United States
It was a rough night on Wall Street, with growing anxiety over artificial intelligence’s impact on corporate profitability triggering a broad wave of selling that hit everything from equities to commodities to crypto.
The S&P 500 tumbled 1.6%, the Dow Jones shed 1.3% and the Nasdaq 100 dropped 2% in its fifth fall of more than 1% in the past ten sessions. All seven megacap tech names finished lower, while an ETF tracking software firms slumped 2.7% and the Philadelphia Semiconductor Index lost 2.5%.
Cisco Systems was the session’s biggest casualty, plunging 12% after its margin outlook disappointed, with higher memory chip prices weighing on profitability. The networking giant’s result underscored broader concerns that the AI boom is creating as many losers as winners, with fears about disruption spreading well beyond software into logistics, insurance broking, wealth management and commercial real estate.
Weeks of rising unease about whether massive AI investment will actually pay off appear to be morphing into a wider reassessment of risk. What had been a market narrative focused on AI’s potential to boost efficiency has shifted toward anxiety about which industries and business models could be upended entirely. The mood has darkened notably since AI startup Anthropic released new automation tools, sparking fresh concerns about displacement across multiple sectors.
On the brighter side, Applied Materials delivered an upbeat forecast in after-hours trading. Airbnb posted strong fourth-quarter bookings and issued a positive revenue outlook, while McDonald’s reported its fastest US sales growth in more than two years as value meals continued to resonate with cost-conscious diners. Rivian closed out 2025 with better-than-expected financials ahead of its next-generation SUV launch.
In the AI funding space, Anthropic completed a $US30 billion capital raise at a $US380 billion valuation, while OpenAI warned US lawmakers that Chinese rival DeepSeek is using sophisticated methods to extract results from leading American AI models. IBM said it would triple entry-level hiring in the US this year, even as AI weighs on broader demand for early-career workers.
The bond market told a clear flight-to-safety story. The 10-year Treasury yield dropped seven basis points to 4.10%, while a $US25 billion sale of 30-year bonds drew historic demand. Money markets continued to price little chance of a Federal Reserve rate cut when policymakers meet in March, with a July reduction fully priced in. US CPI data due on Saturday (AEDT) looms as the next major catalyst.
Europe
European equities gave up early gains to finish 0.5% lower on the Stoxx 600, though the session was packed with corporate drama.
The standout move came from Schroders, which soared 29% after agreeing to be acquired by US asset manager Nuveen in a £9.9 billion ($13.5 billion) deal that will create one of the world’s largest active managers with nearly $US2.5 trillion of assets.
At the other end of the spectrum, payments giant Adyen crashed 22% after macro uncertainties led to disappointing guidance. Logistics group DSV tumbled 10.5% as AI disruption fears that have already swept through software and financial services began to weigh on the transport sector. Deutsche Post fell 4.9% in sympathy.
Construction and cement stocks were hit hard after Germany’s chancellor suggested the EU should be open to weakening its carbon market. Heidelberg Materials plunged 11% and Holcim dropped 8.5%.
Telecoms were the day’s best performers, with the sector climbing 1.9% to a 2017 high. Deutsche Telekom surged 6.1% and BT added 3%. Luxury names also fared well, with Hermes rising 2.5% on a sales and profit beat that lifted peers, while EssilorLuxottica gained 4.2% as sales of AI-powered glasses exceeded expectations. In food and beverages, AB InBev jumped 5.7% on upbeat commentary, though ice cream maker Magnum suffered a record 16% drop as results stoked fears about the impact of obesity drugs.
Banks pulled back 1.8%, with HSBC, ING and Santander all notably weaker. Energy stocks also retreated, with BP falling 3.1% following downgrades from BNP Paribas and HSBC.
Australia
Australian shares are set for a sharp pullback on Friday, with S&P/ASX 200 futures pointing down 78 points, or 0.9%, to 8,895, following the broad risk-off session in New York.
Thursday’s local session told a much happier story, with the ASX 200 rising 0.3% to 9,043.50, its highest level since late October. Banks led the charge after ANZ surged 8.5% to a record high on the back of a strong first-quarter profit that signalled early success for CEO Nuno Matos’s restructuring push. Commonwealth Bank added 5.4% after its half-year earnings topped expectations.
Earnings season continues at full pace on Friday, with Westpac reporting a 5% jump in quarterly net profit to $1.9 billion overnight, though net interest margin edged down one basis point to 1.94% amid competitive pressures. Cochlear flagged a weaker outlook, with statutory net profit falling 21% to $162 million as delays in contracting for its new Nexa implant system weighed on revenue. The company warned that if the Australian dollar stays at current levels, underlying profit could come in about $30 million below expectations.
In other corporate news, Nick Scali posted a 36.4% surge in first-half net profit to $41 million, beating its own upgraded guidance. Webjet ended takeover discussions with Helloworld and BGH Capital after neither party progressed to a binding proposal, while also cutting its FY26 EBITDA guidance. Wesfarmers and Microsoft flagged a multi-year partnership to accelerate AI across brands including Bunnings, Kmart and Priceline. Ramsay Health Care received ACCC approval to acquire National Capital Private Hospital.
Commodities and currencies
Commodities bore the brunt of the risk-off mood, with precious metals suffering particularly steep falls. Gold sank 3.2% to $US4,922.71 an ounce, dropping below the $US5,000 level, with some attributing the sharp midday decline to traders liquidating positions to cover equity losses. Silver was hammered, plunging 11%.
Oil prices also retreated despite lingering Middle East tensions, with Brent crude falling 2.6% to $US67.61 a barrel and West Texas Intermediate dropping 2.7% to $US62.90. Iron ore slipped 0.6% to $US99.40 a tonne.
The Australian dollar weakened 0.5% to US70.92 cents as risk aversion lifted the greenback broadly. The euro was little changed at $US1.1871, while the Japanese yen gained 0.4% to 152.70 per dollar as traders sought haven assets.
Bitcoin fell 3.2% to $US65,749, with bearish signals building across the crypto industry. Standard Chartered cut its Bitcoin price target, while Coinbase was downgraded to sell. Ethereum dropped 2.5% to $US1,919.84.
The Australian 10-year bond yield sits at 4.80%, while its US equivalent fell to 4.10%. US January CPI data, due at 12.30am Saturday (AEDT), will be closely watched for signals on the Federal Reserve’s rate path.
Economic Calendar
US:
- CPI MoM, YoY 00:30
EU:
- GDP SA YoY 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.
