General market commentary

Equity markets were mostly higher on Thursday, with the S&P 500 closing at a fresh record high, driven by positive sentiment following President Donald Trump's comments at the World Economic Forum in Davos. Trump called for central banks globally, including the U.S. Federal Reserve, to lower interest rates, alongside demands for cheaper oil and threats of tariffs on non-domestic goods. These remarks helped boost market optimism, particularly in sectors sensitive to economic policy, as all 11 S&P 500 sectors ended in the green. However, yields on 10-year Treasuries rose to 4.64%, putting some pressure on the tech-heavy Nasdaq, despite the index still being on track for a solid weekly gain.

Among individual movers, shares of GE Aerospace surged 6.6% after the company forecast 2025 profit above estimates, while Electronic Arts saw a sharp 16.7% drop following a downgraded forecast for annual bookings. American Airlines also saw its shares fall 8.7% after it issued a 2025 profit warning. In other markets, WTI oil prices dipped after Trump's push for Saudi Arabia and OPEC to reduce prices. On the economic front, initial jobless claims rose slightly from the previous week, though they remain low overall. Looking ahead, the focus will shift to next week's tech earnings reports and the Fed's policy meeting, which will likely set the direction for markets in the near term.

Latest market and economic update

  • Most Asian equity markets rose on Friday, supported by optimism from Wall Street and China’s additional policy support for local equities. However, Japanese shares trimmed gains after the Bank of Japan raised interest rates, while Hong Kong’s Hang Seng index led the region with a 1.7% rally, driven by gains in chipmaking equities.
  • U.S. equity futures are flat to slightly lower on Friday, following the S&P 500’s record highs. Investors will focus on upcoming corporate earnings and potential market reactions to President Trump’s economic comments.
  • European equities rose, with the STOXX 600 climbing 0.4% to 530.34 points, marking its seventh consecutive day of gains, while technology shares fell 1.5%, led by a 4.4% drop in ASML. Puma slumped 22.8% after disappointing profit results, while Volkswagen and Siemens also saw declines amid broader market weakness.
  • The US dollar dropped below 108 on Friday, set for a 1% decline this week, following President Trump’s speech on tariffs and interest rates. The euro strengthened to 1.0449, as the dollar weakened against major currencies amid expectations that the Federal Reserve will keep rates steady.
  • Oil prices dropped in Asian trade this morning, heading for weekly declines, as U.S. President Donald Trump urged for lower crude prices and increased energy production in the U.S. His call for lower oil prices, aimed at tackling U.S. inflation, coupled with concerns over his trade tariffs on major economies, has raised fears of global trade disruptions and reduced oil demand.
  • The Bank of Japan raised interest rates by 25 basis points, its third hike since early 2024, and signalled further increases if economic and inflation targets are met. While slightly lowering GDP growth forecasts, the BOJ raised its inflation outlook for 2024 and 2025, reflecting expectations of stronger wage growth and private consumption.

