Trump mulls targeted Iran military action

General market commentary

US equity markets retreated on Thursday, with the Dow Jones Industrial Average falling 0.5 per cent to 49,395.16, the S&P 500 down 0.3 per cent to 6,861.89 and the Nasdaq Composite off 0.5 per cent at 22,682.73. Financials and technology led a broad based decline, while energy, utilities and industrials were the only sectors to finish higher. The pullback came despite better than expected fourth quarter results from Walmart, where earnings and revenue narrowly beat forecasts, although its 2026 guidance disappointed investors. Overall earnings season has remained constructive, with around three quarters of S&P 500 companies beating estimates and growth expectations revised higher.

Investor sentiment was also shaped by rising geopolitical tensions in the Middle East after comments from Donald Trump regarding Iran. Oil prices climbed, with West Texas Intermediate crude rising 2.4 per cent to 66.73 dollars a barrel, the highest level since August, amid concerns over supply and the Strait of Hormuz. The US dollar strengthened, while Treasury yields were little changed, with the 10 year yield at 4.07 per cent. Economic data pointed to a stable labour market, as initial jobless claims fell to 206,000, reinforcing expectations of moderating inflation and steady growth.

Latest market and economic update

Most Asian equities fell on Friday as uncertainty over US interest rates and escalating tensions with Iran dampened risk appetite. Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index declined, while South Korea’s KOSPI climbed to a record high, lifted by brokerage and defence shares. Australia was weaker and Chinese markets stayed shut.

US equity futures were little changed overnight as investors awaited fourth quarter GDP and the Fed’s preferred PCE inflation data, alongside a potential Supreme Court of the United States ruling on President Donald Trump’s tariffs. S&P 500, Nasdaq 100 and Dow Jones Industrial Average futures all edged marginally higher.

European equities fell sharply on Thursday, retreating from record highs. The Eurozone STOXX 50 dropped 0.8% to 6,054 and the STOXX 600 fell 0.6% to 624, pressured by Fed signals of prolonged elevated rates. Major movers included Airbus down 7%, Enel nearly 4%, and banks UniCredit, Santander, and BBVA all losing over 2%.

The US dollar strengthened, nearing a one-month peak against major currencies, buoyed by stronger-than-expected economic data, hawkish Fed signals and Middle East tensions. The euro fell to $1.1768, down 0.8% for the week, as uncertainty over ECB leadership weighed. Investors continue to watch upcoming US core PCE and GDP releases for further direction.

Oil prices edged higher in Asian trade, extending sharp gains and leaving Brent and WTI near six month highs, with benchmarks up around 6 per cent for the week. Rising US Iran tensions fuelled concerns over potential supply disruptions through the Strait of Hormuz, while a surprise nine million barrel draw in US crude inventories added further support.

US President Donald Trump is considering a limited strike on Iran to pressure Tehran into a nuclear deal, potentially targeting military sites and senior figures. Officials say preparations, including aircraft, warships and missile defences, could be ready by Saturday. Trump set a 10-day deadline, while Russia urged restraint and Poland advised evacuation, amid warnings of Iranian retaliation.

Equities on the move

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

NVIDIA Corporation is nearing a $30 billion investment in OpenAI, part of a $100 billion funding round valuing the AI company at $830 billion. Much of the capital will be reinvested in NVIDIA hardware. The smaller commitment has raised investor concerns over AI sector stability, while OpenAI also seeks funding from SoftBank, Amazon, Microsoft, and MGX.

Tesla unveiled a new, more affordable Cybertruck in the US priced at $59,990 for the dual-motor all-wheel-drive version, while cutting the Cyberbeast model to $99,990 from $114,990 and discontinuing its Luxe Package. Other Cybertruck models remained unchanged. The moves reflect Tesla’s 2026 strategy to attract cost-conscious buyers through targeted price reductions.

The White House outlined President Donald Trump’s proposed ban on investors owning more than 100 single-family homes, aiming to curb further purchases. Exemptions would apply to those building or extensively renovating properties for rental. Officials are pushing to attach the measure to the Senate housing bill, following House and Senate negotiations on separate housing legislation.

Walmart forecast fiscal 2027 adjusted earnings of $2.75–$2.85 per share, below expectations of $2.97, and first-quarter earnings of $0.63–$0.65, missing estimates. Fourth-quarter adjusted earnings beat forecasts at $0.74 per share on $190.66bn revenue. US comparable sales rose 4.6%, while membership fees declined 11.2% year on year.

Airbus Group shares fell over 6% after cutting its A320neo production target to 70–75 jets per month by end-2027 due to Pratt & Whitney shortages. CEO Guillaume Faury threatened to enforce contractual rights. Q4 profit rose 17% to €2.98 bn, revenue reached €25.98 bn, the order book totalled €619 bn, and 2026 deliveries are projected at 870 jets.

Rio Tinto reported flat 2025 earnings of $10.87 bn, below expectations, as iron ore profits fell due to higher costs and weather disruptions, while copper earnings doubled, driven by Oyu Tolgoi output and higher prices. The miner raised its dividend to 254 cents. Focus on copper, asset sales, and capital reallocation reflects a strategic pivot amid stronger demand.

Newmont beat fourth-quarter profit estimates as a record gold rally offset lower production, with shares rising 2% to $127.96. Average realised prices rose nearly 60% to $4,216 per ounce, while production fell 24%. The company plans $1.4 billion for development projects from its Newcrest acquisition and forecast 2026 output of 5.3 million ounces.

