Amazon warns of heavy capex increase

General market commentary

Global equity markets moved lower on Thursday, with the S&P 500 posting its largest one day decline in more than two weeks as investors adopted a clear risk off stance. The index fell 1.2 percent, extending losses to a third consecutive session, dragged down by sharp declines in materials and technology stocks. The Nasdaq Composite dropped 1.6 percent, while the Dow Jones Industrial Average also slid 1.2 percent. With the exception of consumer staples and utilities, all sectors finished in the red, highlighting the broad nature of the sell off. Investor sentiment was further pressured by weak labour market signals, rising job cut announcements and disappointing outlooks from several large companies, particularly within the technology and consumer discretionary sectors. US Treasury yields declined as demand for safe haven assets increased.

Weakness was also evident across other markets. Asian equities closed lower, led by South Korea’s technology focused Kospi index, while European markets ended down after the European Central Bank kept interest rates unchanged. The US dollar strengthened against major currencies, reflecting heightened caution, while commodities declined, with oil prices falling on easing geopolitical supply concerns and precious metals also retreating. Overall, equity market performance reflected growing unease around economic momentum, labour market conditions and elevated valuations, reinforcing a more defensive tone across global markets.

Latest market and economic update

Asian equity markets mostly declined, tracking sustained weakness in global technology stocks. South Korea and Hong Kong led losses, while Singapore and India edged lower. Japanese shares steadied ahead of a national election, supported by stimulus expectations. Australian stocks fell sharply after the central bank struck a hawkish tone, raising fears of further interest rate rises.

US equity futures extended losses overnight as the technology sell off showed little sign of easing. S&P 500 futures fell 0.5 percent, Nasdaq 100 futures dropped 0.9 percent and Dow futures eased 0.3 percent. Amazon slumped 11 percent after flagging sharply higher 2026 capital spending, dragging other major technology stocks lower.

European stocks fell as Wall Street weakness and earnings weighed. Germany’s DAX dropped 0.6%, the FTSE 100 slid 1% and France’s CAC 40 fell 0.3%. Shell eased after weak profits, BNP Paribas rose on strong earnings, while BBVA shares slid despite higher net profit. The ECB and Bank of England left rates unchanged.

The US dollar hovered near a two week high and was on track for its strongest weekly rise since November, supported by risk aversion and expectations of fewer US rate cuts. The dollar index rose about 1 percent over the week, while the euro softened to around $1.1789 after the ECB kept interest rates unchanged.

Oil prices edged lower in Asian trade and were set for a weekly decline as investors pared back risk premiums ahead of US Iran talks in Oman. Brent traded near $67.60 a barrel and WTI around $63. Prices were weighed down by profit taking, easing geopolitical fears and a stronger US dollar after recent strength.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Amazon shares slumped in extended trading yesterday after the company forecast a sharp rise in capital spending, planning around $200 billion for AI investment in 2026. Investors grew uneasy over costs outweighing near term returns, despite strong growth at Amazon Web Services. The move reinforced concerns that Big Tech’s heavy AI spending must deliver clearer financial benefits.

Rio Tinto has ended takeover talks with Glencore, abandoning a deal that would have created the world’s largest mining company. Rio said the proposed merger failed to offer sufficient shareholder value, while Glencore sought a higher premium, especially for copper assets. The collapse follows other failed mining mega-deals, highlighting challenges facing sector consolidation.

Reddit shares rose in afterhours on Thursday after the company forecast first quarter revenue above expectations, helped by AI driven improvements to its advertising platform. Strong advertiser growth and rising user engagement boosted results, while a new $1 billion share buyback plan added support. Fourth quarter revenue and earnings also comfortably beat forecasts.

Roblox shares jumped 20 percent after the gaming platform posted stronger than expected fourth quarter results and issued upbeat bookings guidance. Bookings rose 63 percent year on year, while user engagement surged. Full year outlook exceeded forecasts, supported by rapid growth in daily active users and hours engaged, alongside sharply improved cash generation.

ConocoPhillips plans to cut capital and operating costs by $1 billion in 2026 after missing fourth-quarter profit estimates amid weaker oil prices. The US producer is scaling back spending, selling assets and reducing its workforce, while returning cash to shareholders. Its upstream-only model leaves it more exposed to crude price swings.

Shell missed fourth-quarter profit forecasts as weaker oil prices cut earnings to their lowest since early 2021, but it maintained its large share buyback and raised its dividend. Profits were hit by losses in chemicals and softer gas and marketing results. Shares fell, underperforming the wider European energy sector despite strong cash flow and continued shareholder payouts.

Intercontinental Exchange beat fourth-quarter profit forecasts as market volatility lifted trading volumes. Energy trading revenue rose 15%, while derivatives hit record levels. The NYSE owner also raised its dividend and signalled confidence for 2026, citing strong momentum across its businesses amid geopolitical and policy-driven uncertainty.

Peloton forecast third-quarter revenue below expectations, citing weak demand for its fitness equipment, sending shares down about 26% to an 18-month low. The company also posted a wider-than-expected quarterly loss and missed revenue estimates. Despite cost cuts and price rises under new leadership, demand remains pressured by cautious US consumers.

Novo Nordisk said it will take legal action against Hims & Hers over plans to sell compounded versions of its Wegovy weight-loss pill. The Danish drugmaker called the move illegal and a risk to patient safety, saying it undermines US drug approval standards. Novo said it is the only maker of FDA-approved oral Wegovy using SNAC technology.

Bayer’s experimental drug asundexian cut the risk of secondary strokes by 26% in a late-stage trial, without increasing major bleeding. The results highlight a potential growth driver as Bayer faces generic competition. The once-daily drug showed consistent benefits across patient groups and has received US FDA Fast Track status, though it is not yet approved.

Broadcom is emerging as a major winner from surging AI data-centre spending, particularly at Google. Analysts say much of Alphabet’s heavy capex is flowing into servers, custom TPUs and networking supplied by Broadcom. Despite a recent share pullback, the stock is viewed as a compelling long-term play on accelerating AI infrastructure investment.

Stifel downgraded Microsoft to Hold from Buy, warning 2027 earnings forecasts are overly optimistic amid Azure supply constraints, rising capital spending and intensifying AI competition. The broker cut its price target to $392 and expects higher investment to pressure margins. While long-term prospects remain strong, Stifel said near-term growth looks cloudier as rivals gain AI share.

Citizens upgraded Uber to Market Outperform, citing improved valuation and confidence in its long-term autonomous vehicle strategy. The call follows a modest fourth-quarter beat. While warning of future competition from Tesla’s low-cost robotaxis, the broker said Uber’s growing network of AV partners and financial strength support growth, setting a $100 price target.

Benchmark has initiated coverage of CAVA Group with a Buy rating and an $80 price target, highlighting its leadership in Mediterranean fast casual dining and strong expansion outlook. The broker expects rapid unit growth, rising margins and sustained demand for healthy food to support long-term sales growth, despite recent share weakness.

Upcoming data and events

Friday’s focus includes Germany’s December trade balance, Canadian jobs and PMI data, and key US indicators such as Michigan consumer sentiment, inflation expectations, consumer credit and oil rig counts. Earnings are led by Toyota, Philip Morris, Tokyo Electron, Société Générale and Kone, offering insights across autos, tobacco, technology, banking and industrials.

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