Markets gain on banks and AI chip optimism

General market commentary

US equity markets rebounded on Thursday after two days of declines, supported by strength in technology and financial shares and easing geopolitical concerns. The Dow Jones Industrial Average rose 0.6 percent, while the S&P 500 and Nasdaq Composite each gained around 0.3 percent. Semiconductor shares led gains after Taiwan Semiconductor reported stronger than expected earnings and raised guidance, lifting sentiment across the chip sector. Major banks also outperformed, with Goldman Sachs and Morgan Stanley posting better than expected results, helping drive broader equity market gains. Small cap equities also performed well, with the Russell 2000 rising about 1 percent, reflecting confidence in the domestic economic outlook.

Markets also responded positively to signs of stable economic conditions and lower geopolitical risk. Weekly jobless claims fell below expectations, reinforcing the view of a resilient labour market, while regional Federal Reserve surveys showed improved manufacturing activity. In contrast to equities, energy prices fell sharply, with oil down nearly 5 percent as concerns over imminent military action in Iran eased. Bond yields moved modestly higher, with the 10 year US Treasury yield ending near 4.18 percent, while gold prices edged lower alongside the decline in geopolitical tensions.

Latest market and economic update

Asian equity markets were mixed on Friday, with technology shares rising after strong earnings from TSMC lifted chipmakers in South Korea and Taiwan. Japan’s Nikkei slipped on profit taking, while Hong Kong and China traded flat as investors awaited fourth quarter GDP data. Australia gained modestly, Singapore was flat, and Indian futures edged lower amid trade concerns.

US equity index futures steadied overnight after Wall Street snapped a two-day losing streak. Gains in technology and chip shares, led by TSMC, alongside strong earnings from Goldman Sachs and Morgan Stanley, supported the market. S&P 500 and Nasdaq futures rose 0.1%, while Dow futures edged higher, reflecting cautious afterhours trading.

European shares rose on Thursday, led by AI chipmakers after TSMC’s record earnings. ASML gained 6%, ASM International 11.2%, and BE Semiconductor 7.3%. UniCredit added 1.4% after addressing M&A rumours, while Richemont slipped 2.1% despite strong third-quarter sales, reflecting sector-specific market movements across Europe.

The US dollar edged higher in Asian trade, poised for a third weekly gain after stronger-than-expected jobless claims and positive economic data reduced expectations of near-term Fed rate cuts. The dollar index held at 99.36, up 0.2% for the week, while the euro remained steady at $1.1607 amid stable European economic signals.

Oil prices fell in Asian trade this morning, extending losses from the previous session as concerns over a U.S. strike on Iran eased. Brent and WTI both declined around 0.3 percent. Despite short-term volatility driven by geopolitical headlines, analysts expect ample global supply this year, keeping oil broadly range-bound, with Brent trading between $57 and $67 per barrel.

At least one U.S. aircraft carrier is moving toward the Middle East as tensions with Iran rise, with additional air, land, and sea forces expected to follow. Deployments aim to provide military options, including missile defence systems for U.S. bases and Israel, while President Trump noted that killings in Iran’s protests appear to be decreasing.

Equities on the move

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

The US and Taiwan have agreed a trade deal cutting tariffs on Taiwanese goods to 15% and securing $500 billion in semiconductor investment. Taiwanese firms, led by TSMC, will expand chip, AI and energy operations in the US, with incentives for building domestically and penalties for non-compliance.

TSMC posted a record Q4 profit, up 35%, driven by strong AI chip demand, and forecast 2026 revenue growth of nearly 30%. The company plans expanded U.S. manufacturing, including a fourth Arizona plant. Capital spending could rise to $56 billion, with cautious investment amid robust AI-driven orders from Nvidia, Apple, and others.

BYD rose in Hong Kong trade after reports it is in discussions with Ford to supply batteries for the automaker’s hybrid models. A potential deal could offer BYD a new revenue stream amid cooling EV sales in China, while Ford would gain access to cheaper batteries and advanced technology, supporting its pivot toward hybrid vehicles in markets outside the U.S.

The Senate postponed debate on the Clarity Act, a bill to regulate cryptocurrencies, after Coinbase CEO Brian Armstrong said the company could not support it. Key issues include stablecoin rewards and regulator authority. The delay raises uncertainty for crypto legislation, with continued negotiations ongoing among industry stakeholders and lawmakers.

