S&P logs record high close

General market commentary

US equities saw modest gains on Wednesday, with the S&P 500 rising by 0.2% and the Nasdaq adding 0.1%. Most sectors finished higher, led by defensive sectors like healthcare and consumer staples. Economic data showed a slight miss in housing starts for January, but building permits exceeded expectations. Bond yields also ticked lower, with the 10-year Treasury yield closing at 4.54%. Elsewhere, Asian markets were mixed, while European equities traded lower following a surprise uptick in UK inflation data.

The market's muted movement followed the release of the Federal Open Market Committee’s (FOMC) minutes, which indicated the Fed's readiness to keep interest rates steady amid persistent inflation and economic uncertainty. President Trump’s announcement of potential 25% tariffs on automotive, semiconductor, and pharmaceutical goods had little impact, suggesting investors may be growing indifferent to tariff threats. While semiconductor and healthcare firms, such as Texas Instruments and Analog Devices, posted strong gains, the overall sentiment reflected caution in light of ongoing economic challenges.

Latest market and economic update

Asian equities fell on Thursday, driven by concerns over high U.S. interest rates and President Trump's planned tariffs on automobiles, pharmaceuticals, and semiconductors. Hong Kong's Hang Seng suffered the steepest losses, as an AI-driven rally fizzled out, while Chinese equities also declined amid ongoing trade tensions and weak economic data.

U.S. equity index futures are expected to open slightly lower, pressured by hawkish signals from the Federal Reserve and concerns over new trade tariffs under President Trump, along with losses in defense stocks like Palantir. Market sentiment remains cautious, with Wall Street in a tight trading range amid uncertainty over inflation and potential policy changes.

European equities closed sharply lower on Wednesday, with the Eurozone’s STOXX 600 dropping 1.4% and the pan-European STOXX 600 falling 1%, weighed down by disappointing earnings and concerns over trade barriers. Financial and consumer discretionary shares were among the hardest hit, while auto manufacturers declined following US President Trump's tariff threats, and Philips saw a significant drop after missing sales growth expectations.

The dollar index remained around 107 on Thursday, showing little movement as investors weighed the latest FOMC minutes and trade policy developments. Against the euro, the dollar traded at 1.0431, reflecting ongoing uncertainty over US interest rate expectations and global trade tensions.

Oil prices fell this morning, influenced by a surprise increase in U.S. crude inventories and ongoing geopolitical uncertainties related to the Russia-Ukraine conflict. While supply concerns, including disruptions in Russian crude and U.S. production, have provided some support, the broader market remains under pressure from weaker demand signals.

Equities on the move

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

Rio Tinto reported its smallest full-year underlying earnings in five years, falling to $10.87 billion for 2024, primarily due to weaker iron ore prices amid low demand from China's property sector, and declared a total dividend of $4.02 per share, the lowest since 2019. Despite this earnings dip and ongoing challenges, including high power costs at its aluminium smelter, CEO Jakob Stausholm rejected shareholder calls to consolidate the company's dual-listed share structure.

Garmin forecasted full-year 2025 revenue of $6.80 billion, above Wall Street estimates, driven by strong demand in its outdoor and auto OEM segments, with its shares rising over 12%. The company reported Q4 revenues of $1.82 billion, surpassing expectations, and a profit of $2.41 per share, exceeding the forecast of $2.03 per share.

Philips forecasted a mid-single-digit decline in first-quarter comparable sales due to weak consumer spending in China and the impact of new tariffs, leading to a 11% drop in its shares. The company also projected a 1-3% growth in global sales for 2025, while addressing concerns over China's reduced contribution to group revenue and ongoing trade tensions.

BAE Systems reported strong FY24 results, including free cash flow of £2.51 billion, although its FY25 guidance fell short of expectations. Despite the cautious outlook, analysts remain optimistic about its long-term growth potential and raised their price target for the stock.

