Tech recovers as AI worries take back seat to strong US economic data

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

---

1.

Tech rebound: Technology shares in the US rebounded overnight, lifting the main US indexes, after Nvidia struck a multi-year deal to sell Meta millions of its current and future AI chips, while fresh data showed the US economy is holding up. The Dow was 0.32% higher in afternoon trading, the S&P 500 was 0.64% higher and the Nasdaq was up 1.03%. The gains followed an AI-led selloff that had rocked sectors from software to trucking earlier this month. US industrial production posted its largest gain in nearly a year in January, December business equipment orders topped forecasts and housing starts climbed to a five-month high. Separately, the Financial Times reported Christine Lagarde is expected to leave the European Central Bank before her term ends in October 2027, though an ECB spokesperson said she has not taken any decision regarding the end of her term. (WSJ)(Bloomberg)(Reuters)(FT)

2.

Algorithm bull: French President Emmanuel Macron labelled the free speech defence used by social media platforms “pure bull$**t,” directly challenging a key foreign policy position of US President Donald Trump. Speaking in New Delhi on Wednesday, Macron argued that algorithmic opacity undermined any genuine free speech claim. “Free speech is pure bull$**t if nobody knows how you are guided to this so-called free speech, especially when it is guided from one hate speech to another,” he said. The remarks come as Australia’s ban on under-16s using social media inspires a wave of potential copycat laws, with the UK, Germany and other European nations now weighing similar moves that could significantly hit the advertising revenue of Meta, Snap, X, TikTok and YouTube. The US has pushed back. It recently imposed visa bans on a former European official and activists over online hate speech moderation, actions secretary of state Marco Rubio framed as resistance to the “global censorship-industrial complex.” (Bloomberg)

3.

Fed discipline: White House National Economic Council director Kevin Hassett called a New York Fed study finding that US companies and consumers bore the bulk of Donald Trump’s tariff costs “the worst paper I’ve ever seen in the history of the Federal Reserve System,” telling CNBC that the researchers should be “disciplined.“ The study found that between January and August 2025, US firms and consumers absorbed 94% of tariff costs, falling to 92% in September and October and 86% by November. The average tariff rate rose to 13% last year from 2.6%, it said. Hassett criticised the paper, co-authored by three New York Fed researchers and one from Columbia University, for focusing solely on price changes without accounting for shifts in import volumes, telling CNBC: “Consumers were made better off by the tariffs.” The report’s findings were consistent with those from researchers at Germany’s Kiel Institute (96% borne by US buyers), Harvard and the University of Chicago (near 100% pass-through), and the Congressional Budget Office, which estimated foreign exporters absorbed only 5% of tariff costs. (CNBC)(Bloomberg)(FT)(WSJ)(NY Fed)

4.

Consolidate or perish: Glencore CEO Gary Nagle said that leading miners need to consolidate with more big-ticket deals in order to remain “relevant”, despite the miner’s recent failure to merge with Rio Tinto. In his first public comments since the talks collapsed, Nagle said: “As an industry we need to be more relevant. Relevance and size is important.” He said Glencore’s investors want the company to pursue more merger opportunities and that consolidation in the mining industry makes sense “for a number of reasons”. He observed that it is much harder for the industry to maintain a strong voice in Washington as the market values of the world’s largest miners are being dwarfed by tech firms. Nagle made the comments during a call to discuss the company’s preliminary FY25 results, which saw the miner report core earnings of USD13.5 billion ($19.1 billion), a 6% decrease from the year prior as coal prices weighed on profits. The miner also announced a USD2 billion dividend. (Glencore)(FT)(Capital Brief)(Bloomberg)

5.

Grok dollars: Elon Musk’s xAI landed a USD3 billion ($4.3 billion) investment from Saudi Arabia’s state-owned AI company Humain. The deal could deliver a major financial windfall if SpaceX, which acquired xAI shortly after the funding round closed, proceeds with an IPO that could raise as much as USD50 billion to become the largest listing of all time. Humain, funded by Saudi Arabia’s Public Investment Fund and launched last year by Crown Prince Mohammed bin Salman as Riyadh’s prime vehicle to drive the kingdom’s AI strategy, said the investment (part of xAI’s USD20 billion Series E round) made it a significant minority shareholder in xAI. Its holdings have since been converted into SpaceX shares, giving it a roughly 0.24% stake in the combined USD1.25 trillion company, Bloomberg estimated. The investment deepens ties between Musk and Saudi Arabia, which has made AI a central plank of its efforts to diversify its economy away from oil. Humain chief executive Tareq Amin said in a statement the deal represented “the kind of high-impact platform we seek to support with significant capital.” (Humain)(Capital Brief)(Bloomberg)

6.

Green creed: As Firmus’ sustainability claims have evolved since 2022, refined from nebulous promotion to quantifiable measures, doubts have emerged and some investors are asking if its original claims stacked up, and even if they did whether Firmus’ competitive advantage is narrowing. Co-CEO Olivier Curtis’ allusion to a 95% energy advantage in a 2022 promotional video — viewed by Capital Brief but no longer publicly available — does not seem to have made it beyond the video, only appearing in promotional material from 2021, with the attached cost savings figures having also since disappeared. A 2021 version of Firmus’ website claimed its data centres required 75% less land than rivals. Meanwhile, Firmus’ website launched last year elevates price to the centre of its value proposition. The shift in language could be a reflection of the market in which Firmus competes — advances in AI are moving at warp speed, and sustainability is no longer the top concern of its prospective big tech clients. (Capital Brief)

7.

Not done yet: ASX-listed generics producer, Mayne Pharma, filed a fresh lawsuit against its former US suitor Cosette Pharmaceuticals and its private equity backer Avista Healthcare on Wednesday, arguing the American companies breached the terms of their failed $600 million takeover. It’s the latest twist in a long saga that saw Cosette strike a deal to acquire Mayne for $600 million, then attempt to walk away through novel legal tactics after it downgraded its earnings in April. The Treasurer eventually killed the deal. While Mayne’s announcement to the exchange was slim on detail, a source told Capital Brief the alleged breach of the scheme implementation deed relates to a clause that required Cosette to use ‘best endeavours’ to get the deal done. “Whether or not the case is successful, the work of lawyers and other advisers in seeking to avoid Mayne-Cosette situations in the future will continue apace,” King & Wood Mallesons M&A partner Daniel Natale told Capital Brief. (Capital Brief)

8.

Call for calm: Queensland Premier David Crisafulli is asking for sobriety in the immigration debate ahead of the Brisbane 2032 Olympics, but his call has received immediate pushback from the federal opposition. Amid calls from federal Opposition Leader Angus Taylor and One Nation Leader Pauline Hanson for major cuts to migration, Crisafulli on Wednesday called for bipartisanship and a recognition that Australia is experiencing a workforce shortage. His request was quickly rebuffed by opposition infrastructure spokeswoman Bridget McKenzie, who told Capital Brief current levels of migration are unsustainable. McKenzie acknowledged “parts of regional Australia are desperate for skilled workers”, but she was critical of the current numbers of arrivals and further called for reform of student visas. Crisafulli told the National Press Club he accepted migration was a hot-button issue because there was “a real mood” in the community to ensure young people could get access to housing. (Capital Brief)