US Equity Market Performance
Equity markets in the US closed lower on Thursday, with the S&P 500 retreating from its recent record high amid a mix of corporate earnings and economic data. Walmart’s disappointing full-year earnings outlook, reflecting concerns over consumer behaviour and geopolitical instability, weighed on sentiment, sending the retailer’s shares down by 6.5%. Financials led the decline, while energy stocks managed to hold up, benefiting from rising oil prices. The 10-year US Treasury yield slipped to 4.51%, while gold and silver prices edged higher. Despite a slight rise in initial jobless claims, the labour market remains resilient, supporting the view that consumer spending and wage growth will continue to provide economic momentum in the near term.
European Market Trends
Across the Atlantic, European markets also pulled back following recent record highs, as investors digested mixed corporate earnings and a slowing global economic outlook. The ongoing uncertainty over trade and immigration policies, combined with geopolitical risks, continues to weigh on sentiment. While bond yields softened in the US, the euro and other major currencies faced pressure from a weaker US dollar. Meanwhile, oil prices were supported by production disruptions following a drone strike on Russia’s Caspian pipeline, which added another layer of uncertainty to global markets. Investors are closely watching these developments as they navigate an environment of policy uncertainty and economic resilience, with recession risks appearing subdued for now.
Asia Market Movements
Asian equities remained in a narrow range on Friday, with concerns over US trade tariffs and the prospect of higher interest rates continuing to weigh on sentiment, despite a strong earnings report from Alibaba sparking a rally in Hong Kong. Japanese stocks were flat following stronger-than-expected inflation data, while markets in China and South Korea saw muted movements, and Australian shares extended losses as profit-taking continued.
Key Company Earnings and Market Movers
The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:
- Alibaba: Hong Kong-listed shares surged to a three-year high on Friday, leading a broader rally in Chinese technology stocks after the e-commerce giant reported stronger-than-expected December quarter earnings and outlined plans to ramp up investment in e-commerce and artificial intelligence. The gains in Alibaba were also driven by growing optimism over China’s AI capabilities, particularly following Alibaba’s collaboration with Apple and its advancements in cloud-based AI.
- MercadoLibre: The company reported a nearly four-fold increase in quarterly net profit, rising 287% year-on-year to $639 million, which led to a 12% surge in its shares after-hours. The strong performance was driven by lower funding costs, improved logistics, and better currency management, particularly in Mexico and Argentina, with the company also noting cautious measures to mitigate credit risk in Brazil and Mexico.
- Booking Holdings: The company exceeded analysts’ expectations for fourth-quarter profit and revenue, driven by strong demand for international travel, particularly from high-income American and Chinese tourists. The company posted a 14% year-on-year revenue increase to $5.47 billion, with gross bookings rising 17% to $37.2 billion.
- Block Inc: Shares fell 8% in after-hours trading after the company reported fourth-quarter profit and revenue below Wall Street expectations. Block posted earnings of $0.71 per share and $6.03 billion in revenue, and provided a 2025 outlook of at least 15% gross profit growth despite additional foreign exchange headwinds.
- Walmart: Walmart’s forecast of lower-than-expected sales and profit for the upcoming year, driven by concerns over geopolitical uncertainty and potential tariffs, followed strong holiday quarter sales. However, TD Cowen analysts see the pullback as a buying opportunity, maintaining a “Buy” rating and raising the price target to $115, citing Walmart’s growth potential through its market share and improving technology initiatives.
- Standard Chartered: The bank announced a $1.5 billion share buyback and raised its earnings target after reporting an 18% increase in annual profit, driven by record growth in its wealth business and strong market performance. The bank also declared a final interim dividend of 28 cents per share and upgraded its 2026 return on tangible equity (RoTE) target to “approaching 13%” from the previous estimate of 12%.
- Schneider Electric: The company’s shares rose 3% yesterday after it reported strong fourth-quarter results, with 12.5% organic revenue growth and better-than-expected performance in its Energy Management and Data Centers segments. The company issued an optimistic 2025 outlook, projecting 7-10% organic revenue growth and an adjusted EBITA margin of 19.2-19.5%, although RBC Capital Markets maintained an “Underperform” rating due to high sector valuations.
- Renault: Renault reported a record operating profit of €4.3 billion for 2024, slightly exceeding expectations, with a 7.4% increase in revenue driven by new model launches, including the electric R5. Despite lowering its 2025 margin expectations due to tougher carbon emissions targets, the company remains confident in its strategy, which includes a dividend increase and continued cost reductions.
- Nubank: The company reported an 87% increase in adjusted net profit for the fourth quarter, driven by higher revenues and a larger client base, but shares fell by 6% in after-hours trading. The company, which now has over 114 million customers, plans to announce its next market expansion by the end of the year, although analysts were concerned about decelerating revenue growth and reduced provisions.
- Cruise Lines: Shares of major cruise lines tumbled on Thursday after U.S. Commerce Secretary Howard Lutnick suggested the industry could soon face new taxes, criticising operators for registering ships under foreign flags. Carnival, Royal Caribbean, and Norwegian Cruise Line saw significant losses, as concerns over rising oil prices and potential taxation dampened investor sentiment.
- FTAI Aviation: The company’s stock rose 14% after an independent review by its Audit Committee dismissed allegations from short seller reports, confirming they were without merit. The company also reaffirmed its commitment to transparency by confirming a timely filing of its Form 10-K, helping to restore investor confidence.
- Palantir Technologies: The company received a Buy rating from Loop Capital, which set a $141 price target, highlighting the company’s strong position in the AI-driven enterprise market despite concerns over potential U.S. defence budget cuts. Wedbush also maintained its Outperform rating, arguing that Palantir could benefit from defence spending shifts and pointing to key growth initiatives like Project Stargate, positioning the company as a long-term AI leader.
Commodities and Currency Update
- Oil: Oil prices remained largely steady this morning, set for their best week since early January, as supply disruptions and severe weather in North Dakota continued to support the market. Despite a higher-than-expected rise in US crude inventories, which signalled weaker demand, declines in gasoline and distillate stocks provided some support, reflecting steady fuel consumption.
- US Dollar: The US dollar struggled on Friday, nursing broad losses and set for its third consecutive weekly drop, as traders grew sceptical of the impact of Donald Trump’s second term on tariffs. The dollar weakened against major currencies, with the euro gaining 0.8% overnight and holding steady at $1.0504 in Asia.
Upcoming Data and Market Focus
Friday’s market focus will be on PMI data from the euro zone, the UK, and the US, with expectations of continued growth in the euro zone and potential impacts of US tariffs on business orders. As the German election approaches on Sunday, markets are watching for a possible conservative-led coalition.
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