Alphabet Drops 7.6% After Heavy Capex Spending

Alphabet's stock fell 7.6% in after-hours trading, erasing $192 billion in market value as investors reacted to its high capital expenditures. Asian markets were mixed, with the Chinese yuan stabilizing after Beijing’s measured response to US tariffs, while the Japanese yen strengthened to 153.33 per dollar, impacting the Nikkei. European markets opened lower as Trump hinted at new EU tariffs, and traders awaited key economic data releases.

Equities

The FTSE 100 fell 0.1% on Tuesday, marking its second consecutive decline, but closed well above its session lows after hopes of a trade war de-escalation emerged. The index had been down as much as 0.7% earlier in the day before recovering.

The FTSE 250 also ended 0.1% lower. Energy stocks rose 0.8% as oil prices turned positive following comments from a White House trade adviser suggesting President Trump was set to speak with China’s President Xi Jinping.

Vodafone was the biggest faller in the FTSE 100 after reporting further weakness in Germany, its largest market, during the third quarter. The telecoms group has been struggling with declining revenues in the region, which weighed on its stock price. Spirits maker Diageo fell as much as 1.6% after scrapping its medium-term sales growth target, citing uncertainty over US tariffs on tequila and Canadian whisky. The beverages sector as a whole dropped 1.3%. Meanwhile, De La Rue shares hit a three-year high after the banknote printer said it had received preliminary takeover approaches from multiple parties.

On Wall Street, the major indices all closed higher. The Dow Jones rose 0.3%, the S&P 500 gained 0.72%, and the Nasdaq jumped 1.35%. Energy stocks led gains in the S&P 500, rising 2.18%, while utilities and consumer staples declined.

Alphabet climbed 2.6% ahead of its quarterly results but later fell more than 7% in after-hours trading after missing revenue expectations, with weakness in its cloud business weighing on performance. Palantir surged 24% after issuing an upbeat revenue forecast for the first quarter and full year, surpassing Wall Street expectations.

Estee Lauder dropped 16.1% following a weak earnings report and job cut announcements, while PepsiCo fell 4.5% after forecasting annual profits below expectations and missing revenue estimates. Merck shares declined 9.1% after the drugmaker paused shipments of its HPV vaccine, Gardasil, to China, warning this would hit revenue in 2025. PayPal fell 13.2% as its operating margin shrank in the fourth quarter.

Forex & Commodities

The US dollar fell 0.56% on Tuesday as investors saw President Trump’s new tariffs on China as more of a negotiating tactic than a definitive escalation. The dollar index slipped to 107.97, while the euro rose 0.37% to $1.038. The Canadian dollar weakened 0.81% to C$1.43, giving back gains from Monday’s rebound. The Mexican peso gained 1.06% to 20.546 per dollar after a stronger performance the day before. The Japanese yen traded near 154.29 per dollar, with investors still favouring it as a safe-haven asset.

Gold prices hit a record high of $2,858.12 per ounce, up 0.5% on the day, driven by fears of further US-China trade tensions. US gold futures also climbed 0.3% to $2,884.60, with analysts now eyeing $3,000 as the next key level. Silver gained 0.5% to $32.26 per ounce, while platinum rose 0.8% to $970.95. Palladium was down 0.3% at $987.48.

Oil prices edged lower as rising US crude inventories added pressure to an already uncertain market. Brent crude fell 0.28% to $75.99 a barrel, while West Texas Intermediate dropped 0.15% to $72.59. Crude stocks increased by 5.03 million barrels in the past week, according to data from the American Petroleum Institute. Gasoline inventories rose by 5.43 million barrels, though distillate stocks fell by 6.98 million barrels. Meanwhile, President Trump reintroduced sanctions aimed at reducing Iranian oil exports, which could limit global supply in the coming months.