconomic data also weighed on markets. The ISM manufacturing index slipped to 48.2 in November, pointing to continued contraction and echoing concerns about weaker demand and tariff-related pressures. The S&P Global manufacturing reading offered only a marginal improvement. Higher Treasury yields, with the ten-year around 4.09 per cent, reflected growing uncertainty over the Federal Reserve’s next policy move, as markets assessed both the prospect of a December rate cut and speculation surrounding the White House’s potential nominee for the next Fed chair. These cross-currents left investors cautious as the final month of the year began.

Latest market and economic update

Asian markets mostly inched higher on Tuesday on growing expectations of a US Federal Reserve rate cut, though gains were capped by a weak Wall Street lead. South Korea outperformed on tariff reductions, while China slipped. Japan’s Nikkei lagged amid signs the Bank of Japan may raise rates, with hawkish comments lifting the yen and pressuring exporters.

U.S. equity futures were largely steady overnight, with S&P 500 futures up 0.1%, Nasdaq 100 futures rising 0.2%, and Dow Jones futures unchanged. Markets digested weaker ISM manufacturing data, rising expectations of a Federal Reserve rate cut, and uncertainty over Powell’s successor, while renewed Bitcoin weakness weighed on crypto-linked equities.

European equities fell 0.2% on Monday, dragged down by industrials and defence shares. Airbus dropped 5.7% over A320 panel issues, while German arms makers slid amid optimism over a Russia-Ukraine deal. Investors booked profits ahead of U.S. economic data and Federal Reserve Chair Powell’s speech, though luxury goods and miners like Fresnillo saw gains.

The U.S. dollar remained under pressure after weaker-than-expected November manufacturing data, strengthening expectations of a Federal Reserve rate cut in December. The dollar index edged lower to 99.408, hitting a two-week low, while the euro held steady at $1.1610 as European support for Ukraine continued. Treasury yields rose, but the greenback stayed subdued.

Oil prices held steady in Asian trade, with Brent at $63.23 and WTI at $59.42 per barrel, after OPEC+ confirmed it would pause production increases in early 2026. Markets remain alert to supply risks from Ukrainian attacks on Russian infrastructure and rising US-Venezuela tensions, while expectations of a Federal Reserve rate cut have also supported crude.

U.S. envoy Steve Witkoff and Jared Kushner are meeting Russian President Vladimir Putin to discuss ending the Ukraine war, amid leaked U.S. draft peace proposals and European counterplans. Russia controls over 19% of Ukraine, advancing rapidly in 2025. Key disputes include NATO membership, territorial control, and military limits, with Kyiv and Western powers wary of concessions.

U.S. manufacturing contracted for the ninth consecutive month in November, hit by falling orders, higher input costs, and tariffs. ISM’s PMI fell to 48.2, with layoffs reported in transportation equipment. While AI investment boosted some sectors, most industries, including wood and textiles, saw declines. Inflation pressures persist, and employment contracted for the tenth month.

Equities on the move

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

Airbus confirmed a quality issue with metal panels on some A320-family jets, delaying deliveries and triggering a share slump. The flaw, traced to a supplier, affects around 50 aircraft and adds pressure as Airbus struggles to meet its 820-jet annual target after lower-than-expected November deliveries. Software-related disruptions and repair bottlenecks compound the challenges.

Samsung Electronics has launched its first multi-folding smartphone, the Galaxy Z TriFold, featuring a 10-inch display and super-fast charging. Priced at around $2,440, the device targets niche customers rather than mass sales. Competition from Huawei and Apple is intensifying, though high costs and production limits mean foldables remain under 2% of the global smartphone market.

Eli Lilly has reduced the price of its obesity drug Zepbound to improve affordability for U.S. patients, cutting single-dose vials to $299–$449 per month. The move follows similar cuts for multi-dose pens and aims to address cost barriers amid surging demand. Zepbound, approved for obesity and related conditions, fuels Lilly’s rapid market growth.

Michael Burry used his Substack to argue Tesla is “ridiculously overvalued,” warning that ongoing annual dilution and Elon Musk’s potential $1 trillion pay package could further erode shareholder value. He criticised valuations based on unrealistic growth assumptions and has recently broadened his scepticism to other tech firms after winding down Scion Asset Management.

Warner Bros Discovery has received a second round of bids, including a mostly cash offer from Netflix, as its board evaluates potential buyouts. Paramount Skydance and Comcast also submitted improved offers. The studio, which owns HBO and CNN, is exploring strategic options and plans to split into studio-focused and cable-focused units next year.

