U.S. Equity Market Update
U.S. equity markets closed largely unchanged on Tuesday, with the S&P 500 edging up 0.2% to a record high, while the Dow and Nasdaq finished near the flatline. Despite a quiet economic calendar, commodity-sensitive sectors like materials and energy led the gains, driven by a sharp rise in oil prices. Global markets mirrored this mixed sentiment, with Asian shares closing mostly higher, and European stocks seeing modest gains following a stronger-than-expected economic sentiment reading from Germany. Gold prices surged to new highs, signaling growing investor uncertainty, while bond yields rose, with the 10-year Treasury yield climbing to 4.56%.
Global Market Trends
In corporate news, Intel jumped 16% on reports of potential deals involving rivals Taiwan Semiconductor and Broadcom, while Meta Platforms slipped 2.8%, ending its impressive 20-session winning streak. Meanwhile, President Donald Trump’s latest tariff threats, which included imposing 25% duties on automobiles, semiconductors, and pharmaceuticals, added to market unease. However, investors appeared relatively unfazed, focusing instead on the upcoming release of the Federal Reserve’s January meeting minutes for clues on the interest rate outlook and potential inflationary impacts from the tariffs.
Latest Market and Economic Update
Most Asian equities retreated on Wednesday after U.S. President Donald Trump threatened further tariffs on key sectors, although South Korea’s KOSPI rose to a five-month high, driven by strength in technology shares. Chinese markets continued to rally on optimism surrounding artificial intelligence and government support, while broader regional losses were contained amid hopes that the tariff threats may be a negotiating tactic rather than immediate action.
U.S. equity futures are little changed ahead of today’s open, with investors focused on sector performance, particularly in energy and materials. After-hours volatility in Arista Networks and Bumble may also influence market sentiment.
European Market Overview
European shares closed at record highs on Tuesday, led by banking and defense stocks amid expectations of increased military spending following peace talks on the Russia-Ukraine conflict. The pan-European STOXX 600 index rose 0.3%, while defense stocks gained, and banks saw a 1.9% rise, although Capgemini and Enagas saw losses in the technology and utilities sectors respectively.
The U.S. dollar held steady around 107, supported by escalating tariff threats and geopolitical tensions, with the euro trading at 1.0452. Markets are awaiting the release of the latest Federal Reserve meeting minutes for insights into the rate outlook amid ongoing inflation concerns.
Oil Prices and Supply Concerns
Oil prices continued to edge higher, supported by supply disruption fears following a Ukrainian drone attack on a Russian crude-pumping station. However, gains were limited by cautious sentiment ahead of key U.S. economic data and the Fed’s meeting minutes, which could influence oil demand and interest rates.
Equities on the Move: Corporate Earnings and Stock Movements
The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:
- HSBC Holdings reported a 6.6% increase in annual profit to $32.3 billion in 2024, driven by strong performances in wealth management and trading, although net interest income declined due to higher deposit costs and asset sales. The bank also announced a $2 billion share buyback, reaffirming its commitment to capital returns, and forecast stable revenue while maintaining its mid-teens return on tangible equity target for 2025-2027, alongside ongoing restructuring efforts.
- Baidu’s Q4 earnings showed strong growth in its cloud and generative AI businesses, with cloud revenue rising 26% year-on-year, driven by increased AI adoption, while generative AI now contributes a double-digit percentage of total revenue. Despite a 7% decline in advertising revenue, Mizuho raised its price target on Baidu’s stock to $105 from $95, citing positive prospects for AI and cloud growth, though U.S.-listed shares still closed 7.5% lower on Tuesday.
- Occidental Petroleum reported mixed fourth-quarter results, with earnings exceeding expectations at $0.80 per share, but revenue falling short at $6.84 billion, compared to estimates of $6.98 billion. The company also increased its quarterly dividend by 9% to $0.24 per share, while global production rose to 1.46 million barrels of oil equivalent per day.
- Arista Networks reported strong fourth-quarter results, with adjusted earnings of $0.65 per share and revenue of $1.93 billion, exceeding Wall Street estimates. The company also provided upbeat guidance for the first quarter, forecasting revenue between $1.93 billion and $1.97 billion, driven by continued demand for networking equipment, particularly from AI growth.
- Capgemini reported a 2% drop in annual constant currency sales but narrowly exceeded market expectations, driven by strong demand for its cloud and AI services, particularly generative AI. However, its 2025 outlook was deemed “slightly less optimistic,” and shares fell over 10% as analysts revised expectations, despite improvements in certain business sectors and the proposed dividend remaining unchanged.
- BP is considering the sale of its lubricants business, Castrol, which could be valued at around $10 billion, as part of a wider divestment strategy following pressure from activist shareholder Elliott Management. The potential sale may be announced during BP’s Capital Markets Day on February 26, as the company looks to transform its performance amid a significant decline in fourth-quarter profits.
- Loop Capital reiterated its Buy rating on Nvidia with a $175 price target, expecting substantial upside to consensus estimates for 2025 and 2026, driven by growing investments in generative AI and accelerated computing infrastructure. Despite near-term challenges, the firm remains positive on Nvidia’s long-term prospects, particularly with the anticipated ramp-up in GB200 production and its strategic shift to offer more design freedom to partners.
- Bank of America maintained its Buy rating on Salesforce with a $440 price target, citing strong deal activity and a growing pipeline for Agentforce, though it lowered its FY26 margin expansion forecast due to increased investment in the platform. While the firm remains optimistic about Salesforce’s long-term growth potential, it cautioned that the stock’s near-term outlook may be weighed down by broader concerns in the applications spending environment.
- Morgan Stanley downgraded Hims Hers Health Inc to “Equal-weight” from “Overweight”, citing limited near-term upside after the stock’s strong performance, despite continued business momentum. The firm maintained a positive long-term outlook but set a $60 price target, expecting better entry points for investors given the expanded valuation and potential volatility from GLP-1 weight-loss treatments.
- Morgan Stanley upgraded Glencore to “Overweight”, citing exaggerated market concerns over coal prices and marketing profits, and highlighting the stock’s discount to its sum-of-the-parts valuation. The firm believes the stock offers significant upside potential, with a compelling risk-reward profile and anticipates strong capital returns for the second half of 2024, despite current headwinds.
Upcoming Data and Events
Today’s economic data includes the release of:
- UK CPI MoM for January
- U.S. Building Permits and Housing Starts for January
- FOMC Meeting Minutes
Notable company reports today include Rio Tinto, BAE Systems, and Carvana.
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