Apple delivered a powerful start to the fiscal year with first-quarter earnings that exceeded expectations and an outlook pointing to growth of up to 16% in the current quarter.

Yet alongside the upbeat forecast, the iPhone maker acknowledged a growing constraint that could cap its momentum: a global shortage of memory chips.

Chief executive Tim Cook said memory had “a minimal impact” on margins in the December quarter but warned it could have “a bit more of an impact” in the March quarter.

Apple suggested that demand for its products, particularly iPhones, could be even stronger if it had access to sufficient components.

Although the current supply issues are partly linked to advanced-node chip manufacturing, Cook acknowledged that rising memory prices would affect Apple as well.

The company is exploring “a range of options” to manage the situation, he said, but declined to provide details on how Apple is responding to the AI-driven shortage that is reshaping the global semiconductor market.

AI demand triggers a global memory crunch and astronomical price rise

The rapid ramp-up of AI infrastructure is placing unprecedented strain on the global memory market.

AI workloads demand vast amounts of memory, and the current shortage is partly the result of manufacturers diverting production away from consumer electronics toward higher-margin chips tailored for artificial intelligence.

Rather than expanding output of conventional DRAM and NAND used in smartphones, PCs, and other devices, major memory makers are prioritising data-centre technologies such as high-bandwidth memory (HBM) and advanced DDR modules.

The shift has tightened the supply of mainstream memory and pushed prices higher across the market.

The shortage of memory chips, including DRAM and NAND used for short-term data storage, has intensified as artificial intelligence workloads expand at an unprecedented pace.

Companies such as Nvidia, AMD, and Google are absorbing large volumes of memory for AI chips and data-centre infrastructure, often securing priority supply.

At the same time, production remains concentrated among a small group of manufacturers.

Samsung Electronics, Micron Technology, and SK Hynix together produce more than 90% of global memory, leaving the market highly sensitive to shifts in demand.

Prices have risen sharply as a result.

Memory prices surged by 50% in the final quarter of 2025 and are expected to climb a further 40% to 50% by the end of the first quarter of 2026, according to Counterpoint Research, driven largely by data-centre operators willing to pay steep premiums to secure supply.

“I have tracked the memory sector for almost 20 years, and this time really is different,” says Avril Wu, senior research vice president at Taipei, Taiwan-based TrendForce, which tracks the global semiconductor industry in a WSJ report.

“It really is the craziest time ever.”

MS Hwang, a research director at Counterpoint Research who has been in the memory industry for more than 30 years, says while rapid price appreciation will continue for now, it’s hard to gauge memory-chip pricing beyond mid-2027.

He predicts they will soon be considered one of the pricier components in a device, rising from under 10% to as much as 30% of the total cost of phones and other gadgets.

Memory makers reap the benefits

While hardware manufacturers grapple with cost pressures, memory producers are enjoying a surge in profitability.

Samsung Electronics reported a threefold increase in quarterly profits, hitting a new record, driven by strong demand for AI servers and memory chips.

“Looking ahead to Q1 2026, the DS Division expects AI and server demand to continue increasing, leading to more opportunities for structural growth,” the company said.

“In response, the Division will continue to focus on profitability via a strong emphasis on high-performance products,” it added.

SK Hynix has also reported record profits, supported by soaring demand for high-bandwidth memory.

The company said its revenue from such products more than doubled in the previous year, helping it achieve record annual sales and operating profit.

“We see SK Hynix as one of the biggest AI winners in Asia, driven by its leadership in high-bandwidth memory and strong overall memory competitiveness,” said Ray Wang, an analyst at SemiAnalysis.

Rising risks for hardware manufacturers

According to IDC, the effects of the memory shortage are uneven, producing clear winners and losers depending on supply-chain resilience and the degree of vertical integration.

Manufacturers concentrated in the lower end of the market are likely to feel the sharpest pain.

Companies such as TCL, Transsion, Realme, Xiaomi, Lenovo, Oppo, Vivo, Honor, and Huawei operate on thin margins, leaving them far more exposed to rising component costs.

