Oil prices rise most in 4 years

Equities fell on Friday as investors weighed risks from AI disruption, geopolitical tensions between the U.S. and Iran, and sticky inflation following stronger-than-expected producer price data. The Nasdaq closed 0.9% lower, the S&P 500 fell 0.4%, and the Russell 2000 dropped 1.9%. Asian shares were generally higher earlier, while European markets struggled. Safe-haven flows lifted U.S. government bonds, pushing the 10-year yield below 4% for the first time since November, while the dollar softened and gold rallied. Oil prices rebounded sharply amid concerns over potential supply disruptions from Middle East tensions.

January producer prices rose 0.5%, above the expected 0.3%, driven by higher services prices and evidence of tariff-related inflation in goods. This suggests pipeline inflation remains elevated, supporting expectations that the Fed will stay on hold through the first half of 2026, with potential for one or two rate cuts later. Bond markets saw strong inflows, with 10-year Treasury yields down 25 basis points for the month, although yields are expected to trade broadly between 4% and 4.5% for the remainder of the year.

Latest market and economic update

• Asian markets fell sharply this morning after U.S. and Israeli strikes on Iran heightened geopolitical tensions, driving oil prices higher and fuelling risk aversion. Hang Seng Index dropped 2.4% and Nikkei 225 lost 1.6%, while mainland Chinese, Australian, Singaporean and Indian indices also declined. Tech weakness and inflation concerns further dampened sentiment across the region.

• US futures fell on Sunday evening as escalating US-Israel strikes on Iran and Tehran’s regional retaliation unsettled markets. The death of Supreme Leader Ayatollah Ali Khamenei and disruptions at the Strait of Hormuz heightened risk aversion. Futures reflected investor caution following Friday’s Wall Street selloff, amid concerns over AI’s impact on traditional software equities.

• European shares closed at a record high on Friday, marking their eighth consecutive monthly gain, boosted by strong corporate updates from HSBC, Nestle, and Capgemini. Banks fell sharply on credit and AI disruption concerns, while defensive sectors like healthcare and food outperformed. Travel, leisure, and industrials lagged amid higher crude prices and supply chain pressures.

• The US dollar surged on safe-haven demand after US-Israel strikes on Iran, while the Swiss franc rose to its strongest versus the euro since 2015. EUR/USD fell to $1.1789 and GBP/USD slid to $1.3451. Risk-sensitive currencies, including the Australian and New Zealand dollars, weakened, and the yen eased to 156.235 per dollar.

• Oil prices jumped sharply in Asian trading, with Brent surging as much as 13% at the open, after U.S. and Israeli strikes on Iran heightened fears of supply disruptions, particularly in the Strait of Hormuz. Gains later eased, while WTI rose modestly. An OPEC+ output increase of 206,000 barrels per day helped limit further advances.

• President Donald Trump said US attacks on Iran would continue until objectives are met, warning of further American casualties after confirming three deaths. He vowed retaliation and strongly backed Israel, claiming Iran’s military command was destroyed. The escalation follows mutual strikes, maritime attacks in the Strait of Hormuz, and stalled nuclear negotiations.

Equities on the move

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

• OPEC+ agreed a modest 206,000 bpd output increase from April, but analysts say it is unlikely to stabilise markets as Gulf shipping remains disrupted. RBC’s Helima Croft and Barclays warn Brent could surpass $100 if Strait of Hormuz flows deteriorate, emphasising spare capacity outside Saudi Arabia and the UAE is very limited, leaving markets vulnerable to sustained supply shocks.

• Nvidia plans to launch a new processor to accelerate AI “inference” computing for OpenAI and other clients, addressing speed limitations in handling complex queries. Unveiled at next month’s GTC conference, the system will include a Groq-designed chip, following a $20 billion Groq licensing deal and Nvidia’s $100 billion investment in OpenAI.

• SpaceX is planning a confidential IPO filing, potentially valuing the company above $1.75 trillion, Bloomberg reported on Friday, with a full public offering possible in June. Last year, SpaceX earned $8 billion on $15–16 billion revenue, largely from Starlinklink offerings, and the acquisition of Musk’s AI startup xAI underpin growth prospects.

• On Friday, OpenAI announced a $110 billion funding round at a $730 billion pre-money valuation, with $50 billion from Amazon, $30 billion from NVIDIA, and $30 billion from SoftBank Group Corp. Partnerships expand infrastructure, AI agent platforms, and cloud distribution, with OpenAI reporting 900 million weekly active users and over 50 million subscribers.

