AMERICAS Head-spinning rotation

• TSMC reported record Q4 profit up 35% and expects nearly 30% revenue growth in 2026, citing the 'AI mega trend' as demand driver
• U.S. small-cap stocks continued advancing despite tech selloff, indicating investors remain committed but are becoming more selective in allocations
• Oil prices spiked to a three-month high above $66/barrel on Iran tensions but dropped sharply after Trump's comments, while global supply glut of 2.8 million barrels/day expected in 2026

Market Summary: Head-Spinning Rotation in U.S. Markets

Key Market Movements

Wall Street retreated Wednesday as investors rotated from expensive "Magnificent 7" technology stocks into value names and small-cap equities. The selloff extended into Asian trading Thursday, with Japan's Nikkei declining 0.9% after hitting an all-time high. However, the trend reflects selective positioning rather than broad risk-off sentiment.

Company Highlights

TSMC delivered blockbuster Q4 results Thursday, posting a 35% profit increase to record highs. The chipmaker forecast nearly 30% revenue growth for 2026, citing the "AI mega trend" as a key driver, potentially steadying investor concerns about the tech sector.

Major U.S. banks Goldman Sachs, Morgan Stanley, and BlackRock are scheduled to report earnings Thursday.

Geopolitical and Commodity Impacts

Oil and gold prices reversed course Thursday morning, declining after President Trump suggested Iran's crackdown on demonstrators may be subsiding. Brent crude had reached a three-month high above $66 per barrel Wednesday on intervention threats but pulled back on easing tensions. Despite geopolitical volatility, oil remains rangebound due to a supply glut, with the EIA projecting global inventory increases of 2.8 million barrels daily in 2026.

Policy and Currency Developments

The dollar index stabilized as Trump stated he wouldn't fire Fed Chair Powell, following recent criminal probe announcements that drew broad criticism. Markets expect the Fed to hold rates steady this month, with two cuts anticipated in 2026, likely after Powell's term ends in May.

The Japanese yen recovered from its weakest level since July 2024 amid intervention warnings and confirmed snap election calls by Prime Minister Takaichi.

Market Outlook

Uncertainty persists around geopolitical tensions, Fed leadership, and sector rotation dynamics as investors remain selective in deployment strategies.