Since the beginning of the week, I have been hesitating to write an article that will probably elicit some harsh comments such as ‘OK Boomer’. But here goes. Stock market reactions to earnings reports are becoming increasingly crazy. Double-digit fluctuations have become commonplace, even for companies considered to be stable. We are also seeing drops of 30%, 40% or 50% in a single trading session for companies worth tens of billions. Take Fiserv in the middle of the week, for example: a downward revision of its targets, the departure of its CFO, and poof, its market capitalisation fell from $75 billion to less than $40 billion.

So one of three things is true: either the market has become really bad at valuing companies, or we need to offset mindless rises with mindless falls. Or the company is going to collapse in the not-too-distant future. Specifically regarding Fiserv, after losing nearly half its value in two days, the company is trading at 7.5 times next year's expected earnings. That's barely more expensive than Valeo. Except that Valeo is an automotive equipment manufacturer in a depressed market, while Fiserv is a fintech company, albeit a somewhat old one, but with a 10-year average P/E ratio closer to 40 than 7.5. But perhaps the market believes that Fiserv will eventually disappear, wiped out by AI-powered start-ups?

What is certain is that post-earnings volatility yesterday resulted in declines of 10% or more for seven large S&P 500 stocks (eBay, Meta, Chipotle and Cigna in particular). Europe was not to be outdone, with WPP, Kongsberg and Arcadis plunging more than 10% in the Stoxx Europe 600. There were slightly fewer spectacular rises yesterday, but the same applies to gains. To my knowledge, there is no research documenting a dramatic increase in volatility around earnings in the recent period. My thinking is partly anecdotal. But at least one academic study has shown that market reactions to earnings became stronger in the period 2001 to 2016 than they had been previously. The authors explain this by the increased transparency of corporate communications and the growth in distribution channels. The trend has only strengthened since then. I have no doubt that in the age of social media, storytelling and greater access to the market for individuals, crowd movements are significantly more powerful.

It is clear that earnings reports shape index performance in their own way. Yesterday, the market was rather alarmed by the headlong rush into AI spending by the major platforms. Meta ended the day down 11% and Microsoft down 3%. The unsinkable Nasdaq 100 took a hit (-1.5%) due to fears surrounding the return on investment of AI. Added to this was the bucket of cold water thrown by the Fed on Wednesday evening on the overheating market. Its chairman left open the possibility of maintaining the status quo on key interest rates at the central bank's last meeting of the year in December, contrary to the consensus, which is still betting on easing.

After the close of Wall Street, however, Amazon and Apple gave futures a boost with their results. The online retailer continues to benefit from sustained growth at AWS, the world's largest cloud provider. Apple, for its part, delivered a mixed performance, to stay with the fruit theme. The market forgave it for slowing down in China thanks to the promise of a bright end to the year. Amazon gained 13% in after-hours trading. Apple settled for 2.5%.

The trade compromise reached between the United States and China on Thursday did not impress financiers. Everyone understood that this is a fragile transitional agreement in the economic war between the two countries. The market bought the rumour and sold the news. In China, the manufacturing industry remains sluggish, as shown by the NBS PMI index published last night, which is not only in contraction territory but also below expectations.

In Asia-Pacific, China continues to decline while Japan and South Korea are progressing, supported by recent agreements signed with the Trump administration. In Australia, the ASX fell for the fourth consecutive session after a rise in inflation dashed hopes of interest rate cuts in the country. Europe is expected to fall, as the pulling power of Apple and Amazon has clearly not survived the Atlantic crossing.

Today's economic highlights:

On today's agenda: in Japan, unemployment rate, industrial production, retail trade and retail sales; in China, composite, manufacturing and non-manufacturing PMIs; in France, EU harmonized CPI and PPI; in the eurozone, CPI; in the United States, monthly and yearly core PCE price index, personal income, consumer spending and Chicago MNI PMI. See the full calendar here.

  • GBP / USD: US$1.31
  • Gold: US$4,008
  • Crude Oil (BRENT): US$63.94
  • United States 10 years: 4.1%
  • BITCOIN: US$109,478

In corporate news:

  • Barclays discussed FX market outlook and central bank policies at the Asia Forum in Singapore.
  • John Wood Group PLC reported strong order book growth but declining revenue and adjusted EBIT in H1 FY25, amid delays in financial results and a takeover by Sidara.
  • Iomart Group PLC saw a 25% revenue increase in H1 FY2025, driven by the acquisition of Atech and Microsoft-related activities.
  • Filtronic reported significant growth in 2026, driven by a focus on Gallium Nitride (GaN) technology.
  • WPP experienced a revenue decline and reduced financial outlook, leading to a market sell-off impacting UK equities and the British pound.
  • Ironveld subsidiary entered a binding term sheet with Daemaneng Minerals for a mineral project collaboration.
  • Fairview International PLC announced a 15% increase in pretax profit and a 6.6% rise in revenue, driven by higher average fees and effective cost control.
  • Essentra reported increased revenue and order intake in Q3 2025, maintaining a cautious market recovery outlook.
  • Caixabank announced an interim dividend of €0.1679 per share and a €500 million share buyback program, despite an 8% decline in Q3 net profit.
  • Unicaja Banco reported a robust 9-month net profit and raised its financial outlook for 2025.
  • Danske Bank Q3 2025 earnings slightly exceeded expectations, aligning with consensus forecasts.
  • Fugro Q3 2025 earnings surpassed expectations despite offshore wind market challenges.
  • Loomis reported strong Q3 2025 results with a 1.6% EBITA increase and announced a share buyback program.
  • Nobia AB reported a Q3 EBIT loss of SEK 1,882 million, including a non-cash impairment charge related to UK operations.
  • Helleniq Secondary ABO orders below EUR 7.55 per share risk not being filled.
  • Meta Platforms raised up to $30 billion through a bond sale to finance AI infrastructure investments.
  • Apple reported record revenue and earnings per share in its September quarter, driven by strong service revenues.
  • Nvidia is expanding its AI infrastructure in South Korea with a $1 billion investment in the AI startup Poolside.
  • Netflix announced a ten-for-one stock split and is exploring a bid for Warner Bros Discovery's studio and streaming business.
  • Edwards Lifesciences Corp announced a CFO transition and reported strong Q3 earnings, raising its full-year guidance.
  • Brighthouse Financial is being acquired by private equity firms.

See more news from UK listed companies here

Analyst Recommendations:

  • Standard Chartered Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from HKD 173 to HKD 176.70.
  • Wpp Group: Barclays maintains its underweight recommendation and reduces the target price from GBP 3.85 to GBP 3.25.
  • Grafton Group Plc: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 1220 to GBX 1190.
  • Shell Plc: HSBC maintains its hold recommendation and raises the target price from GBP 29.50 to GBP 30.80.
  • Hochschild Mining Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 5 to GBP 4.40.
  • Prudential Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 1170 to GBX 1160.
  • Haleon Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from USD 12.60 to USD 12.20.
  • Pluxee N.v.: Oddo BHF maintains its neutral recommendation and reduces the target price from EUR 23 to EUR 18.