US equities surge on economic cooling
Wall Street posted strong gains on Tuesday as weaker-than-expected retail sales, falling consumer confidence, and soft labour market indicators reinforced expectations of a December interest-rate cut.
Dow Jones Industrial Average: +1.4%
S&P 500: +0.9%
Nasdaq Composite: +0.7%
Healthcare, consumer discretionary, and communication services led the advance, supported by falling Treasury yields, with the 10-year dipping to 4.0%. Reports of Ukraine accepting a US-backed peace framework eased geopolitical tensions, contributing to a softer US dollar and improved sentiment.
Sector highlights
Here’s how key sectors and stocks performed during the session:
Despite overall optimism, tech stocks faced headwinds:
- Nvidia: Down 2.6% after reports Meta may use Google-designed AI chips.
- AMD: Dropped 7.4%, the weakest performer on both the S&P 500 and Nasdaq.
Producer price data showed headline inflation steady but core inflation easing, reinforcing the view that price pressures are moderating. The VIX volatility index fell nearly 10%, signalling calmer markets.
Asian markets extend gains
Asian equities advanced on Wednesday, buoyed by expectations of a US rate cut:
- Japan & South Korea: Tech shares rallied.
- Australia: Gained despite hotter inflation.
- Hong Kong: Lagged on Alibaba’s decline.
- China: Posted modest gains.
Regional futures point to a supportive backdrop for risk assets.
European stocks rise despite weak growth
European shares climbed on Tuesday:
- Germany’s DAX: +1%
- France’s CAC 40: +0.8%
Optimism around a US rate cut offset concerns about German economic stagnation. Corporate highlights included:
- EasyJet: Upgraded holiday business target after beating profit expectations.
- Compass Group: Forecasts 10% profit growth for fiscal 2026.
Currency and commodities update
The US dollar eased further on soft economic data and dovish Fed expectations.
- Euro: Rose to $1.1567.
- Sterling: Steady ahead of UK budget.
Oil prices stabilised after Tuesday’s sharp drop, pressured by higher supply prospects linked to Russia-Ukraine peace progress and rising fuel stockpiles.
Geopolitical developments
Ukraine accepted a revised US-backed peace plan with 19 points, excluding amnesty and military-size limits. Talks continue following meetings in Geneva and Abu Dhabi, with President Zelenskiy thanking the US and President Trump for their efforts. Kevin Hassett, a close ally of President Trump, is emerging as the frontrunner to become the next Federal Reserve chair, reinforcing expectations of a dovish stance.
Corporate movers
Below are notable company updates across major industries:
Tech and AI
- OpenAI: Projects 220M paid ChatGPT users within five years, targeting enterprise clients with plans from $5 to $200 monthly.
- Dell: Raised revenue guidance to $111.2–$112.2B, driven by AI-optimised servers using Nvidia chips. Shares rose 3.5% after-hours.
Retail and consumer
- Alibaba: Beat Q2 revenue estimates but net profit fell 53% due to heavy investments. Singles’ Day sales surged.
- Abercrombie & Fitch: Lifted profit forecast; shares jumped 37% on strong holiday demand.
Automotive
- Tesla: European sales plunged 48.5% in October, cutting its market share to 0.6%, while BYD captured 1.6%. Overall EU car sales rose 4.9%, led by hybrids.
Media and legal
- Warner Bros Discovery: Invited improved buyout offers by December 1 after rejecting Paramount’s $60B cash offer.
- SAP: Sued by o9 Solutions over alleged trade secret theft.
Analyst actions
Recent analyst ratings and outlook changes include:
- UBS: Upgraded Applied Materials to Buy; sees major DRAM-driven spending surge in 2026.
- Macquarie: Initiated ServiceNow at Neutral, citing strong SaaS growth but limited upside.
- Argus: Downgraded Coinbase to Hold on valuation concerns.
- Rothschild: Upgraded L’Oréal; downgraded Estée Lauder amid margin pressure.
- UBS: Raised Eurozone equities outlook to Attractive, forecasting Stoxx 50 at 6,200 by end-2026, supported by improving cyclicals, structural reforms, fiscal stimulus, and ECB policy.
Upcoming data and events
Key US releases on Wednesday:
- Jobless claims
- GDP
- Building permits
- Durable goods orders
- New home sales
- Core PCE inflation
- EIA crude oil inventories
Major earnings: Deere & Co reports before the open.
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