Global Earnings, AI, and Policy Shifts: My Pre-Market Game Plan
Muhammad Faraz 
Global Earnings, AI, and Policy Shifts My Pre-Market Game Plan
A flurry of news broke overnight and this morning, setting the stage for a dynamic trading session. Key headlines include a major AI model release from Alibaba, mixed earnings and outlooks from BlueScope Steel and ReNew Energy, a corporate governance scandal at SkinBioTherapeutics, and a significant cost-cutting plan from Volkswagen. On the macro front, the Global AI Summit kicked off in India with top tech leaders, while HHS Secretary RFK Jr. signaled a potential regulatory overhaul for the processed food industry in the US.
- Alibaba unveiled its new Qwen3.5 AI model, claiming it is 60% cheaper and significantly more powerful, designed for the “agentic AI era” .
- BlueScope Steel reported a 118% surge in H1 net profit and announced a large buyback, yet its shares fell 2.7% in Australia as the market potentially priced in a cautious H2 outlook .
- ReNew Energy announced a 54% surge in adjusted EBITDA for Q3, driven by operational capacity and its solar manufacturing segment .
- Volkswagen is planning to cut costs by 20% across all brands by the end of 2028 to combat margin pressure from China and global competition .
- Norsk Hydro shares dropped after downgrades from RBC and Kepler, citing persistent weakness in its downstream extrusion business despite strong upstream aluminum prices .
- SkinBioTherapeutics plunged 37% after announcing an investigation into its former CEO for financial misrepresentation, forcing a 17% cut to 2025 revenue .
- Physiomics reported 51% revenue growth, launching a new Biometrics service, though operating losses widened due to investment .
- RFK Jr. confirmed the FDA will consider a petition to revoke the “Generally Recognized as Safe” (GRAS) status for dozens of processed ingredients, a major threat to the ultra-processed food industry .
- The Global AI Summit opened in India, with leaders from Google, OpenAI, and others, aiming to establish India’s dominance in the AI era .
Pre-Market Reaction
The overnight reaction has been mixed, with strength in tech-related names and safe havens, while European industrials and specific small-caps face pressure.
| Asset Class | Instrument | Pre-Market / Overnight Reaction |
|---|---|---|
| Equities | S&P 500 Futures | ▲ +0.1% implied open (+5 pts) |
| Equities | Nasdaq 100 Futures | ▲ +0.2% implied open (+35 pts) · buoyed by AI optimism |
| Equities | Alibaba (BABA) | ▲ +3.8% in pre-market on Qwen3.5 unveiling |
| Equities | Norsk Hydro (NHY.OL) | ▼ -2.1% following RBC/Kepler downgrades |
| Equities | SkinBioTherapeutics (SBTX.L) | ▼ -37% in London trading on CEO scandal |
| Commodities | Gold (XAU/USD) | ▲ +$12 to ~$2,910 per ounce · safe-haven bid on policy uncertainty |
| Commodities | Crude Oil (WTI) | ● steady at ~$71.50, awaiting demand signals |
| Currencies | US Dollar Index (DXY) | ● flat at 106.80 |
| Bonds | US 10-Year Treasury Yield | ▼ fell to 4.48% |
The Official Narrative
The consensus from analysts is that we are entering a phase of extreme divergence. Tech giants are being rewarded for aggressive AI investment (Alibaba) , while traditional industrials are being penalized for any sign of weakness, even when core businesses are strong (BlueScope, Norsk Hydro) . Meanwhile, the regulatory landscape is shifting, with health policy (RFK Jr.) and geopolitical tech summits (India AI Summit) introducing new, long-term variables for investors to consider .
Interpreting the Move Before the Open
The market is laser-focused on the future, punishing companies with legacy issues and rewarding those pivoting to growth. The stark contrast between BlueScope Steel’s 118% profit surge/stock drop and Alibaba’s AI-driven rally tells you everything. BlueScope’s cautious H2 outlook is being interpreted as a peak-cycle signal, while Alibaba’s Qwen3.5 model, with its claim of being 60% cheaper and 8x better at processing workloads , is seen as a direct challenge to US dominance and a significant step toward monetizing the “agentic AI” trend. The market is buying the narrative of efficiency and future growth (AI) and selling the narrative of cyclical peak (steel, autos).
