The American stock markets opened lower yesterday but turned upwards towards the closing bell. This week, newly inaugurated President Donald Trump announced a major investment in AI infrastructure by expanding data centers and other necessary infrastructure. Among the companies directly impacted were Oracle, OpenAI, and Softbank, who are forming a joint venture called Stargate. The investment amounts to a staggering $500 billion, with the mentioned companies collectively contributing $100 billion to the project. On Thursday, Trump also delivered a speech in Dovas, demanding an immediate cut in interest rates and promising a historic tax cut in the country. Additionally, the job report was released, showing a slight increase in new unemployment claims last week. The broad S&P 500 index and the tech-heavy Nasdaq composite index rose by 0.2%, while the Dow Jones industrial index climbed by 0.7%.
Commodities traded mostly lower yesterday. Oil continued its recent decline after Trump asserted in his speech that OPEC must lower oil prices. The President also stated that if oil prices were to fall, the war in Ukraine would “immediately” end. Furthermore, macroeconomic data from the US indicated that the country’s crude oil inventories decreased to their lowest levels since March 2022 last week. Recent declines in oil prices have been attributed to the bleak outlook ahead due to Trump’s new pro-drilling policy, coupled with a continuing decrease in global demand creating an imbalance. Analysts have predicted oil price declines for this year and 2026, but Citi recently raised its forecast from $62 to $67 per barrel due to increased geopolitical tensions in Iran, Russia, and Ukraine. WTI oil dropped by $0.9 to $75.6 per barrel, while Brent oil fell by $0.8 to $78.2 per barrel.
Base metals mostly declined on Thursday. Tin was the biggest loser, dropping by 1.8%, followed by zinc at 1.7% and nickel at 1.0%. Lead decreased by 0.8% and aluminum by 0.1%, while copper traded sideways. Gold saw a minor increase after reaching near-record levels last week. However, the metal was held back by a rising dollar, making it more expensive for investors to trade. Trump’s call for lower interest rates also impacted the price of gold, historically thriving in a low-interest environment. Forecasts suggest that the Federal Reserve will leave the benchmark rate unchanged next week. Gold increased by $0.9 to $2,756.7 per ounce.
In the realm of US-listed companies, game developer EA plummeted by 16.7% as the company lowered its full-year forecast due to weaker demand for Fifa. Several aviation-related companies also declined after American Airlines reported below-expectation results, causing the stock to drop by 8.7%. On the other hand, aerospace company GE Aerospace soared by 6.6% after surpassing expectations with its quarterly report. Within the chip sector, several companies retreated after significant gains earlier in the week, including Micron down by 4.0% and Super Micro Computer down by 1.3%. Tesla also traded lower by 0.7%.
The US ten-year Treasury bond rose by 1 point to 4.62%.
Asian markets opened mostly higher on the final morning of the trading week. In Japan, markets declined after the central bank raised the interest rate by 25 basis points to 0.5%, the highest level since the 2008 financial crisis. The Bank of Japan expressed concerns about rising inflation and slowing growth, indicating potential further rate hikes. In China, markets rallied following Trump’s optimistic comments on potential trade deals with President Xi Jinping. The Chinese Shanghai index was up by 0.8%, while the Hang Seng index rose by 2.0%. However, the Japanese Nikkei 225 index slipped by 0.1%.
On the Stockholm Stock Exchange, Ericsson reported lower earnings and margins than expected but still increased its dividend by 0.15 SEK to 2.85 SEK. The fourth-quarter revenue was 72.9 billion SEK, with adjusted EBITDA of 10.2 billion SEK and an adjusted margin of 14.1%, slightly lower than anticipated but an improvement from the same quarter last year. Later in the day, Alleima and Öresund will also report earnings.
In terms of new recommendations on Friday morning, Swedbank saw its target prices raised by SEB and Jefferies to 290 (from 264) and 228 (from 215) SEK, respectively, with buy and hold ratings reiterated. However, DNB downgraded its recommendation for Swedbank from buy to hold with a target price of 265 SEK. DNB and BNP lowered their target prices for Essity to 340 (from 350) and 345 (from 365) SEK, respectively, both maintaining buy ratings, while SEB and Pareto Securities raised their target prices for Investor to 354 (from 310) and 348 (from 328) SEK, respectively, reiterating hold and buy recommendations. EQT also received target price increases from SEB and BNP to 408 (from 361) and 460 (from 430) SEK, respectively, with buy ratings. Citigroup raised its target price for Avanza to 400 SEK (from 330) with a buy rating, while Nordea lowered its target price for Evolution to 1,080 SEK (from 1,310) but maintained a buy recommendation. Lastly, Sandvik saw its target prices raised by SEB and DNB to 240 (from 230) and 235 (from 220) SEK, respectively, with hold ratings, and Handelsbanken raised its long-term recommendation for NCC with a target price of 220 SEK (from 195).
On the macroeconomic front, Friday is expected to be a relatively eventful day. The day began in Japan at 00:30 with the core consumer price index rising by 3.0% in December, followed by the Bank of Japan’s interest rate decision at 04:00, where they raised the interest rate by 25 basis points to 0.5%. At 08:00, Sweden announced its unemployment figures, showing a seasonally adjusted increase from 8.3% to 8.5% in December. The day continues with the purchasing managers’ indexes in France at 09:15, Germany at 09:30, and the Eurozone at 10:00, followed by the UK at 10:30. The US takes over with its PMI figures at 15:45 and existing home sales at 16:00, along with Michigan’s inflation expectations and consumer sentiment index. The day concludes at 19:00 with Baker Hughes’ total rig count.
Overall, the global markets are navigating through various economic and geopolitical challenges, with investors closely watching developments both domestically and internationally for potential opportunities and risks.