Musk-led group seeks $97.4 billion control of OpenAI

General market commentary

Shares rose to start the week, with the S&P 500 gaining 0.7% and the Nasdaq Composite advancing 1%. The rally was broad-based, driven by strength in the information technology and energy sectors. Markets largely shrugged off President Trump’s announcement of a 25% tariff on steel and aluminium imports, along with reciprocal tariffs on countries that impose tariffs on US goods. This more targeted approach, in contrast to previous discussions of universal tariffs, helped ease investor concerns, although full details remain uncertain. European markets also saw gains, buoyed by an improved Eurozone Sentix Investor Confidence Survey. Bond yields were largely unchanged, with the 10-year Treasury yield closing at around 4.5%.

Investor sentiment was further supported by gains in major tech companies, particularly AI chipmakers Nvidia and Broadcom, while steel and aluminium stocks surged after Trump’s tariff reaffirmation, with Cleveland-Cliffs soaring 18.1% and Nucor rising 5.7%. Despite the positive momentum, caution remains as investors await key economic data, including inflation and jobless claims figures, as well as further policy updates from the White House and Federal Reserve Chair Jerome Powell's testimony before Congress.

Latest market and economic update

Asian shares declined on Tuesday, with major indices such as China’s Shanghai Composite and Shenzhen CSI 300 falling 0.5% and 0.7%, respectively, and Hong Kong’s Hang Seng dropping 0.7%, as renewed US tariffs under President Trump heightened global risk-off sentiment. Meanwhile, Australia’s S&P/ASX 200 was largely unchanged, while weak consumer sentiment persisted despite expectations of an interest rate cut by the Reserve Bank of Australia.

U.S. equity futures are expected to open lower later today, as concerns over President Trump's new tariffs on steel and aluminium imports fuel fears of a broader trade war. Investors are also awaiting key economic data, including the consumer inflation report and Federal Reserve Chair Jerome Powell's testimony before Congress.

European equities closed higher on Monday, with the Eurozone's STOXX 50 rising 0.7% to a near 25-year high, and the pan-European STOXX 600 reaching a record high of 546, driven by gains in tech, industrials, and consumer discretionary shares. Notable performers included Hermes, Ferrari, Siemens, Schneider, Prosus, ASML, and BP.

The U.S. dollar continued its upward trajectory, remaining above 108.3, bolstered by President Trump's tariff announcements and growing concerns over a global trade conflict. Despite its strength against most currencies, the dollar struggled against the euro, which traded at 1.0304, as market participants awaited key inflation data and the Fed’s future interest rate stance.

Oil prices extended gains this morning, supported by a report showing Russian production fell short of its OPEC+ quota and fears of further supply disruptions. However, concerns over escalating trade tariffs and their impact on global growth capped the rally. Brent crude rose to $76.11 per barrel, while U.S. West Texas Intermediate crude reached $72.51.

Equities on the move

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

Elon Musk is leading a $97.4 billion bid to acquire OpenAI, aiming to return the company to its original open-source, safety-focused mission while opposing its shift to a for-profit model. However, OpenAI’s CEO Sam Altman and the company's board have firmly rejected Musk’s offer, with Altman mocking the bid on social media and accusing Musk of trying to derail its vision of serving the public good.

BP shares surged 7.2% on Monday amid speculation that activist investor Elliott Management, which has also acquired a $2.5 billion stake in Phillips 66, will push for strategic reforms and board changes to improve returns at both companies. Elliott aims to reshape BP’s strategy with a focus on high-return oil and gas projects, while pushing Phillips 66 to simplify operations, including the sale or spin-off of its midstream business.

McDonald's fourth-quarter comparable sales exceeded analyst expectations, driven by strong performance in international markets, particularly the Middle East and Japan, although U.S. demand remained weak. Despite a slight revenue dip and restructuring costs, the company’s operating profit grew by 1% for the year, and shares rose over 4% following the results.

American Express shares fell 2.1% after the CFO issued negative revenue guidance for Q1 2025, citing fewer days and currency headwinds. Analysts, including BTIG's Vincent Caintic, lowered expectations for the company's 2025 revenue growth, now anticipating it will likely fall closer to the lower end of the 8-10% year-on-year range.