Equities on the move

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

  • GE Aerospace forecasted stronger profits in 2025, citing progress in resolving supply chain issues and a 15-20% increase in LEAP engine production. The company also announced plans for a $7 billion share buyback and a 30% dividend increase, with fourth-quarter earnings exceeding Wall Street expectations.
  • American Airlines forecasted 2025 profit below Wall Street expectations, citing higher costs from recent labour contracts. The airline also projected a larger-than-expected first-quarter loss, as it faces challenges from rising jet fuel prices and struggles to recover from a botched sales strategy, while rivals like Delta and United continue to benefit from stronger pricing and winter demand.
  • Freeport-McMoRan reported better-than-expected quarterly earnings but fell short of revenue estimates due to weaker pricing, with a fourth-quarter profit of $0.31 per share. The company outlined plans for growth in 2025, including the start-up of a precious metal refinery and a smelter ramp-up in Indonesia, alongside the resumption of copper concentrate exports.
  • Union Pacific reported a 7% rise in fourth-quarter profit, driven by higher grain and fertilizer shipments, along with core pricing gains in its key sectors. Despite this, the company’s operating revenue of $6.12 billion missed analysts' expectations, though it benefited from improvements in its grain, chemicals, and intermodal segments, particularly with increased West Coast imports.
  • Boeing has warned of a nearly $4 billion fourth-quarter loss, significantly higher than analyst expectations, due to production quality issues, a major strike, and a slowdown in jetliner deliveries. The company also faces ongoing difficulties in both its commercial and defence divisions, forecasting a substantial loss for 2024 that could rival the record $12 billion loss it posted in 2020.
  • Twilio surged nearly 15% in after-hours trading after announcing it expects Q4 earnings to reach the top of its guidance range, with revenue growth of around 11%. The company also provided a positive three-year outlook, including a $2 billion share buyback programme and projections for strong free cash flow and operating margins through 2027.
  • Intuitive Surgical reported strong fourth-quarter earnings and revenue, surpassing Wall Street expectations, driven by robust demand for its surgical robots. However, shares fell over 2.0% in after-hours trading after the company lowered its 2025 gross profit margin forecast to 67-68%, citing potential impacts from new tariffs.
  • Texas Instruments reported better-than-expected fourth-quarter results, with earnings per share of $1.30 and revenue of $4.01 billion, surpassing analysts' forecasts. However, the company provided a soft earnings outlook for the first quarter, projecting earnings between $0.94 and $1.16, which led to a 4.6% drop in shares during after-hours trading.
  • U.S. President Donald Trump accused Bank of America and JPMorgan Chase of denying services to conservatives, though the banks denied these claims, stating they do not close accounts for political reasons. Both banks highlighted the need for clearer regulatory guidelines to address financial crime without excessive caution.
  • Booking Holdings' shares rose yesterday after a federal court overturned a previous verdict that held the company liable for violating a computer fraud law in a case brought by Ryanair. The court ruled that Ryanair could not prove it suffered significant financial losses due to Booking.com's actions, lifting the legal cloud hanging over the company and alleviating potential future legal complications
  • Mitsubishi Motors is reportedly considering not joining the planned merger between Nissan and Honda due to concerns over its influence within a potential joint holding company. Despite this, the company plans to remain listed and continue its existing partnerships with both Nissan and Honda while focusing on expanding in the Southeast Asian market.
  • The UK has awarded Rolls-Royce an £9 billion contract to design, manufacture, and support nuclear reactors for its submarine fleet, strengthening national defence and the AUKUS pact. The deal is expected to create 1,000 new jobs and safeguard 4,000 existing roles, boosting British business and security.
  • Tripadvisor's shares rose after news of a higher bid from Party 7, offering $18–$19 per share in cash, though the special committee ultimately rejected it as inadequate. Despite maintaining its commitment to the current deal with Liberty TripAdvisor, investor optimism increased over the potential for a competitive bidding scenario to benefit shareholders.
  • Bank of America raised its price target for Meta Platforms to $710, citing expanding AI capabilities, growing ad and messaging revenues, and strong cost discipline. While potential risks include regulatory pressures and competition, Meta's AI-focused investments and valuation below the S&P 500 average support its "Buy" rating.
  • Wedbush Securities raised its price target for Palantir Technologies to $90, citing growing confidence in the company’s AI strategy and its potential to dominate the AI market. The firm highlighted the increasing traction of Palantir's AI Platform, particularly in both commercial and government sectors, with bootcamp deal conversions expected to drive future growth.
  • Loop Capital raised its price target for Super Micro Computer to $40 from $35, maintaining a Buy rating, citing growth potential from its GB200 and GB300 server platforms. Despite potential near-term challenges, the firm remains confident in SMCI's long-term prospects, with expectations of strong revenue growth, particularly from its liquid cooling solutions and customizable platforms.
  • UBS raised its target price for Rheinmetall to €805, citing optimism around increased global defense spending driven by geopolitical tensions and U.S. policy. The company’s strong position in advanced military technologies and its diversified portfolio are expected to boost its growth prospects amid rising demand for modern defence capabilities.
  • Bank of America raised its price target for DoorDash to $205, citing its new Home Depot partnership, robust growth in non-restaurant offerings, and strong Q4 performance. The brokerage highlighted DoorDash's market leadership, projected long-term growth in restaurant spending, and improvements in EBITDA, reaffirming its "Buy" rating.
  • Guggenheim Securities named Constellation Energy its "best idea" for 2025, citing the company's acquisition of Calpine as a transformative move that strengthens its market position. Analyst Shahriar Pourreza emphasised the strategic value of Constellation's gas assets in supporting decarbonisation and load growth, positioning the company favourably for future energy demands.
  • Chewy Inc was upgraded to "Buy" by Argus Research, citing strong growth potential driven by its expansion into Canada and the launch of Vet Care Clinics, along with a focus on high-margin, recurring revenue streams like autoship services. The brokerage set a $42 price target, highlighting Chewy's tripled revenue since its 2019 IPO and its ambitious goals of high single-digit sales growth and a double-digit EBITDA margin.

Upcoming data and events

Key economic releases today include the S&P Global Composite, Manufacturing, and Services PMI Flash reports in the US, while among the companies reporting earnings later today include American Express and Verizon.

For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.