Equities Update: Shell, Apple, Amazon, WPP…

Shell earnings: “a robust third-quarter performance”

Garry White, Chief Investment Commentator at Charles Stanley, comments: “Shell delivered a robust third-quarter performance, posting adjusted earnings of $5.4bn – beating analyst expectations despite weaker crude prices. The results were underpinned by record production in Brazil and 20-year highs in the Gulf of America, alongside standout contributions from its Marketing division, which logged its second-highest quarterly earnings in over a decade. Cash flow from operations rose to $12.2bn, enabling Shell to launch a fresh $3.5bn share buyback, marking its 16th consecutive quarter of at least $3bn in repurchases. Weak oil prices as Opec+ members increase output and concerns grow over global growth are expected to continue to be as feature of energy markets in 2026.”

US cuts rates but markets hold breath for tech earnings, says Rathbones

• ‘AI-related trade remains equity market’s biggest driver’ despite rate cut, as Powell warns another cut in December not a given
• Rathbones’s Head of Market Analysis says choice of appointee to Fed chairman position more important than rate cuts

Commenting, John Wyn-Evans, Head of Market Analysis at Rathbones, says: “The futures market-derived probability of a quarter-point cut in the Fed Funds rate at today’s FOMC meeting was 98% with a minute to go, and the Fed duly delivered as expected.

“Of greater import were comments on the economy and an announcement on the management of the balance sheet. The committee maintained its cautious view on the labor market, citing the gentle rise in unemployment and reduction in vacancies. Even so, there is no cause for alarm, with the overall economy still expanding at a moderate pace. No real surprises there.

“There was welcome news on balance sheet reduction. Having earlier this year reduced the pace of the reversal of past Quantitative Easing, it announced a complete halt on reducing its holdings of Treasury bonds from 1 December. It will continue to run down its book of mortgage-backed bonds, with the proceeds being invested back into Treasury Bills. This will come as some relief to market participants who had recently noted a gradual tightening of conditions in the overnight repurchase markets (that is the market for day-to-day bank liquidity).

“The restless market’s focus now shifts to December’s meeting. Given the dissent of Kansas City Fed President Schmid, expectations for another 25 basis point cut have eased slightly, but remain at 92%. A lot will depend upon the data in the interim, although that remains in short supply owing to the government shutdown. If there is no resolution by then, the Fed might be reluctant to act while “flying blind”.

“Market reaction was muted given the lack of meaningful surprises. There were rises of 2 and 3 basis points respectively for 2 and 10-year Treasury yields, and the dollar was marginally firmer, again reacting to Schmid’s vote not to cut, it would appear. Equity markets barely blinked and remain focused on tonight’s quarterly earnings releases from Alphabet, Meta and Microsoft. The AI-related trade remains the equity market’s biggest driver.

“Today’s news comes against the background of the Trump administration considering its shortlist of candidates to replace Chairman Powell when his tenure ends next May. The identity of the eventual appointee will probably be more important than anything that has been released today.

“Moving on to the press conference, initial comments from Chairman Powell have been taken poorly. He stated that a cut in December rate cut was ‘not a foregone conclusion’, knocking a quick half percent off equities and sending bond yields higher. That could well be the programmed reaction of algorithmically controlled funds to the threat of higher rates than expected. In reality, this is more likely to be the Chairman asserting his independence from White House interference or influence. The December decision will be made on merit according to the prevailing circumstances. At 6.40pm the probability of a December rate cut had dropped to 75%. These are fact-moving markets for traders, but have limited impact on long-term investment outcomes.”

iPhone success and AWS margins hold the key for Apple & Amazon

“Apple and Amazon report earnings tonight, with Apple facing mounting questions over whether the iPhone 17 range can finally break two years of flat growth – particularly as the much-hyped iPhone Air appears to be flopping despite glowing reviews. Options markets are pricing a 3-4% swing in Apple’s shares, with traders desperate for clarity on its AI roadmap and China exposure at what look like uncomfortably stretched valuations.”

“Amazon’s fate hinges on whether AWS margins can stabilise after being squeezed by aggressive AI spending last quarter, though with 10-13% revenue growth guided and the holiday season looming, the e-commerce giant seems better positioned to deliver.”

Shell beats estimates despite oil price weakness

Adam Vettese, market analyst for eToro says: “Shell appears to have shrugged off oil price volatility with a robust third-quarter performance, with adjusted earnings of $5.4 billion and cash flow from operations reaching $12.2 billion, beating expectations. The quarter was marked by record production in Brazil and the Gulf of America, driving strong upstream results alongside the Marketing division’s second-best quarterly earnings in over a decade. However, growth in renewables remains modest, with limited earnings contribution, highlighting the challenges ahead in energy transition.

“Shell continues to commit to a further $3.5 billion to share buybacks, the 16th consecutive quarter exceeding $3 billion. For investors, Shell offers a compelling income story with steady dividends and buybacks backed by resilient cash flows and operational strengths. Shares have recently traded close to the highest level we have seen in the last year, investors will want to see the company continue this momentum in subsequent quarters for shares to push on further.”

WPP’s latest profit warning has the hollow ring of an old agency script retold once too often. 

Mark Crouch, market analyst for eToro says: “A 5.9% drop in third-quarter net revenue exposes how far the world’s biggest advertising group has drifted from the bravado of its Madison Avenue heyday. WPP’s new CEO Cindy Rose inherits a brief no less daunting than a rebrand of the word “decline”. The sharp slowdown at WPP Media, once the jewel in the crown, underlines how the company’s traditional engine is sputtering in a market running on algorithms and automation.

“The irony is cruel, WPP has just inked a five-year deal with Google to hard-wire AI tools like Gemini and Veo into its client offer, yet it feels more like a follower than a pioneer. Defiant words from management can’t disguise the deeper truth, the group that once sold the future is now struggling to outrun its past. For all the noise about machine learning, what WPP really needs to rediscover is human instinct, and a little creative courage.”

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