The FDA has postponed its decision on Eli Lilly’s weight-loss pill to April 10, later than the originally expected late-March timeline. The drug is part of the agency’s fast-track review programme, which aims to accelerate approval for treatments considered critical to public health or national security, highlighting the high level of regulatory scrutiny and interest.

JPMorgan CEO Jamie Dimon said he hopes to remain in his role for at least five more years, citing his energy, passion, and dedication to the job. A spokesperson clarified his comments were made in jest, with succession plans unchanged. Dimon has led the bank for two decades, amid strong profits but some weaker investment banking results.

Rio Tinto will supply copper from its Arizona Nuton leaching programme to Amazon for use in AI data centres. The two-year deal highlights growing copper demand, expected to rise 50% by 2040, amid tight global supplies. Prices have surged as AI growth drives competition for this essential mineral.

Boston Scientific will acquire medtech firm Penumbra for $14.5 billion, marking its second-largest takeover. The deal expands Boston’s heart device portfolio and re-enters the neurovascular market. Penumbra, expected to generate $1.4 billion in 2025 sales, saw shares rise 12%, while Boston’s fell 4%. The acquisition is set to complete in 2026.

Talen Energy is acquiring three natural gas plants from Energy Capital Partners for $3.45 billion, adding 2.6 GW capacity and diversifying its portfolio. The deal, partly in stock, is expected to boost free cash flow over 15% annually through 2030 and supports rapid deleveraging, while ECP becomes a significant Talen shareholder.

Netflix and Sony Pictures have agreed a multi-year deal making Netflix the exclusive streaming home for Sony films after their theatrical and video-on-demand runs for 18 months, before they move to Disney. The arrangement, rolling out gradually from later this year, includes titles like Spider-Man: Beyond the Spider-Verse and The Legend of Zelda.

UniCredit denied rumours of interest in acquiring a stake in Banca Monte dei Paschi di Siena, calling them “speculative” and “unjustified.” The bank said its M&A team regularly analyses potential targets, but discussions do not indicate transactions. UniCredit has previously explored deals in Germany and Greece without success.

Morgan Stanley upgraded KLA Corp to overweight, citing growth from foundry logic spending alongside memory. The bank raised 2026–27 EPS and revenue forecasts, with EPS expected to grow 17% in 2026 and 24% in 2027. KLA’s memory and process control exposure is underappreciated, and the $1,697 price target implies 18% upside.

Morgan Stanley reiterated an Overweight rating on SAP, noting upside risks for Q4 cloud backlog growth. Channel checks and reseller feedback suggest stable-to-strong demand, with just a few large deals needed to exceed expectations. Positive early 2026 trends support continued growth, particularly in S/4 and cloud, with AI-driven mega transactions as a key factor.

UBS raised Novo Nordisk’s 12-month price target to 390 DKK, keeping a Neutral rating, citing valuation and investor focus ahead of the Wegovy pill launch. Initial prescription uptake may be slow due to channel constraints, but UBS forecasts 400,000 Q1 prescriptions and peak sales of $3.25 billion, reflecting accessibility and relative sector valuation.

Mizuho reiterates an Outperform rating on Airbnb, calling it a top 2026 pick. Optimism is driven by new CTO Ahmad Al-Dahle, AI integration for hotel supply and search, stable travel demand, and potential margin expansion. Catalysts include book-now-pay-later features, hotel growth, and guidance, with a $156 price target maintained.

Rosenblatt Securities initiated Buy ratings on Rigetti Computing and Quantum Computing Inc. Rigetti’s modular qubits and in-house fabrication support long-term growth despite delays, while Quantum Computing, with $1.6 billion cash and low revenues, could expand via Luminar fab acquisition, positioning both firms for scaling in the quantum computing sector.

Barclays upgraded Dell Technologies to Overweight from Equal Weight, citing strong AI server orders, stable operating margins, and growth in enterprise server and storage markets. The bank expects $25 billion in full-year AI server shipments, with 155% and 60% AI order growth in FY26–27, while highlighting Dell’s disciplined opex and supply chain strength.

Kepler Cheuvreux upgraded EssilorLuxottica to Buy, citing strong growth in AI-enhanced Ray-Ban smart glasses. Sales could reach 55 million units annually, with output potentially doubling to 20 million by 2026. The smart glasses business is valued at €60 billion, supporting a raised price target of €350, while the company’s brand strength and distribution underpin its market leadership.

Upcoming data and events

Today, US data includes December industrial and manufacturing production, capacity utilisation, and the NAHB housing index, alongside a Federal Reserve speech and oil rig counts. No major company earnings are scheduled for release today.

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