Magnificent Seven enter correction, shed trillions

Good morning. Here's what happened overnight and what you need to know today.

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1.

Magnificent correction: The seven tech giants that fuelled a 54% surge in US stocks have entered a correction, shedding USD1.6 trillion ($2.5 trillion) since their 17 December peak. The Bloomberg Magnificent 7 Index has fallen over 10%, with Tesla leading losses at 37%. Amazon, Microsoft and Alphabet are down at least 10%, while Apple and Nvidia have slipped about 2%. Meta is the only gainer, up 5%. Investors are on edge ahead of Nvidia’s earnings on Wednesday (Thursday AEDT), with the Nasdaq 100 down 5% over four sessions and the Cboe Volatility Index spiking above 20. Elsewhere, the S&P 500 and the Nasdaq hit a more-than-one-month low in intraday trading as US consumer confidence saw its sharpest drop in 3.5 years. Tariff-related mentions hit their highest since 2019, and federal worker layoffs added to concerns. Treasury yields fell as investors shifted to bonds.(Bloomberg)(Reuters)

2.

DEI upheld: Apple shareholders rejected a proposal to end the company’s diversity, equity, and inclusion (DEI) efforts, siding with management’s stance that diversity is “critical” to its success. The proposal, from the National Center for Public Policy Research, claimed DEI posed litigation, reputational and financial risks. The vote comes as President Donald Trump’s administration ramps up efforts against such programs. Apple defended its DEI policies, saying they foster a “culture of belonging” and arguing the proposal sought to interfere with its business practices. It said it “does not discriminate in recruiting, hiring, training or promoting on any basis protected by law.” At the meeting, CEO Tim Cook did suggest Apple may adjust its DEI approach as legal requirements evolve but reaffirmed its commitment to diversity. Shareholders also backed Apple’s stance on six other proposals and re-elected the board. (Capital Brief)(Bloomberg)(Quartz)

3.

Subsea subterfuge: Taiwan’s coastguard detained the crew of a Chinese cargo ship on Tuesday over suspicions it cut an undersea internet cable, calling it potential “Chinese greyzone harassment.” Authorities said the vessel, flying a “flag of convenience,” had lingered off Taiwan’s southwestern coast since Saturday evening and ignored multiple warnings. Shortly after it dropped anchor on Tuesday morning, Chunghwa Telecom detected the cable had been severed. The coastguard intercepted the ship and escorted it to Tainan for investigation. Registered in Togo but Chinese-funded, the ship was crewed by eight Chinese nationals. Taiwan has reported five cases of sea cable malfunctions so far this year. (Taiwan Coastguard)(CNN)(Reuters)

4.

Eyes shut?: Donald Trump’s top trade adviser Peter Navarro proposed expelling Canada from the Five Eyes intelligence-sharing network, the Financial Times reported, citing sources familiar with his efforts. Navarro, recently appointed senior counsellor for trade and manufacturing, declined to comment before publication but later denied the report, saying: “We would never ever jeopardise our national security, ever, with allies like Canada.” He dismissed the story for relying on unnamed sources. The Five Eyes network also includes Australia, New Zealand and the UK. The report comes as Trump has escalated pressure on Canada, vowing to impose 25% tariffs on imports when a one-month reprieve ends on 4 March, and has spoken about annexing the country. It also comes after Prime Minister Justin Trudeau, who is stepping down on 9 March, was recently caught on an open mic calling Trump’s annexation ambition a “real thing.” (FT)(Capital Brief)

5.

Acrimonious split: Mike Cannon-Brookes' private vehicle, Cannon-Brookes Services (CBS), secured court orders compelling a former employee to surrender personal devices and access to a Google Drive account allegedly containing confidential company information. NSW Supreme Court Judge Kate Williams ruled there was "a serious question to be tried" over whether the ex-employee, Mr Chiu, breached contractual confidentiality obligations. CBS has taken legal action, arguing Chiu violated his contract, while lawyers suggest he may claim wrongful dismissal at trial. The case continues, with legal teams required to draft orders by Wednesday at 12pm AEDT to formalise the ruling. (NSW Supreme Court)(Capital Brief)

6.

Takeover tenacity: Nippon Steel President Tadashi Imai said the company will begin talks with the US Commerce Department to revive its USD14.1 billion ($22.57 billion) bid for US Steel, which was blocked by former US President Joe Biden and rejected by Donald Trump. In Nippon Steel’s first response since Trump suggested an investment rather than a full acquisition, Imai reaffirmed the company’s intent for a complete takeover of the US steelmaker. “The starting point for our discussions with the US government will be this merger agreement,” he said in Tokyo. “From there, we will discuss with the US administration on how we can get President Trump to approve of the deal.” After meeting Japanese Prime Minister Shigeru Ishiba this month, Trump said he “wouldn’t mind” a minority stake deal. Both US Steel and Nippon Steel sued Biden in January over the blocked merger. (Reuters)(Bloomberg)

7.

Baidu buffers: China’s top search engine, Baidu, acquired the YY Live streaming platform from JOYY Inc for USD2.1 billion ($3.3 billion) to diversify its revenue. The deal was initially proposed in 2020 for USD3.6 billion but collapsed in early 2024 after Chinese regulators didn’t approve it. Baidu said that approximately USD1.6 billion, previously held in escrow, has been released and will be redirected to its cloud and AI infrastructure. As competition for user attention intensifies among China's largest social media platforms, Baidu has been expanding its AI capabilities. Earlier this month, it integrated its search engine and Ernie large language model with DeepSeek. (Baidu

8.

Defensive outlay: UK PM Keir Starmer plans to increase defence spending to 3% of GDP in the next three years, boosting efforts to bolster security as President Donald Trump casts doubt over future US support. Starmer told the House of Commons the pledge marks the “biggest sustained increase in defence spending since the end of the Cold War.” The PM vowed to spend the equivalent of 2.5% of GDP on defence by 2027, compared with 2.3% currently, and that he would expand funding to 3% over the next five-year term, which is due to begin by 2029. The government will cut overseas development spending, will not raise taxes nor borrow more to fund the spending hike. The Trump administration has placed significant urgency on the need for EU members to increase defence spending, refusing to back a UN resolution on Monday that condemns Russia’s full-scale invasion of Ukraine. (Bloomberg)