Tech dives as Oracle spooks markets with AI capex blowout

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

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1.

Bad omen: A heavy sell-off in Oracle triggered a sharp slide in tech stocks and pulled the Nasdaq to a one-week low, as concerns over runaway AI spending returned to the forefront of investor fears. Oracle shares dropped more than 16% after the company posted disappointing results and lifted its forecast for annual capital investment by billions. Oracle said it now expects to spend USD50 billion this fiscal year, a big jump from previous estimates. The company’s quarterly capex also overshot expectations by more than 40%, and cloud revenue, operating income and future contract metrics all came in below Wall Street forecasts. Demand for credit-default swaps of the investment-grade rated company surged to five-year highs, Reuters noted. The rout weighed on other major tech names including Nvidia and Broadcom, while the Dow hit a record high as investors rotated into value stocks after the Fed cut interest rates. Elsewhere, Rivian unveiled an in-house AI chip to replace Nvidia tech in future models And shares in Eli Lilly rose after it said its new obesity drug helped patients lose more than 23% of their body weight in a late-stage trial. (Bloomberg)(Reuters)(WSJ)(Capital Brief)

2.

Prompting Disney: Disney is investing USD1 billion ($1.5 billion) in OpenAI and will license more than 200 characters from its Disney, Marvel, Pixar and Star Wars franchises to OpenAI’s short-form video platform Sora under a three-year deal allowing fans to create AI-generated social videos and images. Sora and ChatGPT will begin generating user-prompted content using licensed characters in early 2026, with some videos available to stream on Disney+. The deal excludes talent likenesses and voices, it said. Disney will also use OpenAI’s models to build new tools and experiences, deploying ChatGPT across its workforce, and will receive warrants to buy additional OpenAI equity. The agreement signals growing industry openness to generative AI, despite ongoing concerns. It comes after the Creative Artists Agency in October criticised Sora, warning it posed “significant risk” to artists and questioned whether creators would be compensated or credited. Meanwhile, OpenAI also unveiled ChatGPT 5.2, its most advanced AI model. (Capital Brief)(Disney)(OpenAI)(Bloomberg)(Reuters)

3.

Bonus hold-up: ANZ told some of the former employees it let go in recent layoffs that their final bonus cheques will be delayed until just before Christmas, as the bank scrambles to process thousands of departures. Many staff who had worked through ANZ's full financial year and finished on or after 30 September are entitled to bonus payments, which they had originally expected to receive last Wednesday. However late that afternoon ANZ sent out a mass email, viewed by Capital Brief, informing those eligible they would be required to wait another fortnight. The email added that variable payments were made separately and individual employees who had been removed from the bank's system could "experience different timings", opening the door to further delays. Some former employees complained their final pay was also processed incorrectly. ANZ told Capital Brief that its HR systems were coping with the administrative burden and redundancies were being processed in an orderly manner. (Capital Brief)

4.

Airwallex commits: Airwallex said it will spend USD590 million ($886.3 million) over five years on its UK operations, positioning the country as a base for regional expansion across Europe, the Middle East and Africa. The Melbourne-founded, Singapore-based fintech said it will introduce products including credit cards and recurring billing, and grow its UK headcount to 160 by the end of next year. The investment will also cover costs such as licences, fees and local marketing. The investment announcement followed a USD500 million Series G raise that valued Airwallex at USD8 billion, coming just a week after the company faced unsubstantiated allegations from a US venture capitalist over its ties to China, prompting CEO Jack Zhang to publicly emphasise Airwallex’s Australian origins. The company also said it will invest in the Netherlands, France and Germany in early 2026, and spend more than USD1 billion scaling its US operations between 2026 and 2029. (Capital Brief)

5.

Big deal energy: Singapore stock exchange-listed Sembcorp agreed terms to acquire Alinta Energy in a deal that values the company at $6.5 billion. The companies said that the purchase consideration of $6.5 billion will be paid in cash, funded by a fully committed bridge facility and that equity fund-raising will not be required. The deal brings a multi-year effort by Chow Tai Fook Enterprises to sell Alinta, Australia’s fourth-largest utility company, to a close. Alinta’s largest asset is the brown coal-fired power station Loy Yang B which has a maximum generating capacity of 1200 megawatts and supplies about one fifth of Victoria's power. Sembcorp said that Australia is a key market for Sembcorp’s ambition to grow its renewables capacity to 25GW by 2028, building on over $5.9 billion the company has invested in renewable energy projects globally. Sembcorp was advised by DBS Bank and Goldman Sachs while RBC Capital Markets and UBS advised Chow Tai Fook. (Sembcorp)(Alinta)(Capital Brief)(AFR)

6.

Break (up) fee: Mayne Pharma and Cosette Pharmaceuticals are hurtling towards the NSW Supreme Court over the implosion of their $600 million takeover deal. Mayne has been laying the groundwork to potentially sue Cosette for more than the $6.72 million break fee, or go after its PE backers, lawyers say, but Cosette will defend itself against allegations it materially breached the acquisition scheme. A termination notice issued by Cosette was rejected by Mayne on Wednesday, arguing that Cosette can’t terminate the scheme because it “has failed to comply with its obligations” and that “wilful and intentional” breach “directly and materially contributed to the failure” to get FIRB approval. Mayne itself then terminated the deal on Thursday, alleging that Cosette materially breached the scheme in a way that significantly contributed to the FIRB rejection. But a spokesperson for Cosette told Capital Brief the pharmaceuticals company “rejects any allegation...that it has breached or is in breach of the [SID]”. (Capital Brief)

7.

Claims jump: Applications for US unemployment benefits rose last week by 44,000 to 236,000, in the biggest weekly increase since March 2020. The prior week’s total of 192,000 had been the lowest in over three years. The increase reversed that sharp drop and exceeded most forecasts. With figures often volatile around the Thanksgiving holiday, economists suggested the low prior figure likely reflected a seasonal-adjustment distortion. Continuing claims, which reflect the total number of people receiving unemployment benefits, fell by 99,000 to 1.838 million in the week ending 29 November, the largest weekly decline in four years. It came after the Fed a day earlier cut interest rates by 25 basis points for the third consecutive time. Chair Jerome Powell warned federal data may be overstating job creation by up to 60,000 jobs a month. Given recent estimates of just 40,000 jobs added monthly since April, Powell said the true figure could be a net loss of 20,000 jobs a month. Separately, the US trade deficit narrowed 10.9% in September to USD52.8 billion, the smallest since mid-2020, as goods exports jumped and imports rose only slightly. (Capital Brief)(DOL)(BEA)(WSJ)(Bloomberg)

8.

Bucket hole: The federal government’s mid-year economic forecast and outlook will highlight billions of dollars in additional spending pressures across disaster relief, age pension and defence benefits and entitlements. Among the biggest additional spending pressures that will be flagged in MYEFO 2025-26 include: an additional $6.3 billion in Natural Disaster Relief; $3 billion in additional support for seniors; $2.1 billion more for military superannuation schemes; an extra $1.3 billion will be spent on health and other care services for veterans. When credit-rating agency Fitch reaffirmed Australia’s AAA rating in October it had flagged that “structural spending pressure presents risks to our fiscal outlook”, highlighting NDIS, aged care, health and defence costs in particular. Overnight, it was reported that Treasury is doubling its forecast for business investment in 2025-26 in the upcoming budget update, due to be released next week. In November, the federal government said its budget position was $6 billion better than expected. (Capital Brief)