US markets diverge as confidence slumps and earnings beat

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

---

1.

Market health: The S&P 500 touched a record high and is on track for a fifth straight gain, hovering about 15 points shy of the 7,000 mark, despite US consumer confidence plunging to its lowest level since 2014. The Nasdaq was 1% in afternoon trading, while the Dow was nearly 1% lower, under pressure by a sharp selloff in health insurers after the Trump administration proposed to keep steady the rates Medicare pays insurers in 2027. Analysts had expected a rise in the range of between 4% and 6%, according to the Wall Street Journal. The US dollar, as measured by the Bloomberg Dollar Spot Index fell 0.7%, nearing its lowest level since February 2022, amid speculation of coordinated intervention to support the yen and growing bets on further greenback weakness. The Conference Board reported US consumer confidence fell to 84.5 in January, the lowest reading since May 2014, as views on the economy and labour market deteriorated. Meanwhile, GM and Boeing posted stronger-than-expected results. Meanwhile, investors are expecting the Fed to hold rates steady tomorrow, ahead of key earnings from major tech firms including Microsoft, Meta and Tesla. (WSJ)(Bloomberg)(Reuters)

2.

Zero Ley-way: Since the Coalition’s extraordinary breakup last week, many Liberal MPs have viewed Sussan Ley’s demise as inevitable. The conservative flank’s inability to coalesce around a single successor, with friction between Andrew Hastie and Angus Taylor, may grant her more time. “Clearly, something has to change,” one unaligned Liberal MP told Capital Brief on Tuesday, adding that this week’s Capital Brief/DemosAU poll, whichshowed Hanson leading Ley 26% to 16% as preferred prime minister is “existentially disastrous” for the Liberal Party. Bringing this leadership crisis to a head before parliament resumes on Monday, allowing a new leader to begin the week on the front foot, may tempt some Liberal MPs. That timeline is unlikely given the current stalemate, leaving Ley to front question time where she will face ridicule from Labor. The picture is likely to become clearer on Friday, days before parliament returns but after Liberal MPs attend the funeral of their former colleague, Katie Allen, on Thursday. (Capital Brief)

3.

Takeover tiff: Humm Group shareholder Akat Investments launched a new attack on the buy now, pay later firm, requesting that the Takeovers Panel investigate the Humm Group board’s handling of Credit Corp’s takeover offer submitted late last year and chair Andrew Abercrombie’s purchase of 15 million shares over a few days in December. Akat’s application accuses Abercrombie, Humm’s founder and largest shareholder, of buying the additional shares “during a period of informational asymmetry” and while a superior proposal was unresolved. It also alleges the Humm board: did not disclose the Credit Corp bid for almost one month after its receipt and not until a section 203D notice was given to Humm; failed to release full details of the Credit Corp proposal; did not grant due diligence to Credit Corp; and has not formed an independent board committee to assess the bid. Akat is seeking interim orders preventing the shares amassed by Abercrombie in December from being voted on at Humm’s February general meeting and while the Credit Corp proposal remains on foot. The AFR reported that Humm investor Anton Tagliaferro, who owns more than 4.9 million Humm shares in various entities, including Akat Investments, submitted the Takeovers Panel application. (Capital Brief)(ASX)(AFR)

4.

Outsource to agentic: Mastercard says it has processed the country’s first authenticated agentic ecommerce transactions, with AI-powered bots autonomously buying movie tickets and accommodation. The transactions were completed in partnership with CBA and Westpac. In the first transaction, a bot used a CBA debit card to buy tickets to Zootopia 2 at Event Cinemas. It then booked a weekend of ski accommodation in Thredbo using a Westpac credit card. Mastercard said both purchases were completed with Australian partners, including payments solutions company IPSI and Maincode, which operates the large language model Matilda. At the centre of the trial was Mastercard Agent Pay, which recognises and authenticates the bot making a purchase, seeks customer consent and signals to issuers and merchants that a bot is involved in the transaction. Under Agent Pay, Mastercard will verify and onboard individual bots, authenticate customers using biometrics and use existing tokenisation and cryptogram infrastructure to protect transactions. (Capital Brief)

5.

