In the United States, markets were unsettled last week, as the exuberance surrounding AI faded somewhat and was replaced by questions over whether the level of investment by the mega-cap companies was justified. There were also major developments on the tariff front. The US Supreme Court cast initial doubts on whether President Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) was legal when he implemented his reciprocal tariffs in April. The tough questioning by Supreme Court justices could result in large refunds for US importers and place the entire US tariff regime in jeopardy. The government shutdown also continued, becoming the longest in US history, with its effects beginning to be felt across the country. It was announced last week that capacity at 40 major US airports will be cut by 10%, due to a shortage of air traffic controllers who have gone almost a month without pay as a result of the shutdown. In corporate developments, OpenAI continued its deal spree, signing a US$38bn agreement with Amazon Web Services (AWS). The seven-year deal will give OpenAI immediate access to AWS infrastructure on which to run its generative AI systems, and reduce the company’s reliance on Microsoft for computing power. Overall, OpenAI has now completed approximately US$1tn worth of deals in 2025, including two US$100bn agreements with NVIDIA and AMD, and the US$500bn Stargate project which it is leading. This series of deals comes despite OpenAI posting losses of US$12bn in Q3 2025; however, CEO Sam Altman expects revenues to rise to US$100bn by 2027. Earnings season began to draw to a close last week, with some of the final major US corporates releasing Q3 results. One of the key earnings reports was from Palantir, whose current price/earnings ratio of over 400x illustrates the speculative valuation around the stock. Despite this, Palantir posted positive Q3 earnings ahead of expectations. Revenues reached US$1.18bn, a record quarterly figure, and the group expects Q4 revenues to rise to US$1.33bn. Government sales were a major contributor, growing 52% in Q3 to US$486m, while the company’s commercial business also doubled to US$397m, in a quarter which saw Palantir agree deals with NVIDIA and Snowflake. AMD also reported positive earnings, while McDonald’s missed EPS estimates; however, the company noted that US same-store sales were better than expected for the quarter, rising 2.4% versus forecasts of 1.9%. For the week, the S&P 500 and NASDAQ closed -1.88% and -3.81% lower respectively.
In Europe, equity markets traded mostly lower last week, as mixed investor sentiment around valuations and AI was compounded by uneven corporate earnings. In M&A developments, Novo Nordisk and Pfizer are engaged in a hostile battle over the acquisition of Metsera, a US biotech company specialising in weight-loss drugs, including an obesity treatment involving a longer-lasting injection cycle than the weekly doses required by drugs such as Ozempic or Mounjaro. Novo Nordisk’s proposal is understood to be the stronger offer, with both companies reportedly willing to pay up to US$10bn for the business. In macro developments, the Eurozone economy continues to expand steadily, despite persistent global headwinds. In October, the bloc grew at its fastest pace since May 2023, supported by stronger services activity and improved demand conditions. The HCOB Eurozone PMI index, which measures overall economic activity, rose to 52.5 from 51.2 in September (readings above 50 indicate expansion). October’s print also marked the tenth consecutive month of growth, with Spain, Italy and Ireland recording the strongest expansion rates in the period. For the week, the Eurostoxx 50 and STOXX 600 closed -1.91% and -1.48% lower respectively.
In the United Kingdom, The FTSE 100 declined last week, despite posting another record close on Wednesday. The index was dragged lower by a broader flight from risk assets, as elevated valuations unsettled some investors. The Bank of England’s decision on Thursday also weighed on sentiment. While the rate hold was expected, the narrow margin of the vote signalled that there is already meaningful appetite among some MPC members for immediate rate cuts. In corporate news, Marks & Spencer announced it will take a £136mn hit to its 2025 annual profits due to a cyber attack which severely disrupted the retailer’s online operations earlier this year. In earnings, AstraZeneca — the FTSE 100’s largest constituent by market capitalisation — reported Q3 results ahead of expectations, supported by robust sales across its oncology and cardiovascular drug portfolios. The company noted that sales were up 9% in the United States and 5% in China, and confirmed that it intends to list shares on the New York Stock Exchange to access a deeper pool of capital as it expands its presence in the US market. For the week, the FTSE 100 finished -0.58% lower.