As memory prices climb, their profitability will come under significant pressure, leaving them little choice but to pass on some, if not most, of the additional costs to consumers.

Morgan Stanley analysts warned in a recent note that a pricing “supercycle” in memory chips increasingly threatens hardware manufacturers’ earnings as they head into the next fiscal year.

They added that with hardware original equipment manufacturer (OEM) valuations already near all-time highs, “we believe it’s time to de-risk exposure” to global hardware original equipment manufacturers and original design manufacturers “where memory is a significant input cost.”

Morgan Stanley in November downgraded several hardware firms, including Dell, HP, and Hewlett Packard Enterprise, while maintaining a more optimistic outlook for companies such as Seagate Technology and Western Digital.

Source: Potential contraction in the global smartphone market alongside an increase in average selling prices (ASP) by IDC

“We think cost inflation, especially on DRAM and NAND, could be a sizable drag to margins in the coming year, particularly if the cost inflation doesn’t slow down,” wrote Evercore analyst Amit Daryanani.

However, Daryanani argued that Apple and Dell are relatively well protected.

He cited Apple’s scale and long-term supply-chain agreements, as well as Dell’s greater exposure to commercial customers, as factors that could cushion the impact of rising memory costs.

“In the high end of the market, Apple and Samsung face pressure but are structurally hedged. Its cash reserves and long-term supply agreements allow it to secure memory supply 12-24 months in advance,” said IDC.

Even so, Apple faces a tangible challenge.

Memory can account for 10%-15% of the total bill of materials for high-end smartphones, according to industry estimates, making sustained price increases difficult to absorb indefinitely.

Apple’s strategic response

Apple appears to be recalibrating its product strategy in response to supply constraints and rising component costs.

According to Nikkei Asia, the company is prioritising production of its most premium iPhone models for 2026 while delaying the rollout of its standard model.

The strategy shift towards maximising revenue and margins from high-end devices is a response to memory and materials costs increase.

The US tech giant plans to prioritise the launch of its first foldable iPhone alongside two non-folding models with enhanced cameras and larger displays in the second half of 2026, while the standard iPhone 18 is expected to be pushed back to the first half of 2027, the report said.

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Gold and silver prices came to a screeching halt on Friday as the precious metals experienced wild swings to the downside. 

Silver prices on COMEX, which peaked above $120 per ounce earlier this week, fell below $100 on Friday. 

Meanwhile, gold prices briefly fell below the crucial mark of $5,000 per ounce earlier on Friday, with the yellow metal now trading around $5,109.74 an ounce. 

Sharp correction hits precious metals

Prices have remained volatile throughout this week, with both silver and gold hitting a series of record highs.

Gold on COMEX hit a record high above $5,600 per ounce as experts increasingly forecast a price of $6,000 later this year. 

Just as quickly as it rose, the price of gold and silver corrected downward again at the end of the week.

“The reason for the correction are rumors that US President Trump will announce Kevin Warsh as the successor to Fed Chair Jerome Powell today,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a report. 

The markets see Warsh as a more hawkish candidate than, for example, Kevin Hassett, who was seen to have high chances for the position at times and is considered a Trump loyalist.

Fed Chair speculation drives downside volatility

As a former FOMC governor, Warsh is viewed as a serious and experienced candidate.

“However, we would be cautious about reading too much into this,” Nguyen added. 

The US President’s desire for significantly lower interest rates is clear and appears to be a sustained position.

Consequently, pressure on the Fed is likely to persist. 

Even if Kevin Warsh were Fed Chair, he would probably face continued attacks if he failed to deliver the rate cuts the President expects.

“We therefore continue to see a high probability that the central bank will yield to pressure to at least some extent and cut interest rates more than is currently priced in by the market,” Nguyen said. 

This suggests that the gold price will remain well supported.

Technical factors and dollar rebound

She added that the extent of the correction in gold suggested that investors were waiting for an opportunity to book profits.

This is likely true for silver as well, which has seen a meteoric rise so far in 2026. 