Pinned out: Pinterest plans to lay off up to 15% of its workforce and reduce its office footprint as it reallocates resources toward artificial intelligence initiatives. The company said in a regulatory filing it will shift investment to “AI-focused roles and teams that drive AI adoption and execution” and prioritise AI-powered products. The move is expected to result in pre-tax charges of up to USD45 million ($64.5million) with the restructuring to be largely completed by the end of September. Pinterest shares dropped about 10% following the announcement. The company, which reported a 24% decline in ad pricing in the third quarter, also plans to accelerate changes to its sales and go-to-market approach. As of 31 December 2024, Pinterest had 4,666 full-time employees, meaning the layoffs could impact roughly 700 roles, according to The Wall Street Journal. It is the latest in a wave of tech restructures where AI investment is accompanied by job cuts, as executives last week outlined expectations that many roles will disappear while new ones emerge. (Reuters)(WSJ)(Bloomberg)(Capital Brief)(Pinterest)

6.

Modernising manufacturing: SaaS company Factory, which now has more than 200 Australian customers, secured a $4.69 million Series A round led by Shearwater Capital, to expand its go-to-market and engineering teams, as well as support its North American growth. US investor Martin Tobias also participated in the round, alongside existing investors Investible, Adrian DiMarco and Beachhead Capital. While workflow modernisation tools have long existed in manufacturing, they largely serve enterprise-scale businesses, which account for less than 10% of Australia’s manufacturing sector. Factory co-founder Paul Lutkajtis and his brother Michael founded Factory five years ago to address this gap, launching an operating system for small and medium-sized sheet metal fabrication shops seeking to modernise their operations — allowing them to track, plan and manage jobs from start to finish. “We don’t do custom developments for customers. Instead, we bake into the platform the ability to heavily customise it yourself,” Lutkajtis told Capital Brief. Elsewhere, autonomous vehicle developer Applied EV is finalising a USD40 million ($57.8 million) series B funding round co-led by the NRF and Barrenjoey. (Capital Brief)

7.

Checked out: Amazon is closing all of its Amazon Fresh and Amazon Go stores, winding down two key parts of its Amazon-branded physical retail business. The company said that while it had seen “encouraging signals” in the stores, it had not created a “truly distinctive customer experience” or “the right economic model needed for large-scale expansion.” Some locations will be converted into Whole Foods Market stores, which Amazon acquired in 2017, as part of a broader plan to open more than 100 new Whole Foods stores over the next few years, it said. Most closures will take place this week. Thousands of hourly workers will lose their jobs, with corporate roles also affected, Bloomberg reported citing an unnamed source. Amazon said it would help staff find other roles within the company. The company also said it will continue investing in online and offline grocery, including expanding its same-day delivery service, which now reaches more than 5,000 US cities and towns. Perishable deliveries through Amazon’s fulfilment network grew 40-fold over the past year, with total gross sales over USD150 billion. Separately, UPS said it would cut up to 30,000 jobs and shut 24 facilities in 2026 as it continues to reduce delivery volumes for Amazon, its largest customer. (Amazon)(Bloomberg)(Reuters)

8.

Platform settlement: TikTok reached a settlement with a California woman who accused the platform of contributing to her social media addiction, avoiding the first in a series of landmark trials over whether tech companies can be held liable for personal injury. Joseph VanZandt, a lawyer for the woman identified as KGM said an agreement in principle had been reached ahead of jury selection, which was scheduled to begin Tuesday in Los Angeles. The case is one of several test trials selected from thousands of lawsuits filed by individuals, school districts and state attorneys general, accusing TikTok, Meta, YouTube and Snap of designing features intended to hook young users. KGM said she began using social media as a child and experienced anxiety, depression and body-image issues. Snap separately settled with her earlier this month, and the terms of both settlements have not been disclosed. The trial will proceed against Meta and YouTube, whose chief executives Mark Zuckerberg and Neal Mohan are expected to testify. Separately, the Financial Times reported Anthropic is set to raise about USD20 billion form VC and other investors, or double what it initially targeted. The fundraising reportedly values the company at USD350 billion. (FT)