Amazon has launched "Amazon Now," an ultrafast delivery service offering groceries and daily essentials within 30 minutes in parts of Seattle and Philadelphia. Prime members enjoy lower fees, with orders tracked via the app or website. The service uses smaller, strategically located fulfilment centres and has prompted recruitment of warehouse staff and drivers to support rapid delivery.

Nvidia CEO Jensen Huang described China as a “bonus opportunity,” emphasising that meeting strong global demand remains the company’s priority, with potential benefits for Nvidia, the U.S. and global economy. Meanwhile, the firm invested $2 billion in chip design software maker Synopsys to develop AI-driven tools, strengthening its influence in electronic design automation.

Barrick Mining’s board has authorised management to explore an IPO for a subsidiary, NewCo, holding its North American gold assets, including Nevada Gold Mines, Pueblo Viejo, and the Fourmile discovery. Barrick would retain majority control, offering only a minority stake publicly. Progress updates are expected with full-year 2025 results, with no final decision yet made.

The Trump administration urged the U.S. Supreme Court to hear Bayer’s appeal to limit thousands of Roundup lawsuits, citing federal law. Bayer faces over 67,000 suits alleging its weedkiller causes cancer. Supporters cite EPA approvals, while plaintiffs highlight marketing failures. The company has settled billions and may withdraw Roundup from the U.S. market.

BHP Group made an unsuccessful £40 billion ($53 billion) bid to acquire Anglo American, offering around £34 per share, a 24% premium. The proposal, combining cash and shares, was rejected as Anglo American preferred its planned Teck Resources acquisition and sought to avoid regulatory delays and potential value fluctuations. BHP’s market cap stands at £105 billion.

Morgan Stanley sees Alphabet poised for significant revenue growth as TPU production is set to rise sharply, with 5–7 million units expected in 2027–28. Greater supply could enable external sales, adding billions to revenue and EPS. While primarily for Google’s AI and GCP needs, this signals a broader TPU commercial strategy.

Oppenheimer raised Amazon’s 12- to 18-month price target to $305, citing significant upside for AWS through 2027. Analysts highlighted planned capacity doubling, projecting 14–22% higher 2026–2027 AWS revenue versus consensus. While cloud expansion drives valuation, Amazon’s retail outlook is subdued, with holiday sales expected to grow only 5% year-on-year.

Morgan Stanley raised price targets on Nvidia to $250 and Broadcom to $443, citing broad AI demand and tight semiconductor supply. Nvidia’s data centre revenues remain supply-constrained, while Broadcom benefits from stronger Google TPU demand. Tight front- and back-end capacity, rising ASIC and memory needs, and robust CPU demand underpin a bullish semiconductor outlook.

Jefferies cut Novo Nordisk’s price target to DKK270, citing rising competitive pressure, reliance on semaglutide, and looming patent expiries in 2031/2032. The brokerage expects U.S. GLP-1 revenue and EPS to fall in 2026, warning that valuation remains unjustified amid Eli Lilly gains, a crowded obesity market, and potential future oral alternatives, with further downside likely.

HSBC upgraded Chevron to Buy with a $169 target, citing underperformance as an attractive entry point. Analysts noted disciplined capital allocation, strong cashflow, and selective acquisitions. European oil majors may lag US peers in 2026 amid weaker oil and gas prices and declining refining margins, pressuring overall sector performance.

UBS initiated coverage of Carvana with a Buy rating and $450 target, citing its strong online platform, customer experience, and same/next-day delivery. Analysts see market share growing from 1.5% to 4–8% over the decade, with industry-leading gross profit per unit and 25% CAGR EBITDA growth. Carvana offers 20–50% upside versus peers.

JPMorgan expects 2026 to see a multi-year upturn in European semicap, with ASML benefiting first from memory-driven demand and rising orders. In payments, Adyen is the top pick, supported by a cleaner earnings setup and multiple growth levers, offering investors a strong outlook amid selective opportunities in AI and structural themes.

RBC Capital Markets set a 12-month S&P 500 target of 7,750, implying nearly 14% upside. The forecast combines sentiment, valuation, earnings, economic outlook, and monetary policy, with strong investor sentiment, robust EPS growth, and supportive Fed cuts offsetting modest GDP. RBC views the target as a directional guide, not a precise year-end forecast.

Upcoming data and events

Today's key economic events include Fed Chair Jerome Powell’s testimony in front on Congress, and November JOLTs Job Openings. Other releases cover construction spending, vehicle sales, and API crude inventories. Earnings highlights before and after the open include Crowdstrike, Marvell Technology, Pure Storage, Okta, and Gitlab.

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