Silver is now trading roughly 20% lower after hitting a record high on Thursday, when it traded above $120 per ounce for the first time in history.

Additionally, the dollar rebounded on Friday, which put pressure on silver and gold prices. 

A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers, thereby limiting demand. 

Confidence in the dollar was boosted, and fiscal outlooks were stabilised, following a rebound that stemmed from a series of macro developments. 

Among these was the reported agreement between President Trump and Senate Democrats to avert a government shutdown.

On Friday, the gold/silver ratio, which indicates how many ounces of silver are required to purchase one ounce of gold, increased to 50.01 from 46.28 on Thursday.

“Overall, the current pullback in Silver prices appears largely driven by technical adjustments and profit-taking after an exceptional rally,” Ghiles Guezout, analyst at FXStreet, said in a report. 

Fundamentals, supported by geopolitical risks, political uncertainty in the United States and persistent US Dollar weakness, continue to argue in favor of sustained interest in silver over the medium term.

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Tesla Inc. posted its first annual revenue decline in 2025, underscoring how political shifts and growing consumer unease with Elon Musk’s activism are complicating the electric-car maker’s growth story just as competition intensifies.

The company said fourth-quarter revenue fell 3% from a year earlier to $24.9 billion, broadly in line with analyst expectations, bringing full-year sales to $94.8 billion, also down 3%.

Net income slides

Adjusted net income slid 16% in the quarter to $1.8 billion, topping Wall Street estimates but highlighting mounting pressure on profitability.

The performance marks a turning point for a company that spent years redefining expectations of growth in the global auto industry.

Tesla has been hit by President Donald Trump’s decision to roll back key US electric-vehicle incentive programs, a move that has raised effective purchase prices for consumers.

At the same time, sales in the US and Europe have softened as some buyers recoil from Musk’s increasingly vocal political positions, including support for far-right parties.

Vehicle deliveries in the fourth quarter fell 16% from a year earlier to 418,227 units, missing market expectations and cementing Tesla’s loss of its crown as the world’s largest EV maker to China’s BYD.

The drop in volumes fed directly into margins, with operating margin slipping to 5.7% from 6.2% a year earlier, a far cry from the double-digit levels Tesla once touted as proof of its manufacturing edge.

No Optimus robot yet

Rather than doubling down on traditional models, Musk has leaned harder into a long-term vision centred on autonomy and robotics.

Tesla is pitching self-driving Cybercabs and humanoid Optimus robots as the company’s next growth engines, arguing they could unlock trillion-dollar opportunities. Yet execution remains elusive.

Tesla has yet to produce a single Optimus robot at scale and trails rivals such as Alphabet’s Waymo in deploying vehicles that operate in US cities without human safety drivers.

Investors, for now, have largely backed Musk’s ambition.

In November, shareholders approved a new stock-based compensation plan that could eventually be worth up to $1 trillion if a sweeping set of targets is met.

A Delaware court last month reinstated a $56 billion pay package that had been struck down as excessive, reinforcing Musk’s grip on the company even as financial performance cools.

The tension between Tesla’s near-term challenges and its long-term promises is sharpening.

With EV incentives fading, price competition intensifying and political risk entering the demand equation, Tesla’s core car business is under strain.

Whether bold bets on autonomy and artificial intelligence can offset those headwinds remains the central question for investors heading into 2026.

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Microsoft (NASDAQ: MSFT) reported second-quarter revenue of $81.3 billion, surpassing Wall Street expectations, with Azure cloud services jumping 39% and Microsoft Cloud crossing the $50 billion quarterly revenue milestone for the first time.

Operating income hit $38.3 billion, up 21% year-over-year, while non-GAAP earnings per share reached $4.14, growing 24% and reflecting solid underlying business momentum beneath headline numbers inflated by investment gains.

CEO Satya Nadella captured the strategic significance:

We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises.

The earnings beat masked an important distinction.

Reported net income of $38.5 billion and earnings per share of $5.16 jumped 60% year-over-year, an eye-catching number that obscured a $7.6 billion accounting gain from Microsoft’s investment in OpenAI.

