DeepSeek uses Nvidia Blackwell chips despite US ban

US equity markets fell broadly on Monday after President Donald Trump announced he would raise the global tariff rate under Section 122 of the Trade Act to 15 per cent. The move, combined with ongoing concerns about AI driven disruption, weighed heavily on growth oriented areas of the S&P 500, particularly technology. The software industry dropped around 4 per cent amid fears that advances in artificial intelligence could erode existing business models, while private investment managers with exposure to private credit in the sector also declined sharply. Blackstone and KKR each fell more than 5 per cent, contributing to a fall of over 3 per cent in the S&P 500 financials sector. Major indices ended lower, with the Dow Jones Industrial Average down more than one and a half per cent and the Nasdaq Composite losing just over 1 per cent.

In contrast, defensive sectors outperformed, with consumer staples and health care each rising more than 1 per cent as investors rotated into safer areas. Bond yields declined, with the 10 year US Treasury yield settling at 4.03 per cent and the 2 year yield at 3.44 per cent, while gold prices climbed over 3 per cent amid heightened policy uncertainty. Individual equities saw notable moves, including gains of nearly 5 per cent for Eli Lilly after positive obesity drug trial comparisons with Novo Nordisk, a 4 per cent rise for Domino's Pizza on strong sales, and a near 6 per cent jump for PayPal following reports of takeover interest.

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• Asian equities mostly advanced on Tuesday, led by gains in mainland China as the CSI 300 and Shanghai Composite rose after the Lunar New Year break. Exporters in South Korea and Japan climbed, lifting the KOSPI and Nikkei 225. However, Hong Kong’s Hang Seng Index slid nearly 2 per cent amid renewed artificial intelligence driven disruption concerns.

• US equity futures steadied overnight following Monday’s sharp losses, driven by AI disruption concerns, rising global tariffs under Donald Trump, and escalating US-Iran tensions. Futures indicate cautious investor sentiment ahead of key corporate earnings this week from Home Depot, Inc., Nvidia Corporation, Salesforce, and Snowflake, setting the tone for market direction.

• European equities closed Monday lower, retreating from record highs as trade uncertainty and artificial intelligence concerns weighed on sentiment. The STOXX Europe 600 fell 0.5 per cent. SAP and Adyen led technology losses, while BMW, Mercedes Benz and Volkswagen declined on tariff worries. Enel outperformed, rising 6.8 per cent after outlining plans and a share buyback.

• The US dollar remained subdued on Tuesday as Asian markets digested renewed trade uncertainty from Donald Trump’s tariff threats following the Supreme Court’s ruling against his emergency tariffs. The dollar index was flat at 97.69, while the euro edged higher 0.07 per cent to $1.1793, reflecting cautious investor sentiment amid global trade and geopolitical tensions.

• Oil prices edged higher in Asian trading, with Brent Crude and West Texas Intermediate futures rising 0.8 per cent, holding near seven month highs. Gains were supported by geopolitical tensions ahead of US Iran nuclear talks, although uncertainty over renewed US tariffs and their potential impact on global growth kept sentiment cautious.

• Donald Trump warned countries against retreating from United States trade deals after the Supreme Court of the United States struck down his emergency tariffs. He threatened higher duties and possible licence fees under alternative laws, as the European Union delayed a trade vote and major partners reconsidered ongoing negotiations.

• Christine Lagarde said on Monday that eurozone inflation and the European Central Bank’s interest rate policy remain in a “good place,” signalling no immediate changes. She emphasised the need for continuous assessment and agility, noting the bank must monitor conditions closely to determine if future action becomes necessary.

Equities on the move

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

• Chinese start up DeepSeek reportedly trained its latest model using advanced Blackwell chips from Nvidia, potentially breaching US export controls. US officials said shipments are banned, raising tensions in Washington over AI policy. The issue highlights divisions over China’s access to American technology and national security concerns.

• PayPal shares jumped up to nine per cent yesterday after a Bloomberg report said the company had attracted takeover interest. Trading was briefly halted due to volatility. Potential buyers, including at least one large rival, are reportedly exploring a full or partial acquisition. Interest remains preliminary. The shares have fallen about forty six per cent over the past year.

• Novo Nordisk shares fell more than 16 per cent after its next-generation obesity drug CagriSema underperformed Eli Lilly’s rival. The decline erased gains from Wegovy, returning shares to June 2021 levels. Analysts warn the setback may curb demand, temper long-term sales prospects, and leave Novo struggling to regain market share in the growing obesity treatment sector.

• Paramount has submitted a higher bid for Warner Bros Discovery, challenging Netflix’s $82.7 billion offer for HBO Max and studio assets. The bidding war raises regulatory and shareholder scrutiny, with Paramount citing a clearer approval path, while Warner Bros considers Discovery Global spinoff value and activist investor pressure influences decision-making.

• Citrini Research published a hypothetical 2028 scenario warning that rapid artificial intelligence advancement could trigger widespread white collar job losses and economic disruption. The report highlighted pressure on software as a service companies, consumer platforms and private equity credit markets, unsettling investors and sending major technology shares sharply lower.

• Shares of cybersecurity and technology consulting companies fell sharply Monday after Anthropic unveiled Claude Code Security and Claude Code. The AI tools detect software vulnerabilities and automate COBOL modernisation, threatening legacy consulting revenue. CrowdStrike, Datadog, IBM, Accenture, and Cognizant Technology Solutions dropped 3–11 per cent on investor concern.

• ASML Holding has developed a method to boost the power of its extreme ultraviolet lithography machines from 600 to 1,000 watts, potentially increasing chip output by up to 50 per cent by 2030. The advance shortens exposure times, lowers production costs, and helps ASML maintain an edge over emerging U.S. and Chinese competitors.

