AI race, CVS M&A, Genesis recapitalization - what's moving markets

© Reuters

By Geoffrey Smith 

Investing.com -- The AI race heats up, with Alphabet and Baidu both nearing launches of tools to compete with Microsoft-backed ChatGPT. CVS is closing in on its second big health acquisition in five months. Stocks are steady after slipping on Monday over fears of higher interest rates. The Winklevoss twins will dip into their pockets for $100 million as part of a deal to unlock the assets trapped on crypto lending platform Genesis, and oil rises as Saudi Arabia raises its official selling prices. Here's what you need to know in financial markets on Tuesday, 7th February.

1. AI race heats up with Google launch, Microsoft event 

The AI wars are heating up. Google owner Alphabet (NASDAQ:GOOGL) is set to roll out a new AI tool called Bard in the coming weeks, responding to the competitive threat from the Microsoft-based ChatGPT.

Alphabet CEO Sundar Pichai said in a blog post that Bard will be powered by a slimmed-down version of the LamDA technology, which one Google engineer famously claimed last year to be ‘sentient’.

Microsoft (NASDAQ:MSFT), meanwhile, is set to hold an event of its own later Tuesday that will be attended by Sam Altman, CEO of ChatGPT developer OpenAI.

Overnight in Hong Kong, Baidu (HK:9888) stock rose 13% after the Chinese search giant – which is protected from competition in its domestic market by Beijing’s Great Firewall – also aims to finish testing of a new AI product by March.

2. CVS nears $10 billion deal for Oak Street

Activity in the M&A market is picking up, after months of logjam caused by rising interest rates and mountains of unsold buyout debt.

CVS (NYSE:CVS) is set to announce a deal to buy Oak Street Health (NYSE:OSH) for $10.5 billion, according to The Wall Street Journal, building out a growing presence in the primary healthcare market as its traditional retail business comes under pressure from new entrants such as Amazon (NASDAQ:AMZN).

The deal would represent CVS’s second big deal in the space in less than six months, after it agreed to buy Signify Health for $8B in September.

On Monday, gold miner Newmont Goldcorp (NYSE:NEM) had made a $17B approach for Australian rival Newcrest (ASX:NCM), in what would be the biggest M&A deal of the year so far.

3. Stocks flat ahead of Redbook, trade data 

U.S. stock markets are set to open mixed later, still weighed down by concerns from Atlanta Fed President Raphael Bostic on Monday that the Federal Reserve may still have to raise interest rates further to tame inflation. His comments followed a stronger-than-expected labor market report for January on Friday that showed the economy is still some way from falling into recession.

Economic data for Tuesday is limited, with only January’s trade figures and the latest snapshot of the retail sector from Redbook. Earnings season is also continuing in a lower gear, with Dupont (NYSE:DD) and Centene (NYSE:CNC) heading a list of early reporters and Chipotle (NYSE:CMG) and Vertex (NASDAQ:VRTX) heading the late lineup.

By 06:30 ET (11:30 GMT), Dow Jones futures were down 30 points, or 0.1%, while S&P 500 futures were up by a similar amount and Nasdaq 100 futures were up 0.2%. The main cash indices lost between 0.1% and 1.0% on Monday.

4. DCG strikes deal with Winklevoss twins and other creditors on Genesis recapitalization

Barry Silbert and the Winklevoss twins moved a step closer to ending their bust-up over the collapse of crypto lender Genesis, which left customers of the Winklevosses’ Gemini project short of some $900M.

Under the terms of a deal announced late on Monday, Silbert’s Digital Currencies Group will exchange a $1.1B promissory note due in 2032 for convertible preferred stock, and will also refinance $500M of loans to Genesis that were due this year. DCG will also contribute its equity interest in Genesis Global Trading to a new holding company, bringing all Genesis entities under the same roof as it restructures under Chapter 11 bankruptcy regulations.

The deal will also see Gemini contribute up to $100M, which will unlock at least some of the funds owed to by Genesis to Gemini’s Earn lending platform.

5. Oil rises after Saudi move; API inventories due

Crude oil prices rose after Saudi Arabia raised its official selling prices for export cargoes loading in March, a move attributed by some to higher Chinese demand.

By 06:50 ET, U.S. crude futures were up 1.7% at $75.34 a barrel, while Brent crude was up 1.5% at $82.22 a barrel.

Elsewhere, Turkish authorities restarted the flow of Azerbaijani oil to the export terminal of Ceyhan, after stopping it as a precautionary measure in the wake of Monday’s earthquakes.

In the U.K. meanwhile, BP (LON:BP) said it will slow its planned exit from the fossil fuel business, seeing more demand for conventional energy over through the end of this decade.

The American Petroleum Institute reports weekly inventory data at 16:30 ET.