Carvana reported a larger-than-expected profit for Q4, earning $0.56 per share on revenue of $3.55 billion, significantly surpassing analysts' forecasts of $0.25 per share on revenue of $3.3 billion. The e-commerce used-car platform also projected strong growth for 2025, expecting significant increases in both retail units sold and adjusted EBITDA. Despite the positive results, its shares fell 11% in after-hours trading, as the company is considering raising up to $1 billion in new capital.

Apple has launched the iPhone 16e, a more affordable addition to the iPhone 16 series, featuring the A18 chip, Apple’s first cellular modem (C1), and a 48MP Fusion camera, priced from $599 with pre-orders starting on February 21. Analysts from Evercore anticipate a significant revenue boost from the model, particularly in emerging markets like India and Southeast Asia, while highlighting the new modem chip’s potential to improve margins.

Microsoft unveiled its Majorana 1 chip, claiming that quantum computing could be "years, not decades" away, positioning itself alongside Google and IBM in pushing the technology forward. While the chip has fewer qubits than its competitors, Microsoft believes its lower error rates will enable faster progress, marking a significant development in the race for scalable quantum computing.

Lam Research Corp unveiled two new tools, the ALTUS Halo deposition tool and the Akara etching tool, designed to enhance AI chip production and capitalise on the growing semiconductor demand. The company’s innovation places it in direct competition with major suppliers like Applied Materials and ASML, with a positive market outlook driven by strong demand from firms like Micron and TSMC.

Shares of Palantir Technologies dropped 10% following news that the Trump administration had instructed the Pentagon to prepare for annual defence budget cuts of 8% over the next five years. Despite Palantir's strong performance, analysts suggest its AI systems could still benefit from the cuts, though investors are concerned about the impact of reduced defence spending on the company.

Shares of Hims & Hers Health Inc. surged over 20% after the company announced the acquisition of Trybe Labs, which will enable it to offer at-home lab testing and enhance personalised healthcare. Canaccord Genuity raised the company's price target to $68 from $38, maintaining a Buy rating, while noting the increased risk of near-term volatility due to elevated growth expectations.

Argus Research has upgraded Airbnb to 'Buy' from 'Hold', with a price target of $190, citing strong brand presence, an expanding host network, and robust growth prospects in the short-term homestay market. The upgrade follows Airbnb’s strong Q4 performance, with a 12% revenue increase, and the company's plans to invest $250 million in new ventures, expecting high-teens growth in revenue and earnings over the long term.

Bank of America has recommended buying shares of Marvell Technology, citing strong growth in AI market share, driven by partnerships with Amazon AWS, Google, and Microsoft, and the company’s promising AI sales outlook. With AI expected to dominate its earnings, BofA forecasts Marvell’s earnings per share to reach $5.18 by 2027, maintaining a Buy rating and a $150 price target.

Nomura downgraded Baidu to "Neutral" from "Buy" and reduced its target price to $98, citing growing competition in AI-powered search from rivals like Tencent, Alibaba, and Bytedance. The brokerage also lowered its revenue growth forecast for Baidu's core advertising business but increased its AI cloud revenue growth forecast, while preferring Alibaba, JD.com, and NetEase over Baidu.

Evercore ISI added Lowe’s to its tactical outperform list ahead of its fourth-quarter earnings, expecting potential upside if the company reaffirms its 1% comparable sales growth outlook. While cautious about macroeconomic risks, Evercore believes Lowe's stock could benefit from market share gains and an improved full-year forecast, especially as it trades at a lower multiple compared to its peers.

Jefferies upgraded STMicroelectronics to "Buy" from "Hold" and raised its price target to €34, citing a recovery starting in the second half of 2025, driven by factors such as increased content in Apple's iPhone 17 and strong demand for edge AI microcontrollers. The analysts also highlighted STM's growth prospects in the low-Earth orbit satellite sector and silicon photonics, forecasting strong growth and an attractive valuation, with EPS estimates 22% above consensus for 2026.

Upcoming data and events

Today, investors are focused on the release of the German monthly PPI changes, US weekly jobless claims, and earnings reports from major companies including Walmart, Alibaba, Booking, Airbus, Schneider, and MercadoLibre.

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