Lyft plans to introduce fully autonomous robotaxis, powered by Mobileye, to its app in Dallas by 2026, according to CEO David Risher. The vehicles, financed and owned by Japanese conglomerate Marubeni, will be part of a partnership between Lyft and Mobileye, announced last November.

T-Mobile and Starlink launched a free beta test for satellite-based mobile connectivity, available to all U.S. carriers until July, following a three-year partnership. After the beta period, the service will be priced at $15 per month, with T-Mobile offering it for free on its premium Go5G Next plan and a discounted $10 rate for early adopters.

Merck KGaA is in advanced talks to acquire U.S. biotech firm Springworks Therapeutics, which specialises in cancer and rare disease treatments, with a deal potentially signed in the coming weeks. If successful, the acquisition would strengthen Merck’s cancer treatment portfolio, though another buyer could still emerge, and the terms of the deal remain undisclosed.

Microsoft has proposed widening the price gap between its Office product with and without the Teams app to avoid a potential EU antitrust fine, responding to complaints from competitors like Salesforce-owned Slack and alfaview. The company also offered improved interoperability terms to help rivals compete, with the EU competition watchdog reviewing the proposal before deciding on further action.

Piper Sandler analysts believe the SEC’s new Crypto Task Force will provide crucial regulatory clarity, boosting institutional confidence in digital assets and benefiting firms like Robinhood and Galaxy Digital. The bank remains bullish on both companies, setting price targets of $54 for Robinhood and C$42 for Galaxy Digital, despite risks such as regulatory challenges and market volatility.

Evercore ISI analysts view the recent sell-off in Nvidia stock as a buying opportunity ahead of its earnings report, despite concerns over Chinese startup DeepSeek's advancements and delays in the Blackwell release. They believe Nvidia's strong software ecosystem, demand for its GPUs, and ongoing AI innovations position it well for long-term growth, with risks from custom AI chips being minimal in the near term.

Stifel lowered its Tesla price target to $474, citing challenges like pricing pressure and competition, while maintaining a "buy" rating. At the same time, Needham reiterated a Hold rating, arguing the stock is overvalued with growth drivers already priced in, and forecasting challenges in autonomous ridesharing and robotics. Both firms highlighted uncertainties around Tesla’s future sales growth and long-term prospects in a competitive market.

Barclays maintained an Overweight rating on Samsung Electronics, believing its shares remain undervalued despite lowered earnings estimates and near-term challenges, including delays in Nvidia's HBM3E memory qualification. The bank cut its price target to $1250, citing potential setbacks in memory revenue growth, competition from China’s memory advancements, and export restrictions on AI chips, but remains optimistic about long-term upside.

Phillip Securities downgraded Amazon from Buy to Accumulate due to recent share price strength, despite strong earnings, and raised its DCF target price to $270 from $240. The firm noted Amazon’s strong Q4 performance, driven by AWS growth and cost efficiencies, while slightly adjusting FY25 revenue and PATMI estimates, but remains optimistic about its long-term prospects in generative AI and cloud migration.

Benchmark upgraded Shopify to "Buy" with a $150 price target, citing strong momentum in enterprise adoption and the success of Shopify Plus, particularly with the Shopify Audiences tool. The firm expects continued growth in gross merchandise volume and anticipates further optimisation of Shopify’s advertising products and new marketing features, including generative AI tools, in 2025.

Mizuho downgraded Kraft Heinz to "Neutral," citing limited earnings potential due to reinvestment pressures and declining U.S. market share, lowering its 2025 EPS estimate and EBIT forecast. Despite Kraft Heinz trading at a discount to peers, Mizuho expects its shares to remain range-bound and recommends Mondelez as a more favourable alternative for large-cap investors.

Citi raised its price target for Boeing to $210 from $207, maintaining a Buy rating due to production ramp-ups and improving cash flow expectations. The firm highlighted progress in Boeing's 737 MAX and 787 production, along with positive cash flow in the second half of 2025, driven by factors such as the FAA lifting the 737 production cap and potential divestitures of non-core businesses.

Upcoming data and events

Today, all eyes will be on Federal Reserve Chair Jerome Powell's testimony before the Joint Economic Committee, offering key insights into the economic outlook and recent monetary policy actions. In addition, major companies, including Coca-Cola, S&P Global, Shopify, Gilead Sciences, BP, DoorDash, UniCredit, Deutsche Börse, Kering, and Super Micro Computer, will report their earnings.

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