The non-GAAP earnings per share of $4.14 rose 24%, indicating solid mid-twenties operational growth.​

Azure and cloud: Where AI monetization is happening

The real story lives in Azure. The cloud-computing unit grew 39%, beating the 36 to 38% consensus forecast and extending Microsoft’s three-quarter streak of acceleration.

This marks the highest Azure growth rate since the company went aggressive on AI infrastructure, and it reflects demand from enterprises racing to deploy machine-learning models and AI workloads at scale.​

Microsoft’s broader cloud business, which bundles Azure, Microsoft 365 subscriptions, LinkedIn, and Dynamics software, crossed $51.5 billion in quarterly revenue, up 26% year-over-year.

More tellingly, the company’s backlog of contracts not yet recognized as revenue exploded to $625 billion, up 110% from a year earlier.

That figure includes a $250 billion commitment from OpenAI to purchase Azure computing services and a separate $30 billion deal with Anthropic.

These multi-year commitments provide Microsoft with revenue visibility stretching years into the future, reducing forecast risk.​

CFO Amy Hood emphasized the point:

Microsoft Cloud revenue crossed $50 billion this quarter, reflecting the strong demand for our portfolio of services.

But beneath the headline was an admission: capacity constraints continue to limit growth.

Azure remains supply-constrained, meaning demand for cloud computing outpaces Microsoft’s ability to deliver, a rare and valuable market position.​

Microsoft Q2 earnings: Investing for growth

Microsoft’s second-quarter capital expenditures hit $29.9 billion, roughly double the prior-year quarter.

The company is on pace to exceed $100 billion in annual capex, a staggering investment justified by the undersupply of AI-capable infrastructure.

Operating margin still expanded to 47%, showing that revenue growth is outpacing spending growth.

The leverage dynamic works both ways. Heavy spending today limits near-term earnings growth.

But once data center capacity comes online and utilization normalizes, the combination of high cloud margins (Azure operates at roughly 42% operating margin) and high volumes could expand profitability significantly.

With a commercial backlog of $625 billion and Azure still constrained, Microsoft has rare visibility into future growth.

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Meta Platforms (NASDAQ: META) is inching higher in extended hours after the tech titan posted its Q4 earnings that handily topped Street estimates on the back of strong AI tailwinds.

The multinational earned $8.88 on a per-share basis on $59.89 billion revenue – well above $8.23 a share and $58.59 billion that analysts had called for.

At the time of writing, Meta Platforms stock is down more than 12% versus its 52-week high.

Should you invest in Meta stock after Q4 earnings?

According to Meta Platforms, the total number of daily active users across its family of apps stood at 3.58 billion in the fourth quarter – essentially in line with Street estimates.

In terms of capital expenditures, Susan Li, the firm’s chief of finance, guided for up to $135 billion, nearly double what it spent last year, signalling plans to continue investing rather aggressively on the AI buildout.

Such an increase in CAPEX could compress Meta’s operating margin by nearly 5.0% this year, as per Wall Street estimates.

But Brent Thill – a senior Jefferies analyst – believes “peak pressure” is already baked into META stock following recent weakness.

In a pre-earnings research note, he recommended that long-term investors stick with the Nasdaq-listed firm as its upside outweighs risks in 2026.

How high could META shares fly in 2026?

While Meta Platforms is set to spend billions on AI this year, it has recently reduced budget for its metaverse unit, which Thill dubbed a “positive sign” indicating cost discipline in his latest report.  

The Jefferies analyst agreed that the company’s Llama 4 model didn’t fare well with rivals – but said its new text and image AI models scheduled for the first half of 2026 will change the narrative.

The upcoming offerings will confirm Meta’s investments including on AI talent are paying off, he added.

Thill maintains a “buy” rating on Meta shares with a price objective of $910 – indicating potential upside of roughly 30% from current levels.

Meta Platforms offered upbeat guidance today

META stock appears attractive as a long-term holding also because the titan issued solid guidance for its current quarter. In Q1, it sees sales coming in at $55 billion, well above the Street at $51.41 billion.