• Amazon.com Inc announced a $12 billion investment to build its first data centre campuses in northwest Louisiana, creating 540 direct jobs and supporting 1,700 additional roles. The expansion aims to boost AI and cloud capabilities, fund local infrastructure, and support STEM initiatives, though shares fell 2.5 per cent amid investor caution over costs.

• Oracle Corporation shares fell amid broader technology sector weakness after a report questioned the Stargate artificial intelligence data centre venture with OpenAI and SoftBank. The report highlighted minimal staff, disputes over project structure, and OpenAI pursuing separate deals outside the joint venture, raising concerns over execution and financial risk.

• FedEx Corporation has sued the US government in the Court of International Trade seeking a full refund of emergency tariffs imposed by Donald Trump, after the Supreme Court of the United States ruled them illegal. The Court said Trump exceeded his authority, leaving uncertainty over more than 160 billion dollars already collected.

• Apple Inc. will move some Mac mini production to a Foxconn site in Houston later this year, reinforcing its 600 billion dollar US investment pledge after tariff threats from Donald Trump. Meanwhile, App Store revenue rose nine per cent in February, supporting expectations for eight per cent quarterly growth and double digit Services expansion.

• Citigroup announced agreements to sell a 24 per cent stake in Banamex to a consortium of institutional investors and family offices, including General Atlantic, Blackstone, Sura, Banco BTG Pactual, Chubb, and Qatar Investment Authority, for around $2.5 billion, reducing Citigroup’s holding in the Mexican unit to 49 per cent.

• Bayer has sued Johnson & Johnson in a Manhattan federal court, alleging false advertising of prostate cancer drug Erleada against its rival Nubeqa. Bayer claims misleading survival comparisons, flawed analysis and improper reference to regulatory standards, amplified by artificial intelligence search results. It seeks damages and an injunction to halt further promotion.

• Hims & Hers Health reported fourth-quarter earnings above expectations, with EPS of $0.08 and revenue of $617.8 million, slightly below forecasts. Full-year 2026 revenue guidance of $2.7–$2.9 billion aligns with consensus, though Q1 projections are softer. Shares fell 2 per cent amid regulatory scrutiny, competitive pressures, and mounting short interest.

• Domino’s Pizza beat Wall Street estimates as U.S. same-store sales rose 3.7 per cent, supported by value promotions and new menu items such as Parmesan-stuffed crust pizza. Shares gained around five per cent. Fiscal 2026 U.S. sales are expected to grow three per cent, while international growth lagged. Quarterly earnings per share increased to $5.35.

• Wells Fargo forecasts hyperscaler compute capacity to double to 98GW by 2027, driven by surging AI demand, with Alphabet, Amazon and Microsoft controlling roughly 75 per cent. Capital spending is expected to reach $860 billion, with compute access critical amid chip, power, and data centre constraints, supporting long-term AI growth potential.

• JPMorgan strategist Mislav Matejka remains bullish on equities, citing supportive 2026 macro conditions, solid earnings, contained inflation, and softening price pressures. Geopolitical market weakness is seen as buying opportunities. He favours Value, small-cap and international equities, expecting broader leadership, while U.S. megacap performance may limit overall gains.

• Citi maintains a constructive outlook for 2026, supported by strong fourth-quarter 2025 earnings and accelerating sales across large-cap companies. Consensus earnings have been stable, while Citi forecasts S&P 500 earnings of $320. AI spending tailwinds and soft-landing conditions are positive, though tariff-related volatility and small- and mid-cap margin pressures pose risks.

• Wells Fargo upgraded Alphabet to Overweight, citing leadership in data, distribution, and compute capacity for artificial intelligence. Price target was raised to $387. Google Cloud revenue and compute forecasts were increased, with Gemini subscription potential highlighted. AI search transition risks remain, though Google maintains strong search market share.

• RBC Capital Markets upgraded Banco Santander S.A. to Outperform, raising its price target to €12.25. Analysts cite cost-cutting, strong revenue growth, and shareholder distributions as key drivers. Fiscal 2028 EPS is projected at €1.53, with CET1 ratios stable. Risks include political uncertainty, M&A execution, regulatory impacts, and litigation exposure.

• Walmart saw its price targets raised on Monday, driven by digital growth, margin expansion, and Walmart Plus membership adoption. Evercore lifted its target to $153, highlighting $150 billion global digital revenue, while Barclays raised its target to $132, citing e-commerce acceleration, advertising growth, and strong comparable sales supporting potential full-year earnings.

• Airbus Group SE was downgraded to Neutral by Rothschild Redburn, citing execution risks on the A320neo and A350 programmes despite strong industry demand. Operational setbacks, supply chain constraints, and engine uncertainties cloud 2026–2027 outlook. Analysts cut profit and cash flow forecasts, noting current valuation does not fully compensate for production risks.

• Goldman Sachs downgraded Rio Tinto Plc to Neutral, citing full valuation after a 60 per cent share surge. Higher aluminium costs, missed earnings, rising net debt, and additional tax assessments weighed on the outlook. Non-core divestments, cost reductions, and stable 2026 guidance support operations, while a merger with Glencore was abandoned.

• Bank of America warns that rising memory prices could pressure Dell Technologies’ near-term profitability, cutting its price target to $135 while maintaining a Buy rating. Fiscal 2027 earnings per share are projected to fall to $10, with margin pressure expected across infrastructure and client solutions, despite long-term AI-driven growth prospects.

Upcoming data and events

Today’s economic releases include December house price data, S&P/Case-Shiller home prices, February Richmond and Dallas Fed manufacturing and services indices, wholesale inventories, consumer confidence, money supply, and a 2-year note auction. Key corporate earnings feature The Home Depot, Inc. and MercadoLibre, Inc., providing insights into retail and digital markets.