United States
Wall Street endured a turbulent session as investors grappled with mounting concerns over whether the staggering sums being poured into artificial intelligence will ever deliver meaningful returns.
The S&P 500 slipped 0.1 per cent to 6,969 after recovering from an earlier tumble of as much as 1.5 per cent as dip buyers emerged late in the session. The Nasdaq 100 shed 0.5 per cent while the Dow Jones Industrial Average edged 0.1 per cent higher. Small caps were largely unchanged.
Microsoft bore the brunt of investor frustration, plunging 10 per cent in its worst session since 2020 after reporting that cloud sales growth had slowed even as spending on AI infrastructure surged to record highs. The results sparked fresh concerns about how long it might take for the company’s AI investments to generate returns.
Meta Platforms provided some relief, with its solid outlook helping ease worries about its plans to double capital expenditure to as much as $US135 billion this year. Tesla also cheered investors after fourth-quarter profit topped expectations, though the electric vehicle maker confirmed it would spend more than $US20 billion reshuffling factory lines to accommodate its push into AI, self-driving vehicles and robotics.
After the closing bell, Apple delivered a significant boost to sentiment. The iPhone maker reported fiscal first-quarter revenue jumped 16 per cent to $US143.8 billion, driven by record iPhone sales across every geographic segment. Services revenue also hit an all-time high, climbing 14 per cent from a year earlier. Apple shares rose nearly 2.5 per cent in extended trading.
In corporate deal news, Amazon is reportedly in talks to invest as much as $US50 billion in OpenAI, while SpaceX and Elon Musk’s artificial intelligence firm xAI are discussing a potential merger ahead of a blockbuster public offering planned for later this year.
Treasury yields drifted lower, with the 10-year rate slipping one basis point to 4.23 per cent. President Donald Trump indicated he would announce his nominee to chair the Federal Reserve next week, reiterating his expectation that the central bank’s new leader will lower interest rates.
Europe
European equities retreated as disappointing results from luxury giant LVMH dashed hopes of a sector recovery and geopolitical tensions weighed on sentiment.
The Stoxx 600 fell 0.8 per cent, with luxury names bearing the heaviest losses. LVMH tumbled 7.9 per cent after reporting a wider-than-expected decline in fashion and leather sales, dragging peers Hermes down 3.8 per cent, Richemont 2.3 per cent and Ferragamo 5.8 per cent.
Banks also struggled, with the sector dropping 1.3 per cent. Deutsche Bank fell as much as 3.9 per cent after German authorities raided the lender’s Frankfurt offices in connection with a money-laundering probe involving staff.
Technology stocks posted a mixed session. Dutch semiconductor equipment maker ASML started strongly but surrendered all its gains to finish 1.9 per cent lower. However, other chipmakers advanced after US peer Texas Instruments delivered a reassuring outlook, lifting Infineon 2.6 per cent and STMicroelectronics 1.9 per cent.
Energy stocks outperformed with gains of 1 per cent as oil prices surged on heightened Middle East tensions. Shell added 1.5 per cent while TotalEnergies and BP each rose more than 0.9 per cent.
In corporate news, Swedish truckmaker Volvo rallied 2.4 per cent after beating fourth-quarter margin expectations and upgrading its outlook.
Australia
Australian shares are poised for a positive start to Friday’s session, with S&P/ASX 200 futures up 0.2 per cent to 8,910, pointing to an early gain of around 0.3 per cent.
Pilbara Minerals delivered a solid December quarter update, with higher realised lithium prices driving a 49 per cent surge in revenue to $373 million despite lower production volumes. Sales rose 8 per cent to 232,000 tonnes and cash climbed 12 per cent to $954 million, reinforcing balance sheet strength. The board is assessing a potential restart of the Ngungaju plant, with a decision expected in the March quarter.
Broker activity was busy, with Goldman Sachs upgrading ALS to buy and JPMorgan lifting both IDP Education and REA Group to overweight. On the downside, Bell Potter cut Whitehaven Coal to sell while Barrenjoey downgraded APA Group to underweight.
Coles Group faces regulatory scrutiny after the competition watchdog flagged that the supermarket’s proposed purchase of a Western Australian site will be subject to a Phase 2 review.
Quarterly updates due today include Origin Energy, ResMed, Atlas Arteria and Champion Iron.
Bond yields edged higher, with the three-year rising 1.1 basis points to 4.27 per cent and the 10-year adding 2.1 basis points to 4.84 per cent.
Commodities and currencies
Commodity markets experienced wild swings as geopolitical tensions and speculative flows collided.
Gold suffered its biggest retreat since October after briefly breaching $US5500 an ounce for the first time. The precious metal tumbled as much as 5.7 per cent intraday before recovering somewhat, with spot gold last trading around $US5310 an ounce. The selloff came as investors used gold as a source of liquidity to cover losses elsewhere, with technical indicators having pointed to overextended conditions.
Copper exploded to a record above $US14,500 a tonne, surging as much as 11 per cent on a wave of buying from China and a weaker US dollar. Trading volumes on the Shanghai Futures Exchange spiked sharply, with January already the busiest month on record.
Oil prices jumped to their highest since July after President Trump warned Iran to make a nuclear deal or face military strikes. Brent crude settled 3.5 per cent higher at $US70.77 a barrel while West Texas Intermediate gained 3.5 per cent to $US65.43. The rally intensified after reports Iran had warned ships it planned to conduct a live-fire drill next week in the Strait of Hormuz.
Iron ore rose 1.5 per cent to $US104.60 a tonne.
The Australian dollar eased 0.2 per cent to 70.30 US cents. Bitcoin slumped 5.8 per cent to $US84,090.
Economic Calendar
US:
- PPI Final Demand MoM 00:30
- MNI Chicago PMI 01:45
EU:
- GDP SA 21:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