Historical Context & Credibility
We’ve seen this before. The “tech-led” rally of the late 90s was built on a similar promise of transformative potential, while industrials lagged. The credibility of these moves hinges on earnings delivery. Alibaba’s claim of outperforming US models like GPT-5.2 is bold but unverified in real-world applications. However, the sheer cost reduction (60% cheaper to use) is a credible and powerful lever for mass adoption, which is why the pre-market reaction is so strong. Conversely, Volkswagen’s 20% cost-cutting plan by 2028 is a stark admission that the European auto giant sees structural, not cyclical, headwinds from China. This is a long-term bearish signal for the sector.
Contrarian View
The market’s punishment of BlueScope Steel and Norsk Hydro feels overdone. BlueScope announced a massive capital return program (dividend + buyback) equivalent to ~A$3.00 per share for 2026 . For Norsk Hydro, RBC’s downgrade comes after a 30% run-up in the stock, and the brokerage still highlights tight aluminum markets and the company’s low-carbon positioning . The sell-off presents a potential entry point for value investors willing to look through near-term downstream weakness. The downstream issues are fixable; the upstream tightness is a powerful tailwind.
What Could Happen at the Open and Beyond
Direct Impact & Sector Rotation:
- AI & Tech: Expect capital to continue rotating into AI-exposed names. The India AI Summit, with participation from OpenAI and Google , will keep the sector in focus.
- European Autos & Industrials: Volkswagen’s cost-cutting news will likely weigh on the entire European auto sector. Investors will see this as a template for others, suggesting margin pressure is industry-wide. This could lead to outflows from the DAX and into more defensive US tech.
- Consumer Staples: The RFK Jr. announcement on ultra-processed foods is a direct threat. We could see significant selling pressure on packaged food companies at the open as investors price in potential regulatory risk and litigation costs, similar to the tobacco playbook.
- Small-Cap Biotech: The SkinBioTherapeutics scandal serves as a stark reminder of the governance risks in small-cap biotech, potentially causing a flight to quality within the sector.
Volatility & Sentiment Shift
Expect elevated volatility in specific names. The overall market sentiment is cautiously risk-on, but the rotation is violent. Gold’s rise alongside Nasdaq futures suggests a “havens and growth” trade, where investors are seeking safety (from food regulation, European slowdown) while still wanting exposure to structural growth (AI). This is a sign of a maturing bull market, not a broad-based melt-up.
Forward-Looking Catalysts
- DeepSeek’s New Model: Any announcement from DeepSeek could immediately challenge Alibaba’s AI narrative and re-ignite the China AI race .
- US Tariff Decisions: The potential for US tariffs to impact Norsk Hydro’s ~NOK700 million in metal effects is a key risk for base metals .
- RFK Jr. Confirmation: Any further details on the timeline for the FDA’s GRAS review will be a critical catalyst for the food and beverage sector .
My Predictions & Price Targets
Based on the synthesis above, I predict that markets will show a divergent theme: AI-led strength in tech, defensive strength in gold, and pressure on European industrials and US food stocks over today’s session.
Specific Price Targets & Rationale:
Asset 1: Alibaba (BABA)
- Bias: Bullish
- Primary Target (PT1 – $125.00): The first level I expect it to reach today/intraday.
- Rationale: A break above the recent consolidation range near $118. The Qwen3.5 news provides the fundamental catalyst to clear this short-term resistance.
- Secondary Target (PT2 – $132.50): A more ambitious target if the move gains momentum today.
- Rationale: This level represents a major swing high from earlier in the year and a key Fibonacci retracement level. It will act as a magnet if buying volume surges.
- Key Level to Watch ($118.00): The pre-market gap-up level. A hold above this confirms the bullish sentiment; a fall back below would indicate the market is already “selling the news” on the AI release.
Asset 2: S&P 500 (SPX)
- Bias: Bullish
- Primary Target (PT1 – 6,150): The first level I expect it to reach today/intraday.
- Rationale: This is the overnight futures high. A push to retest this level is likely as US traders enter and react to the positive tech catalysts.
- Secondary Target (PT2 – 6,175): A more ambitious target if the move gains momentum today.
- Rationale: This would represent a new all-time high, requiring broad market participation beyond just tech. Watch for this on a pullback in yields.
- Key Level to Watch (6,090): The pre-market low. A break below this level would invalidate the bullish bias and suggest the weight of European industrials and food sector fears is dragging the broader market down.
Asset 3: Gold (XAU/USD)
- Bias: Bullish
- Primary Target (PT1 – $2,925): The first level I expect it to reach today/intraday.
