Market Report: European markets open with a spring in their step, US awaits key results
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “UK markets have a spring in their step with the FTSE 100 up 0.3% in early trading, building on a good session yesterday that saw the UK’s largest stocks outperform most major European peers. Broader European markets have also had a positive open as investors look ahead to inflation figures for October and comments from the European Central Bank for any insights into the monetary policy outlook.
After last week’s whirlwind of activity, US markets took a breather yesterday evening with a more subdued session. While the market’s tendency to rebound remained intact, investor caution lingered as they weighed the implications of Trump appointees and potential tariff policies. With homebuilder sentiment hitting a 7-month high and major earnings from Wal-Mart and Nvidia on the horizon, yesterday’s measured tone reflected a market waiting for more direction.
Tesla shares surged on reports that the Trump administration is exploring a federal framework for unsupervised self-driving vehicles, potentially removing a key regulatory hurdle. While the removal of EV credits under Trump could challenge competitors, Tesla’s dominant position allows it to thrive without subsidies. More significantly, Elon Musk’s influence on shaping the regulatory landscape could prove to be a strategic masterstroke for Tesla’s future.
Nestlé is ramping up its cost-cutting efforts to fund a major advertising push as the world’s largest food and beverage company sharpens its focus on driving growth. Investors and analysts will be settling in for a day of presentations and meetings as the Nestlé management team hosts their capital markets day. These new plans are expected to help drive organic sales growth of 4% with an operating margin of around 17%, in the same ballpark as where medium-term consensus was already pointing. With more details to come over the day, the initial read will be mixed – while hitting targets will require greater advertising investment, management’s indication that underperforming divisions may face closer scrutiny is a promising sign.
It’s a big week for Alphabet, with the DOJ’s final proposal in the Search antitrust case expected soon, but early rumours suggest the remedies may be less severe than some feared. A complete breakup seems unlikely, and rumours are pointing to a more realistic proposal, including a spinout of Chrome, an end to exclusive deals like the Apple deal, a separation of Android from Search and Google Play, alongside measures giving advertisers more control. While that sounds like a lot, and it is, these proposals seem largely manageable and, notably, lack provisions to enhance competitor capabilities, which could be a positive for Alphabet which is one of the cheapest Mag 7 stocks right now.
Chinese stocks rebounded on Tuesday, with the Shanghai Composite up 0.6% and the Shenzhen Component gaining 1.3%, ending a three-day losing streak. The rally coincides with a high-profile investment summit in Hong Kong, where top officials are addressing key financial developments. Investors are also eyeing the People’s Bank of China’s upcoming Loan Prime Rate decision, while new regulatory guidelines encouraging shareholder-friendly initiatives like share buybacks and dividends added further support. There are still question marks around whether the government is willing to take strong enough measures to sustain a rebound in growth and, in turn, higher share prices.
Brent crude oil futures rose above $73 per barrel this morning, building on a 3.2% surge in the previous session amid tightening global supplies and escalating geopolitical tensions. Supply disruptions at Western Europe’s largest field in Norway, and Kazakhstan’s Tengiz field, operated by Chevron, have significantly impacted production. Meanwhile, escalating tensions between Russia and Ukraine, following US approval of Ukraine’s use of long-range missiles inside Russia, are further fuelling price gains, supported by a weaker US dollar.”
The author holds shares in Tesla
