In the United States, markets declined in the early part of last week, as weakness in the technology sector dragged broader indices lower. Shares in NVIDIA, Broadcom, and AMD fell sharply after Blue Owl, Oracle’s largest data centre partner, declined to support the company’s proposed $10bn data centre project. However, markets rebounded strongly on Thursday following softer-than-expected inflation data. In corporate news, the Warner Bros. saga continued last week, as Netflix executives attempted to allay concerns that its proposed acquisition of the studio would result in a downturn in box office revenues or job losses within the industry. Warner Bros. has agreed a deal with Netflix, which has offered to acquire the studio for $72bn. However, the process has been complicated by a public intervention from Paramount, which has submitted an all-cash offer in excess of $100bn. Paramount, led by the Ellison family, is expected to contact Warner shareholders directly regarding its proposal. Antitrust considerations are expected to be a key factor in assessing both bids, as each presents significant regulatory challenges. However, industry insiders suggest that the Paramount proposal may face fewer antitrust hurdles, while the Netflix deal is considered more difficult to secure regulatory approval due to Netflix’s scale. By comparison, Netflix currently has a market capitalisation of approximately $397bn, having fallen by more than $100bn since announcing its initial interest in Warner in September, while Paramount’s market capitalisation stands at $15.2bn. Despite these developments, Warner announced on Wednesday that it would recommend shareholders reject Paramount’s offer and proceed with the agreed deal with Netflix. The company described Paramount’s bid as inferior to the terms agreed with Netflix. Paramount now has until January 8th to submit an improved offer before the tender process concludes. In the technology sector, Amazon is reportedly in talks to invest up to $10bn in OpenAI. If completed, the deal would raise OpenAI’s valuation above $500bn, cementing its status as the world’s most valuable private company and start-up. From an economic perspective, in addition to labour market data, US inflation figures for November were also released. In a welcome development, inflation slowed to 2.7% in November, down from 3.0% in September and marking the lowest reading since July. An October figure was unavailable due to insufficient data arising from the government shutdown. Energy prices accelerated by 4.2%, driven by an increase of more than 11% in oil prices, while food prices rose by 2.6% and shelter costs increased by 3%. The continued moderation in inflation provides further support for the Federal Reserve’s case for additional interest rate reductions in 2026. Overall, 2025 proved to be another positive year for US equities. Despite heightened uncertainty and volatility throughout the year, the S&P 500 recorded a strong year-to-date gain of 16% up to December 19th, while the technology-heavy NASDAQ rose by just over 20%, supported by robust performances from major firms such as Alphabet.
In Europe, equity markets were mostly flat to slightly higher last week, as sector-specific pressures in defence and technology weighed on indices during the middle of the week. Hopes of a ceasefire in Ukraine continued to dampen sentiment towards defence stocks. Meanwhile, technology shares came under pressure following reports that a Chinese company in Shenzhen had completed a prototype of an extreme ultraviolet (EUV) lithography machine. At present, such machines are exclusively built and operated by ASML for semiconductor manufacturing. If successful, this development could reduce China’s reliance on ASML for lithography equipment. However, industry experts note that ASML’s technology remains between ten and fifteen years ahead of any potential competitor. Markets recovered later in the week after the ECB held interest rates at current levels and upgraded its growth outlook for Europe in 2026. In corporate news, the European Commission is expected to scrap one of its landmark laws relating to combustion engines. Brussels is reportedly planning to roll back the 2035 ban on new combustion engine vehicles, allowing European carmakers to produce a limited number of petrol and diesel models. Under the proposed revision, manufacturers would be permitted to emit up to 10% of 2021 emissions levels, provided they meet specific criteria, such as using green steel in vehicle production. For the year as a whole, both the Euro Stoxx 50 and STOXX 600 performed strongly, closing 2025 with double-digit returns.
In the United Kingdom, the FTSE 100 rose last week, as softer-than-expected inflation data, coupled with a Bank of England rate cut, propelled the index to its strongest performance since April. From an economic perspective, UK inflation declined to 3.2%, its lowest level since March and well below the October reading of 3.6%. This inflation data helped to reinforce the Bank of England’s decision to cut rates on Thursday, following a prolonged period in which elevated inflation throughout much of 2025 had constrained the central bank’s ability to ease policy. For 2025 as a whole, the FTSE 100 delivered its strongest performance in years, closing the year more than 21% higher.
