Global stocks defy November seasonality for weak start, as Tesla, ITV in focus

Global stock indices are heading towards a weekly loss after pockets of volatility have knocked market sentiment. The S&P 500 is lower by 1.5% in the last 5 trading sessions, and if this persists then the US blue chip index could experience its first weekly loss in a month. Fears about high AI stock valuations knocked market sentiment once more on Thursday, however, futures prices suggest that the sell off may not gain traction on Friday, and, so far, the S&P 500 is expected to open higher along with the Eurostoxx 50 index, although futures markets are still pointing to a mildly weaker open for the Nasdaq.

The gold price is higher by $30 today and is back above the $4000 level and is currently eking out a 0.1% gain for the week. The gold price has been moving alongside risk in recent days; however, concerns are rising that the Fed will need to extend their balance sheet, which could trigger further inflows into gold, independently of what is going on with stocks. Thus, gold could start acting like a safe haven once more.

Cracks in the US economy could drive gains into gold

The gold price’s move back above $4,000 per ounce ,may also reflect concerns about weakness in the US labour market. The stock market sell off in the US on Thursday was in part triggered by the firm Challenger, Grey & Christmas, which found that companies announced 153,000 job cuts last month, 175% more than a year ago. This comes after a spate of US firms have announced job cuts, or frozen hiring, with some trying to find AI efficiencies and others correcting after over-hiring during the pandemic.

Amazon and IBM are two large firms who have reported job cuts. However, we would urge caution. The 153,000 figure is reported layoffs, it does not mean that they will happen, and the actual number of jobs lost could be far less. So far, companies are announcing more layoffs than actually cutting their workforce, and this could keep the unemployment rate increases fairly small.

Earnings season has been in focus for Europe this week. Overall, for Western Europe, the picture is strong. There have been positive surprises for both earnings and sales, even if there have been some pockets of earnings weakness, for example in the materials, industrials and real estate sectors.

Will seasonality boost sentiment for November?

Yet again, the market is selling off on any ‘bad’ news, and we could be in for more volatility in the coming weeks. We would point out that November is seasonally a strong month for stocks. The S&P 500 has reported an average monthly return of over 5% for November over the last 5 years. Likewise, the FTSE 100 also has a strong history of outperformance in November, and the average monthly return is more than 4%. The question now is, can seasonality outweigh valuation concerns and fears about the US economy to deliver more stock market gains this month?

Chart 1: FTSE 100 seasonal returns

Source: XTB and Bloomberg

UK focus: house prices pick up as ITV readies broadcast sale to Sky

In the UK, three factors could drive markets. Firstly, the real estate sector could get another boost after Halifax reported that house prices returned to growth in October, after declining in September. Also, IAG, the owner of British Airways, reported earnings that could weigh on the air travel sector. It reported weaker than expected Q3 revenues, although it kept its full year 2025 guidance intact. The company said that air passenger numbers were flat, but that air cargo was weaker. The company could limit any stock market weakness, since it will announce more share buybacks when it delivers full year results in 2026.

Also, ITV, the FTSE 250 member, is in talks to sell its broadcasting business to Sky. The deal could be worth up to £1.6bn, although there is no sign yet that it will take place.

Musk’s $1 trillion pay deal won’t shift the dial for the share price

Ahead today, the focus will be on the Tesla share price, after shareholders voted to endorse Elon Musk’s $1 trillion pay packet, which will give him control of 25% of Tesla shares. The pay packet comes with lofty milestones, including raising the company’s market capitalization to more than $8 trillion, it is currently $1.4 trillion, and to get 1 million robotaxis operational. This is a high bar, so the mega pay packet may never see the light of day.

Tesla’s share price slid on Thursday and dropped more than 3%, alongside other richly valued AI stocks, like Palantir, which was lower by another 6%. The stock price drifted sideways in after-hours trading and did not recoup early losses. Tesla’s share price is underperforming the overall market and is higher by only 14% so far this year, over the past month the stock is down 0.4%. The bigger driver of Tesla’s share price in the short term is valuation concerns since it has a forward P/E ratio of 216 times earnings, which leaves the stock vulnerable to a further sell off.