The Nasdaq-listed firm continues to tap on AI to optimize ad performance and boost engagement across its platforms. Yet, it’s currently trading at a steep discount to rival Alphabet Inc.

Meta shares are currently going for about 21x forward earnings versus more than 28x for GOOGL. That’s a much bigger discount than “historical norms” – Jefferies’ Brent Thill told clients.

All in all, the company’s “top-line strength and continued efficiency gains” can offset the increase in operational expenses, which makes its stock worth owning in 2026, he concluded.

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The Hang Seng Index continued its strong bull run on Thursday as investors cheered the new developments in China, where officials are considering measures to boost the property market. It jumped to a high of H$27,870, its highest level since July 2021, and 90% from the 2022 low.

China to Ease the “Three Red Lines” policy

One major catalyst for the ongoing Hang Seng Index rally is a report that Beijing was considering ending the Three Red Lines policy that led to the collapse of companies like Evergrande, Country Garden, Kaisa, and Fantasia Holdings.

According to Bloomberg, developers are no longer required to submit metrics designed to rein in their debt buildup. The three red lines forced companies to submit data on the liability-to-asset ratio, net gearing ratio, and cash-to-short-term debt ratio.

Developers are required to have a liability-to-asset ratio of less than 70%, net gearing ratio of less than 100%, and a cash-to-short-term debt ratio of at least 1. These measures were introduced to ensure China’s real estate sector was healthy.

As a result, property stocks were among the top gainers on Thursday. Longfor Group stock jumped by over 5%, while China Overseas Land, China Resources Land, and Henderson Land stocks jumped by over 4.5%.

The ongoing rally also helped to lift copper to a record high as investors anticipated renewed demand from Chinese developers.

Casino stocks slump after weak Macau results 

The rally in the property sector was offset by a big decline in casino stocks. Sands stock plunged by 7.38%, while Galaxy Entertainment fell by 3.50%.

The crash happened after Las Vegas Sands published weak financial results, which it attributed to its Macau operations. Its EBITDA from Macau came in at $608 million, lower than the median estimate of $628 million. Also, the adjusted profit margin dropped to 28.29%, the lowest level in a decade.

The main reason for this is the rising competition in Macau, which is squeezing margins as companies pivot away from high rollers towards mass market gamers. Also, China has continued to crack down on VIP bettors.

The Hang Seng Index jumped after the Federal Reserve delivered its interest rate decision, which was in line with what analysts were expecting. 

Hang Seng Index technical analysis 

HSI stock chart | Source: TradingView

The weekly timeframe chart shows that the Hang Seng Index has rebounded in the past few years. It jumped from a low of $14,825 in January 2024 to the current $28,000.

The index has moved above the key resistance level at $27,165, invalidating the forming double-top pattern, a common bearish reversal sign. 

It has remained above the 50-week and 100-week Exponential Moving Averages (EMA), a sign that bulls remain in control. The index has remained above the Supertrend indicator.

Therefore, the most likely scenario is where the index will likely continue rising as bulls target the next key resistance level at $30,000. A drop below the key support level at $27,164 will invalidate the bullish outlook.

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British car, van, truck, and bus production fell to its lowest level since 1952 in 2025, underscoring what industry leaders have described as the most challenging period for UK manufacturing in decades.

According to data from the Society of Motor Manufacturers and Traders (SMMT), total vehicle output dropped 15.5% year on year to 764,715 units.

Of these, 717,371 were cars, around 60,000 fewer than in 2024.

By comparison, UK car production stood at about 1.7 million in 2016.

SMMT chief Mike Hawes called it “the toughest year in a generation” and said hitting the government’s 2035 ambition of 1.3 million vehicles will likely require a new factory.

The industry group expects a recovery as new electric models launch, but warned that policy shifts in Brussels and tariffs in the US are adding pressure.

A three-day visit to China by Keir Starmer and UK business leaders has created hopes for potential inward investment in the UK.