• Berkshire Hathaway’s Q4 operating profit fell 30% to $10.2 billion, hit by lower insurance income and a $4.5 billion Occidental writedown. Net income declined 3% to $19.2 billion. Greg Abel, now CEO, pledged to uphold Warren Buffett’s disciplined investment approach. While some business units need improvement, cash reserves of $373 billion offer scope for major acquisitions.

• Shares of major credit card companies plunged on Friday after Block announced cuts to nearly half its workforce as part of an AI-driven overhaul. American Express dropped 6.5%, Capital One 6.3%, and Synchrony 5.7%. Analysts caution that AI disruption could trigger broader white-collar layoffs, unsettling credit-sensitive markets globally.

• Dell Technologies shares surged 17.5% on Friday after forecasting AI server revenue to double to $50 billion in fiscal 2027, driven by strong demand for AI infrastructure. Investors welcomed a 20% dividend hike and $10 billion share buyback. Analysts praise Dell’s leadership in AI compute, noting resilience against rising memory costs and outperforming HP and Lenovo.

• Netflix surged nearly 14% on Friday after exiting the bidding for Warner Bros Discovery, receiving a $2.8 billion termination fee from Paramount, which will acquire Warner Bros in a $110 billion deal. Analysts praised Netflix’s disciplined focus, leaving it free to prioritise its business, while Paramount strengthens its content and streaming strategy against rivals.

• CoreWeave shares fell around 15% on Friday after the company announced plans to double 2026 capital expenditure to $30–35 billion, raising investor concerns over margin pressure and returns from its AI expansion. Analysts highlight that neoclouds like CoreWeave lack Big Tech cash reserves, leaving them exposed to market volatility despite high-demand AI infrastructure investments.

• Duolingo shares fell 18% on Friday after forecasting first-quarter and 2026 bookings below expectations, shifting focus from monetisation to user growth. Analysts at Morgan Stanley and Evercore downgraded the stock, citing slower revenue growth, higher spending, and uncertainty over stabilising daily active users and EBITDA margins.

• Strategists say market fallout from the escalation in US-Iran hostilities is likely to be contained. Vital Knowledge’s Adam Crisafulli argues US equities have historically absorbed geopolitical shocks quickly. However, Barclays’s Ajay Rajadhyaksha warns tail risks are rising and advises waiting for a roughly 10% pullback before buying the dip.

• BCA Research warns AI could erode the monopoly power of Big Tech by undercutting economies of scale, network effects, and proprietary software, while raising infrastructure costs. Analysts predict disruptions across software and social media, favouring scarce-resource owners, metals, emerging markets, with potential equity rotation and mild recession risk in the broader economy.

• Bernstein upgraded Heidelberg Materials to Outperform from Market-Perform on Friday, setting a €230 price target after shares fell 20%. Bernstein cited excessive carbon price concerns priced in, stable EU ETS outlook, robust CCS projects, and strong cash flow. 2026–27 earnings, EBITDA, and capital allocation support upside amid low debt and buybacks.

• UBS upgraded Palantir to Buy, citing a 35% share pullback as a compelling entry point. Analysts highlight 70% 2026 revenue growth, stable 55%–60% margins, and strong AI-driven demand. With a projected three-year revenue CAGR of 54% through 2028, compressed multiples, and limited competition, UBS maintains a $180 price target.

• Jefferies is bullish on Snowflake Inc, citing strong bookings, robust large deals and guidance implying high-20s revenue growth with margin expansion. Analysts say its AI push is accelerating, with rapid uptake of Snowflake Intelligence and Cortex Code. They see upside from faster monetisation, maintain a Buy rating and set a $250 price target.

• Bernstein upgraded Newmont to Outperform from Market-Perform, raising its price target to $157, citing higher long-term gold forecasts of $4,800/oz for 2026 and $6,100/oz for 2030. Elevated central bank and ETF demand, US rate cuts, a new CEO, and company-specific catalysts support a 26% EBITDA increase to $21.9 billion.

• Morgan Stanley upgraded Block Inc to Overweight with a $93 price target, citing faster growth, an expanding addressable market, and AI-driven efficiency. Cash App originations and monthly users rose, while seller volume accelerated. Analysts raised 2026–27 EPS forecasts, highlighting revenue acceleration, improved profitability, and cost savings from headcount reductions.

Upcoming data and events

Key economic releases today include Italy’s full-year 2025 GDP growth and government budget deficit. In the US, February ISM Manufacturing data are due: PMI, Employment, New Orders, and Prices. Additionally, US three- and six-month Treasury bill auctions are scheduled.