S&P posts third consecutive losing session

General market commentary

US equity markets ended mostly lower on Monday as investors digested President Donald Trump’s confirmation that tariffs on Canada and Mexico would proceed as planned in March. Technology shares led the declines, with the Nasdaq Composite dropping 1.2%, while Nvidia fell 3.1% ahead of its highly anticipated earnings report. Palantir tumbled nearly 11% amid concerns over reduced government spending, and Robinhood slid 3.2% despite the SEC dropping its investigation into the company’s crypto business. Meanwhile, the Dow Jones Industrial Average edged slightly higher, supported by gains in healthcare stocks, as investors processed mixed economic data. The Dallas Fed reported a sharper-than-expected contraction in Texas manufacturing activity, reflecting rising uncertainty surrounding tariffs.

In fixed income, US Treasury yields declined, with the 10-year yield easing to 4.402%, as markets looked ahead to the PCE inflation report later this week. European markets were mixed, with Germany's DAX rising on news that a conservative alliance won the federal election, though the fragmented result could limit policy changes. The UK's FTSE 100 and France's CAC 40 edged lower. In commodities, WTI crude oil climbed 0.6% to $70.85 per barrel amid fresh US sanctions on Iran, while gold gained 0.5% as investors sought safe-haven assets. The dollar strengthened against major currencies, reflecting a cautious tone in global markets as attention turns to key economic data, including US housing figures and the Federal Reserve's next policy moves.

Latest market and economic update

Most Asian markets ended lower on Tuesday, as technology shares took a hit ahead of Nvidia's earnings report, compounded by concerns over tighter US controls on chip exports to China. Hong Kong's Hang Seng was the worst performer, dropping 2%, while South Korea's losses were more modest, with the KOSPI falling just 0.4% after the Bank of Korea cut interest rates to support the economy.

US equity futures were little changed on Tuesday, following a pullback in major indexes driven by losses in technology and AI shares the previous day. Investors are looking ahead to key earnings reports and the upcoming release of the PCE index, which could provide further insights into inflation and influence market sentiment.

European equities closed mostly lower on Monday, with the STOXX 50 down 0.4% and the STOXX 600 edging 0.1% lower, as investors digested the German election results and ongoing uncertainty over government spending and trade flows. Key movers included Prosus, which sank 9% after announcing a €4.1 billion acquisition of JustEatTakeaway.com, while Schneider dropped 7%, and luxury shares also closed in the red, though banks, insurers, and automakers posted gains.

The US dollar strengthened to around 106.7 on Tuesday, recovering from 11-week lows after President Trump confirmed that tariffs on Canada and Mexico would proceed. The euro traded at 1.0473, reflecting the dollar’s strength as markets focused on upcoming economic data that could influence future US monetary policy.

Oil prices rose this morning as new US sanctions targeting Iran's oil industry raised concerns about supply disruptions, with Brent crude gaining 0.6% to $75.19 per barrel and WTI rising 0.7% to $70.92. Despite the sanction-driven price boost, the overall outlook remains uncertain, with potential production delays by OPEC+ and a return to a supply surplus in 2025 likely to influence future price trends.

Equities on the move

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

Chinese tech giants, including Tencent, Alibaba, and ByteDance, are significantly increasing orders for Nvidia's H20 AI chips, driven by the global demand for DeepSeek's low-cost AI models. Despite concerns over potential US export restrictions, the surge in orders is mainly attributed to the rapid rise of DeepSeek's models, with analysts predicting Nvidia will generate over $12 billion in revenue from H20 shipments in 2024.

An analyst note highlighting Microsoft's potential slowdown in leasing data centre capacity raised concerns on Monday, suggesting possible oversupply as the company builds out AI infrastructure. While Microsoft's stock fell just 1%, shares of related firms such as Siemens Energy and Schneider Electric dropped significantly, with skepticism growing over the payoffs of the AI boom and Chinese startup DeepSeek's lower-cost AI technology.

Hims & Hers Health Inc reported weaker-than-expected fourth-quarter earnings, with a profit of $0.11 per share on revenue of $481.1 million, which surpassed Wall Street’s revenue estimates but missed earnings forecasts. Despite this, the company raised its 2025 revenue forecast and expects strong growth in Q1 2025, with full-year revenue projected between $2.3 billion and $2.4 billion.

Prosus has agreed to acquire Just Eat Takeaway.com for €4.1 billion, significantly lower than its 2019 bid, aiming to create a major European food delivery player. The deal positions Prosus as the fourth-largest food delivery company globally, though it has led to a drop in its shares, while Just Eat's stock surged by 54%.

UBS has upgraded Rheinmetall to "buy" from "neutral" and raised its price target to €1,208, citing strong revenue growth prospects driven by increased defence spending in Germany and Europe. The bank expects Rheinmetall to capture a significant share of NATO's rising land-system spending and forecasts annual revenue growth of 26% through 2028, despite potential political hurdles and competition from US defence firms.

TD Cowen raised its price target for Mondelez to $71 per share, increasing its 2026 earnings per share estimate to $3.15, citing a 19% decline in cocoa spot prices and a 12% drop in futures, which should improve the company’s hedging position. The brokerage remains positive on Mondelez's long-term prospects, highlighting its strong presence in emerging markets, leadership in snacking, and pricing power, with further upside potential if cocoa costs continue to normalise.

Jefferies analysts upgraded Nike to "Buy" and raised their price target to $115, citing the company's efforts under CEO John Donahoe to tackle product and distribution issues, positioning Nike for a market rebound. Despite recent struggles, Jefferies sees a strong path forward with a projected V-shaped recovery in margins and EPS by fiscal 2027, driven by product innovation and restored wholesale partnerships.

BMO Capital Markets upgraded Block Inc to "Outperform" and raised its price target to $89, viewing the stock's recent sell-off as an attractive entry point. The brokerage expects improved sentiment and achievable growth for Square and Cash App, driven by product innovations and a stronger focus on credit and lending-based products.

Upcoming data and events

Today, key economic data releases, including consumer confidence figures and home price indices, are expected to provide valuable insights into consumer sentiment and the health of the housing market. Alongside this, earnings season continues, with investors focused on reports from industry giants such as Home Depot, American Tower and Heidelberg Materials but also smaller companies such as CAVA Group and Instacart.

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