Output slumps after a bruising year

Commercial vehicle output fell 62% to 47,344 after the closure of Vauxhall’s Luton plant in late March, with parent Stellantis consolidating van production at Ellesmere Port.

A major cyberattack at Jaguar Land Rover forced the company to shut down computer systems in early September, halting production for more than a month and taking additional time to return to normal output levels.

Beyond these events, longer-term headwinds include uncertainty over Brexit arrangements, the closure of Honda’s Swindon factory in 2021, the impact of the Covid-19 pandemic, and persistent global supply chain disruption.

With roughly 78% of UK-built cars destined for export, the industry also remains highly exposed to trade policy shifts.

US President Donald Trump’s announcement in April of new tariffs on car imports prompted some manufacturers to curb shipments, even though a later deal removed the threat of higher levies.

The basic tariff on UK car exports to the US still rose from 2.5% to 10%, dampening sales.

Investment needs and European trade risks

The government’s longer-term ambition is to raise production to 1.3 million vehicles a year by 2035.

Hawes cast doubt on that target without major new investment, saying: “To get to 1.3 [million] you kind of need a new plant.”

He suggested Chinese manufacturers are the most likely source of such investment, noting: “In terms of who is expanding their production globally, obviously it’s the Chinese.”

Starmer arrived in Beijing and Shanghai on Wednesday with a delegation that included executives from Jaguar Land Rover, McLaren, and Octopus Energy.

Chinese brands are gaining traction in the UK.

They accounted for 9.7% of new car sales in 2025, nearly doubling their market share in a year as MG, BYD, and Chery expanded.

The UK has not imposed tariffs on Chinese imports, unlike the US or the EU.

Chery said last year that it was “actively considering” building a UK plant as part of its localisation strategy.

At the same time, Hawes warned of growing risks from Europe, pointing to what he described as an increasingly protectionist “Made in Europe” approach.

“Unless the UK can be seen as part of that, these proposals could have the effect of delivering what Brexit didn’t deliver – and that’s making it much harder for UK produced vehicles to access the European market,” he said. “So this is a significant threat.”

EV transition and hopes for recovery

Despite the weak backdrop, the SMMT expects conditions to improve in 2026 as production of new electric models gathers pace.

Hawes said there is a “pathway” to lifting combined car and van production above 1 million units a year by 2027, a target he described as “optimistic but realistic.”

Car output is forecast to rise by about 10% this year, supported by new model launches.

Nissan’s latest electric Leaf began rolling out of its Sunderland factory in mid-December, while Jaguar Land Rover is preparing to produce a new electric Range Rover and the first models in a new generation of electric Jaguars at its Solihull plant later this year.

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OpenAI, the creator of ChatGPT, is on track to raise billions of dollars from its existing and new investors, a sign that the artificial intelligence (AI) boom is accelerating.

OpenAI to raise billions as competition rises 

The latest reporting by The Information shows that the company is about to raise as much as $100 billion in the coming weeks.

NVIDIA, an existing investor, plans to provide up to $30 billion in the company using the windfall it has received during the ongoing AI boom.

Microsoft, which kick-started its investment in the company, will contribute about $10 billion, while Amazon plans to invest between $10 billion and $20 billion in the company.

Amazon’s deal is structured differently from the others. For one, it is contingent on the company using Amazon’s chips and also use its cloud for about 7 years.

At the same time, Masayoshi Son’s Softbank also plans to invest $60 billion in the company, a year after it provided it with over $40 billion in financing. It is also working with Middle East investors, who are expected to provide as much as $50 billion to the company.

The new fundraising means that the company has now raised billions of dollars in financing, making it the second-biggest private company in the world with a valuation of over $750 billion.

Most importantly, the funding will help the company to cover the rising cash burn, which is estimated to have reached $9 billion in 2025. It will also help the company to fulfill part of its spending plans, including its deals with companies like Broadcom, Oracle, and CoreWeave.

The funding comes as the company is preparing to go public either this year or in the coming year. It will likely wait for the much-anticipated Anthropic IPO to gauge interest among institutional and retail investors.

