Solid economic data lifts spirits

US equity markets closed higher on Wednesday, supported by stronger than expected economic data. The Nasdaq Composite rose 1.3% to 22,807.5, while the S&P 500 gained 0.8% to 6,869.5 and the Dow Jones Industrial Average increased 0.5% to 48,739.4. Sentiment improved after the Institute for Supply Management’s services index climbed to 56.1 in February from 53.8 in January, the strongest reading since July 2022 and well above expectations. Private employment data also surprised to the upside, with the ADP report showing payrolls increased by 63,000 in February compared with forecasts of around 50,000, suggesting labour market conditions may be stabilising. Growth oriented sectors such as technology and consumer discretionary led gains across the S&P 500.

Despite the rebound in US equities, global markets have faced greater pressure amid rising oil prices linked to the ongoing conflict involving Iran. West Texas Intermediate crude rose to around $75.93 per barrel, while bond yields also moved higher, with the ten year United States Treasury yield reaching 4.09%. International equities have been more sensitive to the energy shock, with the Euro Stoxx 50 down more than 4% this week, Japan’s Nikkei falling nearly 8%, and declines also seen in emerging markets such as Hong Kong and Korea. The rise in oil prices reflects concerns about potential disruptions to shipping through the Strait of Hormuz, although reports that Iran may be open to discussions with the United States helped ease market volatility.

Latest market and economic update

• Asian equities rose sharply on Thursday, led by South Korea’s KOSPI, which rebounded over 10% on chipmaker and auto sector gains. Chinese shares also climbed after Beijing set a slightly weaker 2026 growth target but pledged fiscal support. Japan, Singapore, India, and Australia saw modest gains, while rising oil prices and U.S.-Iran tensions kept markets cautious.

• US equity futures moved higher overnight, extending gains after strong economic data supported market sentiment. S&P 500, Nasdaq 100 and Dow Jones futures all advanced modestly. In after hours trading, Broadcom Inc rose more than 5% after reporting better than expected earnings and issuing a strong outlook driven by demand for artificial intelligence chips.

• European shares rebounded on Wednesday, with the STOXX 600 up 1.4% and Germany’s DAX gaining 1.7%, as hopes of a Middle East resolution boosted sentiment. Banks, travel, luxury, tech, and industrials led gains. Key movers included Santander, BBVA, Adidas, and ASM International, while oil remained near multi-month highs, keeping inflation concerns alive.

• The United States dollar paused its recent rally on Thursday, easing from a three month high as tentative hopes for diplomatic progress in the Middle East improved risk sentiment. The euro stabilised near $1.1628 after earlier losses, although the dollar remains more than 1% higher for the week amid ongoing geopolitical uncertainty and inflation concerns.

• Oil prices rose sharply in Asian trading as escalating tensions in the Middle East heightened fears of supply disruptions. Brent Crude climbed about 3% to $83.84 per barrel, while West Texas Intermediate Crude gained 3.5%. Concerns centre on the closure of the Strait of Hormuz, although rising United States crude inventories tempered gains slightly.

• China set a 2026 economic growth target of 4.5% to 5%, slightly below last year’s pace, signalling a shift towards higher quality and more sustainable growth. Policymakers plan greater support for technology, innovation and domestic consumption while maintaining accommodative fiscal and monetary policies, as the world’s second largest economy seeks to reduce reliance on exports.

Equities on the move

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

• Broadcom Inc said artificial intelligence chip revenue could exceed $100 billion by 2027, highlighting strong demand for custom semiconductors used in AI infrastructure. The company forecast second quarter revenue above expectations and announced a $10 billion share buyback. Shares rose in extended trading, as AI related sales more than doubled in the latest quarter.

• Nvidia CEO Jensen Huang said recent investments in OpenAI and Anthropic could be the last before the AI firms go public, with stakes of $30 billion and $10 billion respectively. Meantime, billionaire investor Leo KoGuan has bought one million Nvidia shares, citing early AI potential, while Jefferies views Nvidia and Broadcom Inc as undervalued.