- Rationale: A clean break above the overnight high of $2,910. The regulatory uncertainty from RFK Jr. and general geopolitical unease from the AI summit are providing a safe-haven bid.
- Secondary Target (PT2 – $2,950): A more ambitious target if the move gains momentum today.
- Rationale: A psychological level. Reaching this would require a weaker US dollar or a fresh bout of risk-off sentiment, perhaps from a poor US open.
- Key Level to Watch ($2,890): The support level from yesterday’s close. A drop below this would signal the safe-haven bid is fading and traders are rotating fully into risk assets like tech.
Asset 4: Volkswagen AG (VOW3.DE)
- Bias: Bearish
- Primary Target (PT1 – €98.00): The first level I expect it to reach today/intraday.
- Rationale: A test of the recent swing low. The 20% cost-cutting plan is being viewed as a defensive move in a structurally challenged market.
- Secondary Target (PT2 – €95.00): A more ambitious target if the move gains momentum today.
- Rationale: A break below €98 would likely accelerate selling towards the next psychological support level of €95.
- Key Level to Watch (€101.50): The pre-market high. Any recovery would need to reclaim this level to suggest the market is giving the company credit for its proactive restructuring efforts.
Asset 5: Physiomics (PYC.L)
- Bias: Neutral-to-Bullish (Intraday)
- Primary Target (PT1 – £0.0165): The first level I expect it to reach today/intraday.
- Rationale: The 51% revenue growth and new Biometrics service are strong fundamentals . The stock may see a relief bounce after being overshadowed by the SBTX scandal.
- Secondary Target (PT2 – £0.0178): A more ambitious target if the move gains momentum today.
- Rationale: This would be a test of its 50-day moving average. A positive mention in broader biotech commentary could lift the stock.
- Key Level to Watch (£0.0150): The recent support level. A break below here would put it back into the downtrend, suggesting the market is ignoring its positive results.
What Could Go Wrong Today
Thesis Invalidation Levels:
- For Alibaba (BABA): A sustained break below $118.00 in the first hour of trading would prove my bullish forecast incorrect, suggesting the market sees the Qwen3.5 launch as a “me-too” event rather than a game-changer.
- For S&P 500 (SPX): A break and sustained trade below 6,090 would invalidate the bullish outlook, confirming that selling pressure from the European and food sectors is overwhelming the AI-driven optimism.
- For Gold (XAU/USD): A drop below $2,890 would invalidate the bullish thesis, indicating a stronger risk-on tilt than I anticipate.
Key Risk Factors:
- DeepSeek Release: An unannounced release of a new, competitive model from DeepSeek could immediately halt Alibaba’s rally .
- Tariff Headlines: Unexpected news on US tariffs could disrupt the positive outlook for base metals and further pressure industrials .
- Contagion in Small Caps: The SkinBioTherapeutics scandal could cause a broader sell-off in UK small-cap pharma/biotech, dragging down fundamentally sound names like Physiomics.
Trading Considerations
Today is a stock-picker’s market. Do not buy the dip in European autos or US food processors without a clear catalyst. Fading the strength in AI names like Alibaba is risky given the momentum. The safest trades are long Nasdaq/gold against short European industrials. Position sizes should be reduced given the sector-specific risks, and trailing stops are essential to protect profits if targets are hit quickly.
The Bottom Line for Today’s Open
Today’s pre-market action tells a clear story of a market grappling with structural shifts. The future belongs to those enabling the next wave of efficiency (AI), while the present is punishing those facing structural headwinds (autos, processed foods, some industrials). The rise in gold alongside tech indicates this is not a “risk-on” party for everyone, but a selective rotation.
The single most important action for today is to watch the open for divergence between the Nasdaq and the S&P 500. If tech strength can lift the broader market, the bullish thesis holds. If the broader market drags tech down, it’s a sign of underlying weakness. Avoid chasing the rally in European auto stocks, and look for pullback entries in AI leaders rather than buying the open gap.
What I’m Watching:
- The first 30-minute range of the Nasdaq 100 versus the S&P 500.
- The price action of major food companies (like Kraft Heinz, General Mills) at the open in response to the RFK Jr. news.
- Any breaking news from the India AI Summit regarding partnerships or policy announcements .
Chart Source: TradingView
Disclaimer: This commentary represents my personal analysis and opinions. It is for informational purposes only and not financial advice. All investments involve risk, including loss of principal. Conduct your own research and consider your financial situation before making any investment decisions.
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