The Morning Brief
European earnings season is quietly running hot while the overnight AI story out of Asia reminds traders that the chip-buildout narrative still has rough edges.
Oracle's (ORCL) decision to scrap a $7 billion AI chip-leasing deal with Tencent (700) is the headline that matters most this morning.
The cancellation lands right as the market has been pricing AI infrastructure spending as a one-way bet, and it is a reminder that cross-border chip and cloud arrangements with Chinese partners remain fragile under the current trade and export-control backdrop. Expect this to color sentiment around the AI-capex trade when U.S. futures get moving, even without a direct read-through yet on Nvidia or the hyperscalers.
European corporates are, on balance, delivering more upgrades than warnings overnight.
Heidelberg Materials posted a strong third quarter and expanded its cost-savings program, Vopak raised its full-year 2026 outlook, Coca-Cola HBC lifted revenue guidance, and AIB Group upgraded its FY26 targets alongside nine-month results. That's a decent scorecard for European industrials and consumer names heading into year-end. The counterweight comes from Barry Callebaut, which cut its profit forecast as cocoa prices keep climbing, and Jefferies, which downgraded Haleon to Hold. Marks & Spencer also posted interim results and J.D. Wetherspoon issued a trading update, both adding to a dense slate of U.K. corporate news this morning.
Aviation is where the big-ticket deals are happening.
Boeing (BA) and Avolon finalized a purchase of 140 737-10 jets, the largest single-aisle order ever placed by a lessor, while IndiGo is in talks with Embraer for up to 150 aircraft. Together they underscore how tight narrow-body demand remains even as supply chains stay strained.
The pre-market tape leans cautiously constructive.
The S&P 500 proxy (SPY) sits near its highs, up double digits on the year, while the Nasdaq proxy (QQQ) has outperformed on a year-to-date basis but is still negative over six months, a sign the AI-led rally has been choppier lately than the headline numbers suggest. Small caps (IWM) are holding steady. Treasuries (TLT) are under pressure, oil (USO) is firmer, and gold (GLD) is giving back ground, a mix consistent with yields creeping higher into the open.
Single-name mover:
trivago (TRVG) is lower after its third-quarter results, with UBS trimming its price target following the print.
On the radar today:
a packed earnings docket includes McDonald's, Qualcomm, Uber, CVS Health, Allstate, Albemarle, Arm Holdings, Datadog, AppLovin, HubSpot, and crypto-adjacent names Riot Platforms, Hut 8, and American Bitcoin Corp. Novo Nordisk also named a new CFO from Galderma ahead of its own report.
Bottom line: the AI trade faces a fresh crack from the Oracle-Tencent fallout even as European earnings argue the underlying corporate backdrop is still solid, leaving today's open to sort out which signal dominates.