US regional banks under scrutiny amid rising market conce

General market commentary

US equities fell sharply on Thursday as concerns over deteriorating credit quality at several regional banks sparked a broad market sell-off. Large loan write-downs at Zions Bancorp and Western Alliance Bancorp, alongside Jefferies Financial Group’s exposure to a bankrupt auto-parts maker, weighed heavily on the financial sector, which dropped nearly 3%. Zions’ shares tumbled 13% after revealing a 50 million dollar charge-off linked to loan irregularities, while Western Alliance fell almost 11% following news of a fraud-related lawsuit. Jefferies slid 11% after addressing potential losses tied to First Brands Group’s bankruptcy. Outside financials, most major sectors were lower, though J.B. Hunt Transport Services surged 22% after reporting stronger-than-expected quarterly earnings. The Dow Jones Industrial Average declined 0.7% to 45,952.2, the S&P 500 lost 0.6% to 6,629.1, and the Nasdaq Composite fell 0.5% to 22,562.5.

Market sentiment was further dampened by protracted US-China trade tensions and the ongoing government shutdown, now in its third week. The risk-off tone saw investors flock to safe havens, driving US Treasury yields lower, with the 10-year yield dipping below 4% for the first time this year. Gold extended its rally, rising above 4,300 dollars per ounce, while the dollar weakened against major currencies. Despite some signs of resilience in the broader economy, growing credit concerns, policy uncertainty and a lack of fresh economic data have contributed to fears that the recent equity rally may be losing momentum.

Latest market and economic update

Most Asian equities fell on Friday, following Wall Street losses amid renewed fears over U.S. regional banks. Chinese shares led declines due to escalating trade tensions with Washington and new tariff threats. Japan, Singapore, and Australia also fell, while South Korea briefly hit a record high on optimism over a U.S. trade deal before giving up gains.

US equity futures edged lower on Thursday evening after Wall Street’s weak close, as concerns over regional banks, escalating US-China trade tensions and the ongoing government shutdown weighed on sentiment. S&P 500 and Nasdaq 100 futures both slipped 0.2%, while Dow Jones futures eased 0.1%, following sharp losses in financials and mixed corporate earnings.

European equities rose on Thursday as political uncertainty in France eased and growth data supported sentiment. Germany’s DAX gained 0.4%, while France’s CAC 40 jumped 1.4%, led by strong gains in luxury giant LVMH. Pernod Ricard, however, weighed on the market after reporting weaker-than-expected first-quarter organic sales in key markets including the US and China.

The dollar remained under pressure on Friday, heading for its biggest weekly drop in nearly three months as trade tensions, weak US data and the prolonged government shutdown bolstered expectations of further Fed rate cuts. The dollar index hovered at 98.23, down 0.6% for the week, while the euro firmed 0.1% to $1.1701.

Oil prices fell to five-month lows in Asian trade this morning, with Brent at $60.95 and WTI at $57.36 a barrel, pressured by weak demand, rising US inventories and oversupply fears. News that Presidents Trump and Putin plan to meet to discuss ending the Ukraine war also weighed, fuelling expectations of eased sanctions and higher Russian exports.

Minneapolis Fed President Neel Kashkari said he sees limited risk of a sharp labour market downturn or a surge in inflation, though a softer labour market is a bigger concern. He supports further quarter-point rate cuts this year as insurance, while noting persistent inflation around 3% is more likely than a spike, and data gaps from the government shutdown complicate assessments.

Equities on the move

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

Oracle forecasts cloud infrastructure revenue of $166 billion by fiscal 2030, representing nearly 75% of total sales, with overall revenue expected at $225 billion and adjusted profits of $21 per share. Recent cloud bookings reached $65 billion, including a $20 billion Meta deal. Shares rose 3% on the news, while AI infrastructure margins are projected at 30–40%.

TSMC raised its full-year revenue forecast, citing strong AI-driven demand, after posting a record third-quarter profit of T$452.3 billion ($14.76 billion), beating estimates. The chipmaker plans $42 billion in 2025 capital spending and US$100 billion investment in the US, while AI demand continues to bolster customers like Nvidia, AMD and Apple, despite trade uncertainties with China.

Novo Nordisk and Eli Lilly shares fell after President Trump suggested lower prices for GLP-1 weight loss drugs, including Ozempic. Negotiations have not yet begun, but investors reacted to the prospect of reduced costs, raising concerns over potential revenue impacts for the companies dominating the weight loss and diabetes medication market.

