SpaceX buys xAI, uniting Musk’s AI and space ambitions

General market commentary

Equity markets rallied on Monday, with US stocks rising broadly as investor sentiment was lifted by stronger than expected manufacturing data and an easing in geopolitical tensions. The Dow Jones Industrial Average gained 1.1 percent, while the S&P 500 rose 0.5 percent and the Nasdaq Composite added 0.6 percent. Most sectors finished higher, led by consumer staples, industrials and financials, as markets responded positively to signs that US manufacturing activity has returned to expansion. The Institute for Supply Management index jumped to 52.6 in January, well above expectations, and the S&P Global manufacturing index was also revised higher, reinforcing confidence in the underlying strength of the economy.

Bond yields moved higher alongside the improved growth outlook, with the ten year Treasury yield rising to 4.28 percent, while the US dollar continued to strengthen. Markets largely looked past the partial government shutdown, viewing it as temporary, and focused instead on supportive economic momentum and reduced global risk. Hopes of progress in US Iran nuclear talks and an announced US India trade agreement helped calm investor nerves, while falling oil prices also eased inflation concerns. Overall, Monday’s session reflected a renewed focus on growth fundamentals, with equities taking encouragement from resilient economic data and a stable policy outlook.

Latest market and economic update

Asian equity markets rallied strongly on Tuesday, led by South Korea and Japan as investors returned to AI and technology shares. Seoul’s KOSPI surged nearly 5 percent, while Japan’s Nikkei rose over 3 percent. Elsewhere, Australia and Singapore advanced, though Hong Kong and mainland Chinese markets lagged the regional rebound.

US stock futures edged higher overnight following a strong start to February, driven by gains in technology and semiconductor shares. Investor focus is on upcoming earnings from AMD, Alphabet and Amazon, while a partial US government shutdown has delayed key jobs data, adding uncertainty around the economic and policy outlook.

European shares climbed to record levels, with the STOXX 600 up 1% as banking and healthcare stocks led gains. Markets recovered from early weakness caused by commodity turmoil as gold and silver stabilised. Bank shares hit 2008 highs, healthcare advanced, volatility fell, Pandora surged, BFF slumped, and Europe continued to outperform US equities in 2026.

The US dollar held broadly steady on Tuesday, supported by strong manufacturing data and expectations of a less dovish Federal Reserve. The euro edged slightly higher to around 1.18 dollars, while the Australian dollar gained after a rate hike. The yen remained weak ahead of Japan’s election, despite easing geopolitical tensions.

Oil prices fell for a second day as easing US Iran tensions and a firmer dollar weighed on sentiment. Brent slipped to around $66 a barrel and WTI to near $62. Increased Venezuelan oil output and exports added to supply concerns, with analysts expecting volatile, headline driven trading and downside risks to dominate in February.

The French government has survived the first of two no-confidence votes, moving closer to securing approval for the 2026 budget. A motion from the hard-left failed to reach the required majority. A second challenge from the far right is due later and is expected to fail, following several budget-related votes last month.

Australia’s central bank raised interest rates by 25 basis points to 3.85 percent, its first hike in two years, citing stronger growth and stubborn inflation. The Reserve Bank warned inflation would stay above target for some time, prompting markets to price in further tightening, with the Australian dollar and bond yields rising sharply.

Venezuelan oil exports rose to about 800,000 barrels a day in January, up sharply from 498,000 in December and close to last year’s average. Shipments rebounded after US licences eased a blockade, restoring flows mainly to the US. Output is recovering, though exports remain below January 2025 levels and large inventories persist.

Equities on the move

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

Elon Musk said SpaceX has acquired his AI startup xAI in a record breaking deal, valuing SpaceX at about one trillion dollars and xAI at 250 billion dollars. The merger unites Musk’s space and AI ambitions, ahead of a potential SpaceX listing, and may attract regulatory scrutiny over governance and national security concerns.

OpenAI chief Sam Altman said the company hopes to remain a major long term customer of Nvidia, pushing back against reports of dissatisfaction with its AI chips. His comments followed claims of strained ties, a stalled Nvidia investment, and OpenAI’s moves to explore alternative chip suppliers as demand for AI hardware continues to surge.

Palantir posted stronger than expected results, with revenue beating forecasts and US government sales rising 66 percent. The company projected sharp growth into 2026, driven by demand for its AI platforms. Shares surged around 11 percent in after hours trading, though valuation concerns and scrutiny over its surveillance activities persist.

Disney warned of weaker international visitor demand at its US theme parks and a sharp profit fall in its entertainment division, raising investor concerns as it prepares for a leadership transition. While parks still drove most profits, higher marketing costs weighed on results. Streaming earnings improved, and Disney reaffirmed its full-year outlook despite travel and media headwinds.

Oracle plans to raise up to $50 billion in 2026 through equity and debt to fund AI-driven data-centre expansion tied to OpenAI, while preserving its investment-grade rating. Investor sentiment improved after Fitch affirmed its ‘BBB’ ratings. The agency expects leverage to rise in 2026 before easing as AI revenues grow, despite near-term cash flow pressure.

Shares of rare earths and critical minerals firms jumped Monda after reports that President Trump plans a $12 billion US strategic minerals stockpile to cut reliance on China. The initiative, dubbed Project Vault, would fund reserves of key materials for technology and manufacturing, boosting stocks including MP Materials, USA Rare Earth and other domestic producers.

Warner Bros Discovery may hold a shareholder vote in March on its proposed $82.7 billion sale of streaming and studio assets to Netflix. Approval would advance the deal, though regulators are likely to scrutinise it closely. A rejection could revive pressure from Paramount Skydance, which is pursuing a rival takeover bid for the company.

Strategy shares fell as Bitcoin dropped below the firm’s average purchase price. The cryptocurrency slid to its lowest level since April, raising concerns over the value of Strategy’s large holdings. Bitcoin has weakened amid geopolitical uncertainty and shifting US policy expectations, even as the company continued funding purchases through share sales.

Bank of America says its Sell Side Indicator signals solid equity gains, implying a 12% S&P 500 return over the next year. Although strategist allocations are elevated, they remain below bearish levels. Earnings expectations stay resilient, with no 2026 EPS cuts, strong guidance, upbeat corporate sentiment and easing demand concerns after January’s rebound and volatility.

Micron is benefiting from a severe memory chip shortage, pushing DRAM prices to highs last seen in 2019. Phillip Capital rates the stock Buy, citing strong AI-driven demand, sold-out HBM through 2026, pricing upside, and potential market share gains from next-generation HBM4, alongside supportive US manufacturing incentives.

Jefferies said Amazon shares are undervalued, citing an attractive valuation ahead of an expected re-acceleration in AWS growth. The bank highlighted strong cloud deal momentum, resilient consumer demand and operational improvements. Amazon trades at a discount to peers, with Jefferies reiterating a Buy rating and a $300 price target, seeing significant upside potential.

JPMorgan upgraded Autodesk to Overweight with a $319 price target, citing its leadership in design and BIM software, strong cloud and AI adoption, and exposure to data centre and infrastructure growth. Analysts see the shares as undervalued, supported by high margins and solid revenue growth, despite a planned workforce restructuring.

Upcoming data and events

Markets will today be focusing on the JOLTs report for fresh insight into the strength of the US labour market, alongside remarks from Federal Reserve Governor Michelle Bowman for clues on monetary policy. Earnings season continues, with results due from major companies including PepsiCo, Advanced Micro Devices, Amgen, Pfizer and Merck, likely to influence trading sentiment.

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