Meta rallies on US$18b settlement in child safety case

Meta Platforms rallied after the social media giant cut a deal with US states to end a high-profile court case claiming Instagram and Facebook had been designed to hook children.

Stocks on Wall Street were mixed ahead of Nvidia’s quarterly earnings, which will provide the next gauge on the health of the artificial intelligence sector, while Anthropic signed a new multi-billion-dollar cloud-compute supply deal with Nscale’s flagship data centre under development in West Virginia.

Oil prices continued to ease after Iran and Oman agreed to a revenue-sharing deal for traffic through the Strait of Hormuz, although Russia is reportedly planning to escalate its war in Ukraine.

And Australian futures are pointing to a marginally weaker start to the trading day for the ASX, with Qantas Airways and Chemist Warehouse-owner Sigma Healthcare among companies reporting across the Tasman, while New Zealand’s reporting season continues with Genesis Energy, Precinct Properties NZ and Summerset Group Holdings on the local calendar.

A big deal

Meta shares rose 1.8% in late trading after the Facebook developer cut a deal with 47 states and US territories to end claims that the social media group’s platforms were designed to addict minors and that it misled the public about the safety of its products.

The social media group will pay the full US$17.1 billion in penalties over 10 years, provided TikTok and YouTube make similar agreements, and reached a separate US$1 billion settlement with Texas. Meta will also restrict teen use of its platforms at night and ban features that stoke mental health issues, but won’t admit any wrongdoing and doesn’t have to drop personalised recommendations or targeted advertising.

Snap sank 7.8% in late trading, while YouTube-owner Alphabet dipped 1.5% and Pinterest was down 1.1%.

Stocks on Wall Street were mixed, with the S&P 500 and Nasdaq Composite nudging up 0.1%, while the Dow Jones Industrial Average edged down 0.1%, with Merck & Co, Goldman Sachs and Nike leading the blue chip index lower. Across the Atlantic, the UK’s FTSE 100 slipped 0.1%, Germany’s DAX increased 0.1% and France’s CAC 40 gained 0.3%.

Nvidia slipped 0.8% in late trading with markets poised to latch on to its latest quarterly result when it reports after the bell, with analysts predicting revenue and earnings to have almost doubled. Options pricing indicated the chipmaker’s share price would rise or fall by about 5.4% in the coming day.

“Nvidia's results after the closing bell will provide the next major test of the AI investment boom that has driven much of the market's gains this year,” Moomoo market strategy consultant Greg Boland said in a note. “Investors will focus on Blackwell demand, data-centre revenue, hyperscaler capital expenditure and forward guidance.”

Meanwhile, Bloomberg reported Anthropic agreed to a US$45 billion computing supply deal with Nscale’s West Virginia data centre development, which will start to come online next year.

Shipping channel

Brent crude oil futures fell 0.6% to US$87.67 a barrel at 7am in Auckland as Iran and Oman agreed to a revenue-sharing arrangement for traffic through the Strait of Hormuz. The US wasn’t a party to the agreement.

Meanwhile, Bloomberg reported Russia was preparing to escalate attacks on Ukraine after negotiations for a peace deal collapsed.

The kiwi dollar traded at 59.42 US cents at 7am from 59.54 cents yesterday after US personal consumption expenditure deflator – a measure of the average change in prices – rose in line with expectations. Federal Reserve chair Kevin Warsh’s keynote speech at the annual central bankers’ symposium in Wyoming later this week remains in focus.

The subdued tone is set to carry through to the antipodes, with Australian futures pointing to a marginal decline for the S&P/ASX 200 index when trading opens across the Tasman, with July household spending data and June quarter private capital expenditure figures on the data radar.

Moomoo’s Boland said New Zealand’s S&P/NZX 50 index would likely hold near its record levels, having closed above the psychological 14,000 level yesterday.

“With the NZX also at a record, investors will be watching whether strong local earnings can continue to support the market if global technology stocks become more volatile,” he said.

The benchmark index will also start getting pushed around by companies shedding rights to upcoming dividends. Ebos Group, Heartland Group Holdings and Investore Property are among firms going ex-dividend today.

Reporting by Paul McBeth. Photo by Shutter Speed on Unsplash.