TSMC's outlook and record GS, MS earnings drive Wall St rebound

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

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1.

Bounce back: Wall Street rebounded as a surge in chip stocks, triggered by TSMC’s strong outlook, reignited confidence in the AI-fuelled tech rally. The world’s top producer of advanced AI chips projected up to USD56 billion in capital spending for 2026 and flagged further US manufacturing plans. That helped stabilise the recent sector rotation and revived optimism around AI-driven demand, as US-listed shares of TSMC rose as much as 7%, lifting Nvidia, ASM, and chip-equipment makers. Goldman Sachs and Morgan Stanley were both seeing strong gains after beating quarterly profit forecasts, supported by strong trading and dealmaking. The Russell 2000 was still outperforming the S&P 500, the 10th straight session and longest run since 1990, according to Bloomberg data. Jobless claims dropped by 9,000 to 198,000, with continuing claims down to 1.884 million. Oxford Economics said that suggested labour market conditions were at least stable. And oil prices fell over 4% after US President Donald Trump signalled he may hold off attacks on Iran. (Bloomberg)(WSJ)(Reuters)(Capital Brief)

2.

Facebook scourge: Australia's biggest banks called out Meta for its failure to combat financial crime, as thousands of Facebook groups actively sell and rent out 'mule' bank accounts for fraud and scams, despite the majors' appeals for it to intervene. The big four say they are increasingly frustrated by the big tech company's refusal to shut down the illicit activity, as the banks invest hundreds of millions of dollars to protect their customers. “Scams are a scourge on society and have a devastating financial and emotional impact," NAB group investigations executive Chris Sheehan told Capital Brief. While scams have long used social media to target victims, banks are becoming increasingly alarmed about platforms, especially Facebook, being used by criminals to buy and sell 'mule' accounts – legitimate bank accounts sold to another party for illicit activity. CBA’s fraud intelligence team said Facebook groups transacting Australian bank accounts collectively had seven million members between them, with the largest having more than 90,000. (Capital Brief)

3.

Netanyahu’s call: Israeli prime minister Benjamin Netanyahu asked Donald Trump on Wednesday to postpone any plans for a US military strike on Iran, an unnamed senior American official told The New York Times, as Arab nations also urged restraint amid fears of regional retaliation. Officials from Qatar, Saudi Arabia, Oman and Egypt have been calling US counterparts for two days warning that an American attack could trigger a wider conflict, while also urging Iran not to respond if struck. Netanyahu’s call came as Trump had been weighing military options for days, after protests erupted in Iran and security forces reportedly killed over 3,400 people, according to rights groups. Yesterday, Trump said he had received information from “very important sources on the other side” that Iran had stopped killing protesters and would not proceed with executions, a message he reinforced Thursday local time by posting on social media that reports showed protesters would not be sentenced to death. Still, The Wall Street Journal reported Trump asked for military assets to be put in place in case he decided to proceed, and US officials told the paper he is expected to order the USS Abraham Lincoln aircraft carrier to move from the South China Sea to the Middle East. The Journal also reported US officials have advised Trump that even a large-scale strike may not bring down the Iranian regime and could spark escalation. (NYT)(WSJ)

4.

Fee fracas: Destination NSW pulled funding for SXSW Sydney after the culture and innovation festival's American owner Penske Media Corporation refused to offer a discount on the licensing fee. A source with direct knowledge of the issue who requested anonymity to discuss the confidential matter told Capital Brief the dispute over the discount was the primary reason behind the festival's closure. InnovationAus earlier reported that the NSW government had decided to withdraw funding following a review, with the decision taken before organisers publicly announced the cancellation. The NSW government paid a reported $12 million for the SXSW Sydney licence over five years. The official explanation given by organisers for the event's sudden death was "prevailing market conditions" and a "changing global environment that is impacting major events, festivals and cultural programs worldwide". Despite being pitched as a landmark moment for the local startup and tech sector, the event provoked a more ambivalent response than the hype suggested. (Capital Brief)

5.