Live Nation Entertainment beat fourth-quarter revenue estimates, with total revenue up 11.1% to $6.31 billion, driven by resilient demand for concerts. Concert attendance reached 159 million globally, with early 2026 ticket sales up double digits. Shares rose around 3% in after-hours trade, despite reporting a $1.06 per share loss and an ongoing antitrust lawsuit.

Nestle posted stronger-than-expected Q4 organic sales growth of 4% and outlined a sharper focus on Coffee, Petcare, Nutrition, and Food & Snacks, including plans to sell its remaining ice cream business to Froneri. CEO Philipp Navratil aims to improve efficiency amid recalls, tariffs, and currency pressures, targeting 3–4% organic growth and higher profit margins in 2026.

Klarna reported fourth-quarter revenue of $1.08 billion, up 38% year-on-year, slightly above forecasts, driven by U.S. growth and a doubling of banking users to 15.8 million. Gross merchandise volume rose 32% to $38.7 billion. CEO Sebastian Siemiatkowski highlighted AI adoption, workforce reductions, and rising employee wages, with full earnings due February 26.

Renault Group reported a 15% drop in 2025 operating profit to €3.6 bn, with margins falling to 6.3% amid pricing pressure from Chinese rivals and Stellantis. Shares fell nearly 6%. The group targets 5.5% margin in 2026, plans cost reductions, and aims to grow overseas sales, including India and South America, while maintaining a €2.20 dividend.

Samsung Electronics shares hit a record high after reports its next-generation HBM4 memory chips may be priced 20–30% above HBM3E, boosting profit forecasts. Strong AI-driven demand and tight global supply are supporting higher HBM and DRAM prices. Samsung and SK Hynix are poised for record first-quarter earnings, with Samsung already mass-producing HBM4.

Blue Owl clarified it is not halting investor liquidity from its private debt fund, Blue Owl Capital Corp II, planning to return 30% of net asset value over 45 days and continue capital returns. Shares in private investment firms including Apollo, Blackstone, TPG and KKR fell sharply amid broader concerns over liquidity and valuations in private credit.

Johnson & Johnson is preparing a potential sale of its orthopedics unit, DePuy Synthes, which could exceed $20 billion, with private equity firms seen as likely buyers. The unit generated $9.3 billion in 2025. J&J is assembling financials and exploring a tax-free spinoff, while facing ongoing litigation linked to hip replacement devices, with resolution expected by mid-2026.

Google has launched Gemini 3.1 Pro, an upgraded AI model for science, research, and engineering tasks. Achieving 77.1% on the ARC-AGI-2 benchmark, it more than doubles reasoning performance. Available via API, Vertex AI, and apps, it supports complex problem-solving, data synthesis, visual explanations, and advanced system integration, with preview access for developers and enterprise users.

AppLovin Corp. is developing a social networking platform after failing to acquire TikTok’s non-Chinese assets. The initiative aims to increase user data access and control over mobile advertising, but positions the company against Meta, TikTok, and Snap. Shares have dropped 40% this year, lowering market value below $140 billion.

CME Group will offer 24/7 trading for cryptocurrency futures and options from May 29, aligning with always-on crypto markets. The move responds to record client demand, following $3 trillion in 2025 notional volume. YTD 2026, average daily crypto derivatives volume rose 46% to 407,200 contracts, with open interest up 7%.

Netflix could increase its $82.7bn bid for Warner Bros Discovery if rival Paramount Global raises its $108.4bn offer. Warner Bros’ board continues to back Netflix, citing concerns over Paramount’s financing, regulatory risks, unresolved deal terms, and equity commitments, while Paramount must submit a “best and final” offer by Monday.

Visa will acquire Argentine payment platforms Prisma and Newpay from Advent International, strengthening its digital payments presence in Argentina. The deal, expected to close in Q1 2026, will accelerate tokenization, biometric authentication, and intelligent risk tools adoption, while Advent International retains ownership of merchant acquirer Payway.

Wolfe Research says recent turbulence in AI-linked stocks reflects expectation recalibration, not economic shifts. Analyst Stephanie Roth notes sector rotation, early adoption among large firms, and continued hyperscaler gains. Domestic AI investment is projected at 1.8% of GDP in 2026. Economic momentum is improving, supporting cyclical stocks before AI leadership reasserts itself.

Chewy was upgraded to Outperform by Raymond James after a 33% pullback in the share price. Trading at 8x EV/2027 EBITDA, Chewy offers an attractive entry. Fiscal 2026 revenue is expected to rise 7%, supported by consumer trends, active customer growth, pricing flexibility, loyalty initiatives, and its defensive autoship-driven model.

Carvana’s post-earnings share pullback presents an attractive entry, says Morgan Stanley. Despite higher reconditioning costs and a weaker Q4, the company’s growth remains intact, supported by a $12 bn loan-purchase agreement, stable 9.2% gain-on-sale spread, improved leverage, and guidance for sequential retail GPU gains in Q1.

Upcoming data and events

Friday sees key economic data from the US and UK, including US Q4 GDP, personal spending, and PCE inflation, alongside building permits and new home sales, with mixed PMI readings for both countries. Earnings reports include Air Liquide, Warner Bros. Discovery, AngloGold Ashanti, Danone, Anglo American, and Sika AG, providing updates on Q4 2025 performance.

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