Nvidia released their Q4 results after hours on Wednesday. Recently, earnings day for the world’s largest company has been a major event, gaining widespread coverage, with their results being seen as the barometer for the artificial intelligence (AI) trade. Despite posting record results and beating expectations, the market did not react as it has done previously. Instead, the share price fell over 5% on the day, with investors continuing to question whether these results are enough in the face of growing concerns about the sustainability of capex spending across the industry.
The unveiling of Nvidia’s NVLink Fusion Spine, a next‑generation, high‑bandwidth interconnect, drew widespread attention after CEO Jensen Huang claimed it could move more traffic than the entire internet. Despite the genuine excitement surrounding AI’s exponential productivity potential, markets were rattled this week by a viral Substack post from US firm Citrini Research. The article painted a scenario in which AI triggers mass white‑collar unemployment, a collapse in consumer spending and, ultimately, a sharp downturn in equity markets. In the days that followed, several investors dismissed the report as “science fiction”, aiming to calm sentiment but not fully eliminating the underlying unease. It appears Nvidia’s results, positive as they were, have not yet done enough to silence the bears.
Remaining in the US, the Supreme court ruled 6-3 that President Trump’s tariffs were unlawful. The court found that the tariffs were not authorised by the International Emergency Economic Powers Act (IEEPA) and that Trump needed congressional authorisation to impose them. Despite the ruling Trump moved swiftly to replace the tariffs that were shutdown with a temporary 10% global tariff for 150 days. There remain exemptions, such as the US-Mexico-Canada agreement, however the fate of dozens of deals remains unclear. That also includes the uncertainty around tariff refunds which were estimated to have reached $175bn, as Treasury Secretary Scott Bessent estimated the dispute on refunds could last years.
In the UK, Bank of England (BoE) monetary policy maker Megan Greene recently wrote that central banks have tended to move in lockstep over recent decades when responding to global shocks. Her analysis suggests that US Federal Reserve easing typically raises inflationary pressures in the UK. However, Greene argues that the BoE should not feel compelled to follow the Federal Reserve’s policy path going forward. Instead, the BoE should remain focused on the specific forces shaping the UK’s economic outlook. This could be another dovish signal and once again raises the prospect of an interest rate cut as early as March.
The FTSE 100 reached a record high on Thursday, gaining more than 6% this month, supported by Rolls‑Royce. The company reported a 40% rise in annual profits for 2025, driven by strong demand for aircraft engines and increased activity in its power systems division, benefiting from the rapid build‑out of data centres. There was further support for the index from LSEG and RELX, both of which saw strong recoveries after earlier concerns that AI might undermine their software and data‑analytics business models.
Australian inflation came in higher than expected at 3.8%. The Reserve Bank of Australia will feel vindicated in raising interest rates at their last meeting (the first hike since 2023), given this elevated inflation reading.
The ongoing bidding war for Warner Bros seems to have been won by Paramount, with Netflix dropping their bid. This is a saga that has rumbled on for weeks but now looks as though Paramount will secure their target for $111bn.
It has been a positive week for government bonds with downward pressure on yields (prices up) in the UK and US. We’ve seen the yield drop below 4% for the US 10-year government bond and fall below 4.3% for the equivalent UK bond. Falling borrowing costs will be a relief to both nations given their high levels of indebtedness. Staying with borrowing costs, there was positive news for the US consumer, with the headline interest rate on the 30-year mortgage dropping below 6% for the first time since 2022.
It’s been another week where investment headlines have been dominated by AI, however the mood music has begun to shift, with investors now questioning the validity of the investment case. This has weighed heavily on the US market, which is dominated by technology and AI focused companies. A diversified approach has meant we have been able to navigate the AI storm relatively unscathed with portfolios making new highs this week.
Nathan Amaning, Investment Analyst
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