Markets brace for sharp moves on Nvidia result

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

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1.

Chip focus: The Nasdaq led a choppy Wall Street trading session as chip stocks rebounded ahead of Nvidia’s results, seen as a crucial test for AI-driven markets. The AI chip leader has been under pressure after breakthroughs by China’s DeepSeek wiped over USD500 billion from its market value. It rose as much as 5.6% in New York trading. Options implied a 9% swing in either direction after the report. The S&P 500 was edging lower, the Nasdaq was 0.1% higher and the Dow was down 0.5%. The price of Bitcoin kept falling. Amazon launched Alexa+, a generative AI-powered upgrade to its voice assistant. PsiQuantum announced mass production of its Omega quantum chips with GlobalFoundries, targeting a commercial quantum computer by 2027. US President Donald Trump called for the removal of Apple’s DEI policies after shareholders overwhelmingly voted to retain them. General Motors unveiled a USD6 billion share buyback and a higher dividend. (Reuters)(Bloomberg)

2.

AI or Die: Human resources software unicorn Employment Hero has instructed all 1,500 staff to use artificial intelligence in all problem-solving efforts in one of the most aggressive moves by an Australian company to adopt AI to date. Internal documents viewed by Capital Brief show Employment Hero is moving to rapidly adopt "AI-first" principles with few implementation constraints or oversight mechanisms. The initiative coincides with the company's international expansion of its "Employment Hero Jobs" platform which CEO Ben Thompson has boldly referred to as a "Seek killer," and is scheduled for launch within six weeks. "If we don't [adopt AI], others will and we will get steamrolled by our AI powered competitors who are more effective and more efficient than us," Thompson wrote in a message to staff on February 21, characterising AI adoption as non-negotiable for the company's future. (Capital Brief)

3.

Too late: Defence officials revealed that military commanders only learned of China’s live-fire drill in the Tasman Sea 40 minutes after the “firing window” started. Chief of the Defence Force David Johnston told Senate estimates Airservices Australia informed Defence at 10.10am, after a Virgin Australia pilot reported the drill at 9.58am with the nation’s air control provider. The New Zealand Defence Force, which was shadowing the Chinese flotilla, notified Canberra at 11.01am—90 minutes after the exercise window started at 9.30am. Johnston said China’s “inadequate notification” caused 49 aircraft diversions and noted it was “possible” a Chinese nuclear-powered submarine was accompanying the task group. The Coalition accused Prime Minister Anthony Albanese of misleading the public, criticising his ambiguous statements about how much notice was given for China’s live-fire drills in the Tasman Sea. They also challenged his claim that Defence was informed by Airservices Australia and New Zealand “at around the same time.” (The Australian)(AFR)

4.

Mineral deal: Donald Trump confirmed Ukraine’s President Volodymyr Zelensky will visit Washington on Friday (Saturday AEDT) to sign a draft minerals agreement, though a White House official suggested the visit was contingent on Ukraine acknowledging the deal as final. The agreement, which Zelensky described as "preliminary," would see Kyiv contribute 50% of all proceeds from future monetisation of state-owned natural resource assets to a joint US-Ukraine fund. Trump ruled out significant US security guarantees, saying Europe should take responsibility. Zelensky said the deal’s success depended on his conversation with Trump. Separately, Trump announced a 25% tariff on EU imports, particularly targeting the auto sector, while a White House official suggested previously announced tariffs on the US’ North American neighbours could be postponed if border control measures are deemed sufficient. (FT)(Reuters)(Bloomberg)

5.

Gold card: US PresidentDonald Trump proposed replacing the country’s EB-5 immigrant investor visa program with a “gold card” that would cost USD5 million ($7.92 million) and provide green card privileges along with a path to US citizenship. “We are going to be selling a gold card,” Trump said, adding, “We are going to be putting a price on that card of about USD5 million.” Commerce Secretary Howard Lutnick said the gold card would replace the EB-5 program in two weeks, raising the price of admission for investors and eliminating what he called fraud and “nonsense” in the current system. When asked whether Russian oligarchs could qualify, Trump responded, “Yeah, possibly.” He also speculated that selling 10 million gold cards could reduce the US deficit and claimed the program would not need congressional approval. The EB-5 program, created in 1990 by Congress, grants green cards to foreign investors who create jobs. (Reuters)(AP)

6.

Mega merger: State-owned China International Capital Corp (CICC) will merge with its peer China Galaxy Services, according to sources cited by Reuters. The merger will create China’s third-largest brokerage with 1.4 trillion yuan ($305 billion) in assets. Shanghai-listed shares of CICC and Galaxy both surged by 10% on Wednesday, while the two brokerages' Hong Kong stocks climbed nearly 18% and 20% respectively. The merger has secured backing from Chinese authorities, and is expected to be announced in the coming weeks. The deal comes amid a push by Beijing to establish large domestic investment banks to compete with US leaders including Goldman Sachs and Morgan Stanley, that have been eking out local market share. Guotai Junan agreed to acquire its struggling local rival Haitong via a share swap in September last year, forming China’s largest brokerage with USD230 billion in assets. (Reuters)(South China Morning Post)(Capital Brief)

7.

Growth revisited: Taiwan revised down its 2025 GDP to 3.14% from 3.29%, as the threat of potential US tariffs and parliament-imposed budget cuts add uncertainty to the island’s economy. Taiwan is home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), and the US is its second-biggest export destination after China. President Trump has floated a minimum 25% tariff on chips and repeatedly stated his desire to boost local manufacturing and increase investment in the US chip industry. Taiwan statistics bureau chief, Chen Shu-tzu, suggested budget cuts are a more telling data point for the GDP revision, noting that Taiwan’s opposition recently slashed government spending and lawmakers made some defence funds contingent on approval. The GDP revision comes as China took a tougher tone on Taiwan this week, and claimed that Taiwan wanted to give its semiconductor industry to the United States as a "souvenir" for US political leverage. (Xinhua News )(Reuters)(Bloomberg)(Capital Brief)

8.

Cracks in credit: Private credit providers are starting to see the first signs of distress in their loan books, according to one of Australia’s largest insolvency and restructuring firms McGrathNicol. Restructuring and turnaround partner, Kathy Sozou, said investors in distressed debt and private assets were starting to see risks emerge in their underlying investments but did not have the skills internally to manage them. “They’ve been riding high as they got in low when there was plenty of liquidity around and it was all fine. Now they’re like ‘oh, this might actually hit one of our [loans]'.” Sozou told Capital Brief that her team were currently providing initial stages of advice and assessing the working capital of entities facing distress. McGrathNicol’s executive chair Jason Preston adds that private credit funds don’t have the same scale to manage distressed loans unlike banks which have dedicated staff in workout departments. (Capital Brief)