Big bank records: Wall Street’s biggest banks capped a record-breaking year with blowout fourth-quarter earnings, driven by surging trading revenue, revived dealmaking and strong client inflows. Goldman Sachs set a new all-time high for equities-trading revenue with USD4.31 billion ($6.4 billion) in the final quarter of 2025, beating analyst estimates by nearly USD700 million and topping its own record set earlier in the year. Quarterly profit rose 12% to USD4.62 billion, while investment-banking fees climbed 25% to USD2.6 billion. Goldman raised its dividend 12.5% to USD4.50 per share. Similarly, Morgan Stanley reported an 18% jump in quarterly profit to USD4.4 billion, with investment-banking revenue up 47% and fixed-income underwriting surging 93%. Meanwhile, BlackRock’s assets under management hit a record USD14.04 trillion after USD342 billion in fourth-quarter inflows. Adjusted earnings per share of USD13.16 beat estimates, and the firm lifted its dividend by 10%. (Capital Brief)(Bloomberg)(WSJ)

6.

Grok blow: British and Canadian regulators are pushing forward with investigations into Elon Musk’s xAI, after its Grok chatbot was found to still be generating sexualised images despite newly announced restrictions. xAI said it had implemented changes to stop Grok from editing images of real people into revealing clothing, and that it was blocking such content in jurisdictions where it is illegal. But people were still able to use Grok to create sexualised photos on demand, raising questions about the effectiveness of the fixes. Ofcom called xAI’s move a welcome development but said its formal investigation remains ongoing. Canada’s privacy watchdog said it is expanding an existing probe into X to include xAI. Several countries have either launched investigations or moved to restrict the chatbot. Separately, back home, social media platforms have removed 4.7 million accounts held by under-16s in the first month of a world-first age restriction law, according to the eSafety Commissioner. The crackdown threatens companies with fines of up to $49.5 million for non-compliance. Some underage accounts remain active, but all major platforms have pledged to comply, even as Reddit is suing the government in a bid to overturn the ban. (X statement)(eSafety)(Quartz)(Reuters)

7.

Hearty deal: Boston Scientific Corporation agreed to buy medical device maker Penumbra in a deal valued at USD14.5 billion ($21.7 billion) as it expands its portfolio of treatments for cardiovascular diseases. Boston Scientific said that the cash and stock transaction values Penumbra at USD374 per share, reflecting an enterprise value that sits around 19% above Penumbra’s Wednesday closing price. Stockholders will choose between receiving USD374 in cash or 3.8721 shares of Boston Scientific common stock in the deal, which is expected to complete this year. Penumbra is expected to bring in around USD1.4 billion in revenue for 2025, representing growth in the range of approximately 17.3%–17.5% over the prior fiscal year. The acquisition marks the first major healthcare deal of 2026 and will give Boston Scientific access to Penumbra’s broad portfolio of devices for the treatment of conditions including pulmonary embolism, stroke, deep vein thrombosis, acute limb ischemia, heart attack and aneurysms. (Boston Scientific)(Capital Brief)

8.

Biotech bust-up: Cosette Pharmaceuticals moved to appeal a NSW Supreme Court ruling from October, which prevented the US biotech from terminating its $600 million acquisition of ASX-listed Mayne Pharma, which was ultimately blocked by Treasurer Jim Chalmers a month later. Mayne said on Thursday that it intends to "vigorously defend" the appeal, which comes as the two companies gear up for a potential battle over the payment of a $6.72 million break fee. Cosette alleges Mayne undertook "misleading and deceptive conduct" in relation to its FY25 earnings, and that a material adverse change had occurred in relation to Mayne's Q3 FY25 sales performance. Justice Ashley Black ruled in favour of Mayne on both claims last year, preventing Cosette from backing out of the agreed buyout. However, Chalmers eventually killed the deal after refusing Foreign Investment Review Board approval amid concerns Cosette would close Mayne’s manufacturing facility in Salisbury, South Australia. (ASX)(Capital Brief)