Apple is developing its first touch-screen Mac, with revamped MacBook Pro models expected in late 2026 or early 2027. Internally code-named K114 and K116, the laptops will be thinner and lighter, feature OLED displays, and run on Apple’s M6 processors, marking the company’s first use of this technology in a Mac product.

Microsoft has introduced AI upgrades to Windows 11, enhancing its Copilot assistant with voice activation via “Hey Copilot,” expanded Copilot Vision, and text-based interactions. A new Copilot Actions mode allows task automation, while Gaming Copilot provides real-time support on Xbox. The updates aim to boost adoption and compete with AI assistants from Google and Meta.

CME Group plans to launch new financial contracts linked to sports events and economic indicators by year-end, according to reports. The move positions the derivatives exchange against prediction market platforms like Kalshi and Polymarket, expanding its offerings beyond traditional futures and options across interest rates, equities, and commodities.

Charles Schwab beat Q3 profit expectations, reporting a 67% rise to $2.36 billion, or $1.26 per share, driven by record client assets of $11.59 trillion and $137.5 billion in net new assets. Trading revenue surged 25% to $995 million, while net revenue jumped 27% to $6.14 billion, supported by strong market activity and adoption of wealth solutions.

EssilorLuxottica posted record third-quarter sales of 6.9 billion euros, up 11.7% year-on-year, driven by strong demand for AI-powered Ray-Ban Meta smart glasses. The company plans to accelerate wearable production, bringing forward capacity to 10 million units annually, while raising US prices in response to tariffs, though price hikes were not the main growth driver.

Pernod Ricard reported a 7.6% fall in first-quarter sales, hit by weak consumer demand, destocking in China and the U.S., and global tariffs. The company expects improvement in the second half of the fiscal year, aided by duty-free cognac sales, a recovery in China and the U.S., and cost savings from a €1 billion restructuring plan.

UBS upgraded ASML to Buy, raising 2026–2027 earnings forecasts by 6–10% and setting a €1,000 price target. Analysts highlighted growth potential from AI-driven demand, High NA EUV adoption, and strong tool sales to TSMC, noting that non-China demand is expected to rise despite no new High NA orders in the latest quarter.

Berenberg warns the luxury sector faces a structural slowdown, with global revenues set for a rare two-year decline in 2025. Weak Chinese demand, constrained aspirational buyers, and Gen Z shifting to second-hand goods limit growth to 2-3%. Analysts favour top-tier brands like Hermès and Ferrari, downgrade LVMH and Kering, and highlight margin and valuation pressures.

Bank of America upgraded Sea Limited to Buy from Neutral, raising its price target to $215, citing strong momentum in e-commerce and gaming, with fintech providing additional upside. Shopee’s volume is growing, Free Fire is expanding in emerging markets, and Sea’s fintech arm is extending into off-platform payments and loans, supporting higher 2026–2027 earnings estimates.

UBS upgraded Samsung Electronics to Buy with a $1,960 target, citing memory shortages driving strong earnings. Memory, contributing 83% of 2026 operating profit, sees rising DRAM and NAND prices, while steady smartphone demand, narrowing foundry losses, and high-bandwidth memory progress support projected 59% profit growth and 47% EPS increase.

BNP Paribas initiated Tesla shares with an Underperform rating and $307 price target, indicating a 29% potential downside. Analysts cited over-optimistic 2026 consensus estimates and AI ventures generating no current revenue. Even under a constructive scenario for Robotaxi and Optimus, projected free cash flow and margin pressures suggest a clear unfavourable risk/reward profile.

Wells Fargo upgraded T-Mobile US to Overweight with a $260 target, highlighting strong free cash flow growth, network leadership, and capital return potential. Spectrum advantages, rapid rollout, underpenetrated segment gains, aggressive promotions, and the UScellular acquisition support its market-leading postpaid growth versus AT&T and Verizon.

Deutsche Bank downgraded AstraZeneca to Sell, citing weak confidence in its oncology pipeline and rising patent risks, with 2026 earnings multiples cut to 14 times. Analyst Emmanuel Papadakis noted limited upside from selective oestrogen receptor degraders and heightened competition in breast cancer therapies, prompting a more cautious outlook despite projected market growth.

Upcoming data and events

Today’s economic calendar includes Eurozone CPI and U.S. housing starts, capacity utilisation, and industrial production. On the corporate earnings front, results are due fromState Street, Schlumberger, Truist, AB Volvo, and American Express.

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