Anthropic, the creator of Claude, plans to launch its IPO later this year, a move that will value it at over $350 billion. The IPO will provide investors with more information about its business, number of users, and its revenue growth.

OpenAI is facing substantial competition 

The new OpenAI funding comes as the company continues to face substantial competition in the AI industry.

Most of this competition is coming from well -funded companies, with some of them receiving multi-billion dollar valuations. 

For example, Elon Musk’s xAI has received a valuation of over $250 billion, while Anthropic is now valued at over $350 billion. Its valuation has jumped after it released its recent model, which has been widely praised by corporate clients.

Google is also a major player in the industry, with its Gemini product having millions of users globally. Other large players in the industry are companies like Perplexity AI, DeepSeek, Mistral, Meta AI, and Jasper.

Estimates are that OpenAI made over $20 billion in revenue last year and lost billions of it in losses. The company is now working on diversifying its revenue by launching adverts on its platform.

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Indonesian equities plunged further into turmoil on Thursday after a warning from MSCI Inc. over a possible market downgrade triggered the worst two-day selloff in almost three decades, rattling investor confidence across equities and currency markets.

The benchmark Jakarta Composite Index tumbled as much as 10%, after earlier triggering a 30-minute trading halt.

At the time of writing, the index was trading down 5.91%.

The move extended losses sparked by MSCI’s caution around market transparency and the limited amount of stock available for trading among listed companies.

Analysts downgraded their views in response, accelerating the decline.

MSCI warning fuels market rout

MSCI’s concerns center on Indonesia’s low free float, with many of the market’s largest companies tightly controlled by a small number of wealthy shareholders.

Investors argue that this structure distorts index representation and raises the risk of manipulation.

Following the warning, Goldman Sachs Group Inc. and UBS AG both cut their recommendations on Indonesian equities.

Goldman warned that more than $13 billion in outflows could be triggered in an extreme scenario if MSCI were to downgrade the market.

“The market needs a clearer plan from the regulators on what they’re going to do to reach a consensus with MSCI, and the plan must be communicated regularly so investors can keep track of it,” said Aldo Perkasa, head of research at PT Trimegah Sekuritas Indonesia in a Bloomberg report, adding the selloff showed that official explanations so far had failed to reassure investors.

Currency pressure and policy concerns

The turmoil spilled into foreign exchange markets, with the rupiah weakening as much as 0.5% against the dollar, its steepest fall since October and underperforming regional peers.

Exchange rules state that a further 30-minute trading halt would be triggered at a 15% decline.

If losses are sustained, Indonesian equities could enter a technical bear market.

The selloff has intensified scrutiny of Indonesia’s financial markets, once viewed as a flagship of the country’s economic rise.

Confidence has been shaken by an ambitious school lunch program that risks straining public finances, the abrupt departure of former finance minister Sri Mulyani Indrawati last year, and a widening fiscal deficit.

Foreign investors had already turned cautious before this week’s rout.

Net foreign selling totaled $192 million in the week ended Jan. 23, the first outflow in 16 weeks.

On Wednesday alone, overseas investors sold a net 6.2 trillion rupiah ($371 million) of shares, the most since April.

Free-float reforms under scrutiny

Regulators have pledged to improve transparency ahead of MSCI’s next review in May, when the index provider will reassess Indonesia’s market accessibility.

Failure to show progress could lead to a reduced weighting or even a downgrade from emerging market status.

Indonesia currently has the lowest free float among major Asia-Pacific markets at 7.5%.

Authorities aim to raise that to 10–15%, with a longer-term target of 25%, though no timeline has been set.

That compares with 25% thresholds in Hong Kong and India, and 15% in Thailand.

The latest selloff follows months of consultation after MSCI proposed tightening its definition of free float last year.

The firm considered using data from Indonesia Central Securities Depository, but said investors raised “significant concerns” about relying on that dataset.

“Based on what’s been disclosed so far, the discussion around KSEI has mainly been about concerns over aspects of its data methodology, but there hasn’t been enough detail to draw firm conclusions yet,” said Sufianti, a strategist at Bloomberg Intelligence.