• Saudi Aramco is considering selling a stake to a Chinese investor as its planned international IPO is seen delayed further, sources said. The sale could precede a dual listing on Tadawul and overseas markets. Political and regulatory concerns in New York and London have complicated plans for what is expected to be the world’s largest flotation.

• Anthropic chief executive Dario Amodei is reportedly in talks with the United States Department of Defense to salvage an artificial intelligence contract after earlier negotiations collapsed. Disputes centred on safeguards against mass surveillance and autonomous weapons. Rival OpenAI has since secured a Pentagon contract and is also pursuing work with NATO.

• Bayer set 2026 EBITDA guidance of €9.1–9.6bn, slightly below market expectations, as CEO Bill Anderson works to manage heavy debt, costly Roundup litigation, and restructure the management team. Shares fell 3.8% to a two-month low. The company aims to cut costs by €2bn by 2026 and expects €1.5–2.5bn free cash outflow, driven by roughly €5bn in litigation settlements.

• Abercrombie & Fitch forecast modest sales growth for 2026, factoring in a small tariff impact and a slight hit from the Middle East conflict. Shares fell 4%. The retailer plans to expand by about 30 stores, focus on full-price sales, and cater to middle- to high-income consumers, with net income per share expected above analysts’ estimates.

• Brown-Forman, maker of Jack Daniel’s, beat Q3 sales and profit expectations with $1.06bn revenue and 58c EPS, driven by premium whiskey and ready-to-drink drinks, especially in Brazil and Mexico. US sales fell 8% amid health trends and GLP-1 adoption. Despite trade disputes and Gen Z shifts, full-year forecasts remain low-single-digit declines, with fiscal 2026 seen as challenging.

• Robinhood Markets Inc has launched a $695-a-year Platinum credit card for high income customers as it expands beyond trading into broader financial services. Issued with Visa Inc, the invite only card offers premium travel and dining benefits and higher credit limits. It was unveiled alongside new trading accounts and tax tools at the company’s Take Flight event.

• Johnson & Johnson has launched a website, J&J Direct, to sell select drugs including diabetes treatments Invokana, Invokamet and blood thinner Xarelto directly to uninsured or cash paying patients in the United States. The move follows an agreement with the Trump administration to lower drug prices and improve access, alongside a $55 billion US investment plan.

• Goldman Sachs warns of near-term correction risks in global equities from geopolitics, AI disruption, and high valuations, but sees limited scope for a deep bear market. Despite recent MSCI and S&P 500 losses, robust earnings and economic growth support broad diversification and risk-adjusted returns, says chief strategist Peter Oppenheimer.

• Citadel Securities strategist Scott Rubner turned bullish on US equities, citing washed-out sentiment, heavy retail buying, and seasonal patterns despite Iran-related volatility. Defensive positioning and elevated hedging create a favourable setup for a rebound through mid-March, with options expiries and volatility normalisation potentially opening a window for renewed market risk-taking into April.

• Morgan Stanley sees Samsung Electronics shares as attractive after a 20% drop, citing a buying opportunity amid shifts in AI memory architecture. Hybrid models combining SRAM for speed and HBM for capacity are emerging. Nvidia’s upcoming LPU chip could bypass HBM bottlenecks. Samsung’s HBM4, SRAM capabilities, and foundry flexibility make it the firm’s top pick.

• Bank of America reinstated coverage of Tesla with a Buy rating and $460 price target, citing leadership in autonomous driving and robotaxi services. The bank highlighted Tesla’s camera-only FSD approach, 1.1 million subscriptions, and expansion into seven new markets by 2026. Additional upside comes from Optimus robots and the $90bn energy segment, supporting long-term growth.

Upcoming data and events

Thursday brings a packed schedule of U.S. economic data, including jobless claims, trade balance, nonfarm productivity, unit labour costs, import and export prices, factory orders, natural gas storage, Treasury bill auctions, and Federal Reserve Governor Michelle Bowman’s remarks. Key earnings releases feature Costco, Petrobras, Kroger, Marvell Technology, and Ciena.