Tech drags Wall Street as Oracle margin shock hits

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

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1.

Margin squeeze: Wall Street’s rally stalled as technology stocks led a pullback and investor optimism showed signs of cooling. The S&P 500 was down 0.41% and the Nasdaq off 0.67% in late afternoon trading. Oracle shares were 3% lower after The Information reported that its cloud business had razor-thin margins, with internal documents showing just 14% gross profit on USD900 million ($1.37 billion) in Nvidia-powered server rentals for the three months ending in August, and a nearly USD100 million loss on Blackwell chips. Dell Technologies nearly doubled its profit growth target and lifted its annual revenue growth forecast to 7-9% through fiscal 2030, citing strong demand for AI servers. And Tesla unveiled a lower-cost version of its top-selling Model Y SUV, priced from USD39,990. Meanwhile, some investors and analysts raised concerns that valuations have become disconnected from fundamentals, with comparisons to the dot-com bubble re-emerging. Gold surged past USD4,000 a troy ounce. (Bloomberg)(WSJ)(Reuters)(Dell)(The Information)

2.

Pay day: Ex-Macquarie VPs Daniel and Will Roberts banked USD72 million apiece ($109 million) during the last financial year, new documents filed with the SEC show, making the IREN co-CEOs the best-paid executives leading any Australian company. Though listed on the Nasdaq, IREN and a fifth of its employees are headquartered in Sydney. The Bitcoin miner and data centre company's revenue jumped 260% to USD501 million during the last financial year, while a USD29 million loss in 2024 turned into a USD87 million profit. The overwhelming majority of the brothers' pay, USD69.6 million each, came from stock grants, according to a proxy statement filed on Tuesday morning. IREN's board last July instituted a reward plan that, like Elon Musk at Tesla, grants the co-founders extra share allocations if IREN's stock hits certain benchmarks. With its share price up nearly 900% over the last six months, sitting at USD57, each tranche was smashed. (Capital Brief)

3.

AI breakeven: JPMorgan Chase CEO Jamie Dimon said AI costs savings are now matching the money spent. Speaking to Bloomberg in an interview, Dimon said the bank spends USD2 billion ($3 billion) a year on developing artificial intelligence technology (not just generative AI) and is saving about the same amount annually from the investment. “We know that it’s got to billions of cost savings and I think it’s the tip of the iceberg.” He said the bank has hundreds of use cases for AI, which will likely grow. In the same interview, Dimon also said he would welcome proposed changes to ease SEC requirements for quarterly earnings reports, saying JPMorgan would probably still update investors quarterly, but with “much less stuff”. (Bloomberg)

4.

Debt sale: Trump administration officials are exploring options to sell off parts of the federal government’s USD1.6 trillion ($2.43 trillion) student loan portfolio to the private market, according to sources cited by Politico. The masthead said that discussions between Education Department and Treasury Department officials, focused on selling high-performing portions of the government’s portfolio of student debt, which is owed by about 45 million Americans. Trump administration officials are also said to have canvassed the issues with finance industry executives, including potential buyers of the debt. DOGE officials embedded at the Education Department were reportedly part of talks earlier this year. The move would align with broader Republican efforts to shrink US student loan debt on the government’s balance sheet as well as expand private sector activity in the economy. The stage of how advanced the administration’s discussions are or which parts of the portfolio might be sold remains unclear, Politico reported. (Politico)(Capital Brief)

5.

ETF jackpot: BlackRock’s Bitcoin ETF is nearing the USD100 billion ($151.7 billion) asset mark and is now generating more revenue than any other fund in the firm’s lineup, according to Bloomberg Intelligence. The iShares Bitcoin Trust (IBIT), which charges a 0.25% fee, brings in an annual revenue haul that tops USD240 million, a remarkable result for a fund launched less than two years ago. IBIT is on track to reach the USD100 billion milestone about five times faster than any other ETF in history, with money pouring in from both retail and institutional investors. The fund’s rise has come alongside Bitcoin’s surge above USD125,000 for the first time, following Donald Trump’s election win and his administration’s push to bring digital assets further into the mainstream. IBIT now holds about USD70 billion more in assets than the second-largest Bitcoin ETF, according to Bloomberg. (Bloomberg)

6.

US backpay: The Trump administration warned that furloughed federal workers may not receive back pay for days missed during the government shutdown. A memo circulated by the White House budget office and first reported by Axios, argues that under a 2019 law, back pay must be specifically authorised by Congress in the bill that ends the shutdown. Asked about it at the Oval Office during a joint press conference with Canada’s Prime Minister Mark Carney, US President Donald Trump said: “depends on who we’re talking about,” adding that “There are some people that don’t deserve to be taken care of, and we’ll take care of them in a different way.” Democrats have rejected the argument as a violation of the law. House Speaker Mike Johnson told reporters Tuesday local time that he hoped “that the furloughed workers receive back pay.” He added, “There are legal analysts who think that that is not something that government should do.” (Axios)(Bloomberg)(AP)

7.

Delayed impact: The World Trade Organization hiked its forecast for global trade growth in 2025 to 2.4%, up from a previous estimate of 0.9% in the body’s August report. The WTO’s outlook for trade volume in 2026, however, has been downgraded to 0.5% from 1.8%. The body warned: “Trade growth is expected to slow in 2026 as the global economy cools and as the full impact of higher tariffs is finally felt for a full year.” Accelerated spending on AI-related products, particularly in Asia and North America, has helped to buoy global merchandise trade this year, the WTO noted. However, “With higher tariffs now in place and trade policy still highly uncertain, front-loading of purchases is expected to unwind as accumulated inventories are drawn down and as GDP growth slows,” the WTO said. It added that possible signs of weakness in trade and manufacturing output have been seen in developed countries. (WTO)(Capital Brief)

8.

ASEAN expansion: Senior HSBC executive Jo Miyake says Australian corporates have sharply increased their activity in ASEAN markets, the Middle East and India over the past three years, in a trend that has accelerated in the wake of the Trump administration's tariffs. Hong Kong-based Miyake, who leads the bank's Asia and Middle East banking operations within its corporate and institutional unit, says the shift by Australian corporates has been playing out for several years and is also influenced by China's corporate expansion across the globe. “In the last three years we’ve seen Australian corporate activity across those corridors grow 70% which is substantive. It’s because there’s a growth opportunity they’re beginning to see there,” Miyake said. Miyake added that the bank’s internal data was not showing the impact of tariffs just yet, as documentary trade volumes and importer accounts and cash flows through those accounts had not dropped off. (Capital Brief)