“So for now, it’s very much a wait-and-see in terms of what actions might follow.”

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On Thursday, global markets and geopolitics were shaped by a mix of accelerating artificial intelligence investment, volatile Asian equities, renewed UK-China diplomacy, and a powerful rally in commodities.

OpenAI funding signals acceleration in AI arms race

OpenAI, the creator of ChatGPT, is on track to raise tens of billions of dollars from existing and new investors, highlighting the pace at which the AI boom is intensifying.

According to reporting by The Information, the company could raise as much as $100 billion in the coming weeks.

Existing backers are expected to play a central role.

NVIDIA plans to invest up to $30 billion, drawing on the gains it has made during the AI-led surge in chip demand.

Microsoft, which spearheaded OpenAI’s early funding, is set to contribute about $10 billion, while Amazon is expected to invest between $10 billion and $20 billion.

Amazon’s investment is structured differently, with commitments tied to OpenAI using Amazon’s chips and cloud services for about seven years.

At the same time, SoftBank, led by Masayoshi Son, is planning to invest $60 billion, a year after providing more than $40 billion in financing.

Middle Eastern investors could add as much as $50 billion.

The funding would support OpenAI’s rising cash burn, estimated at $9 billion in 2025, and help finance major infrastructure deals with companies including Broadcom, Oracle, and CoreWeave.

The company is also preparing for a potential IPO this year or next, possibly after gauging investor appetite through the anticipated listing of Anthropic.

Asian markets jittery as AI capex collides with policy risk

Asian equities showed mixed performance.

South Korean stocks surged, with the Kospi up 1.09% on the day and 23% for January, while Taiwan’s market has gained nearly 13% this month.

Japan’s Nikkei edged higher, held back by currency volatility and rising bond yields.

Indonesia stood out on the downside. The Jakarta Composite Index suffered a second session of sharp losses after MSCI Inc. warned about ownership concentration and trading transparency.

Goldman Sachs cut its rating on Indonesian equities following the warning.

In the US, stock futures were subdued.

Microsoft shares slid 6.5% in extended trading amid concerns that its heavy AI-related capital expenditure may not deliver sufficient returns.

Meta Platforms, by contrast, raised its revenue and capex outlook for 2026, sending its shares up 6% after hours.

“A common theme so far from META and MSFT is the larger-than-expected capex spending, indicating the upward momentum for AI spending,” JPMorgan analysts said.

Starmer seeks reset in UK-China relations

UK Prime Minister Keir Starmer met Chinese President Xi Jinping in Beijing, marking the first visit by a British leader in eight years.

Starmer described engagement with China as a pragmatic choice, calling for a “mature” relationship with the world’s second-largest economy.

“I have long been clear that the UK and China need a long-term, consistent and comprehensive strategic partnership,” Starmer said.

He added that the two sides should “identify opportunities to collaborate, but also allow a meaningful dialogue on areas where we disagree”.

Xi stressed the importance of “dialogue and cooperation” amid a “complex and intertwined” global environment.

Starmer’s three-day trip includes meetings in Beijing and Shanghai and is accompanied by a delegation of nearly 50 UK businesses, including HSBC, British Airways, AstraZeneca, and GSK.

Copper surges as commodities rally broadens

Copper prices jumped to a record as base metals extended a strong start to 2026.

Three-month copper futures on the London Metal Exchange rose as much as 6.7% to $13,967 a ton, taking year-to-date gains to 12%.

Aluminum hovered near a four-year high, while zinc climbed almost 3%.

The rally has been fueled by expectations of stronger US growth, rising investment in data centers, robotics, and power infrastructure, and a weaker dollar.

“Under the cycle in which the US maintains interest rate cuts, the expectation for upward movement in copper prices has not changed,” said Chi Kai, chief investment officer at Shanghai Cosine Capital Management Partnership.

The surge in metals underscores how AI-driven investment, macro policy shifts, and geopolitics are increasingly intersecting across global markets.

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