Key Points

• Oil Risk Premium Builds: Crude prices climbed above $66 as President Trump signaled a decision on potential Iran strikes within 10 days, raising concerns over Strait of Hormuz supply flows.
• U.S.–Iran Tensions Escalate: Military buildups and stalled nuclear negotiations have heightened geopolitical uncertainty across energy markets.
• Nvidia Expands AI Bet: The chipmaker is in talks to invest up to $30 billion in OpenAI at a reported $730 billion valuation, reinforcing capital concentration in AI infrastructure.
• Markets Await Catalysts: Equities remain cautious ahead of GDP and PCE inflation data, along with a potential Supreme Court ruling on tariffs.

February Economic Calendar

• Feb 21 — U.S. GDP (Q4): Key measure of economic momentum entering 2026.
• Feb 21 — U.S. PCE Inflation: The Fed’s preferred inflation gauge; critical for rate expectations.
• Feb 24 — U.S. Durable Goods Orders: Signals business investment trends.
• Feb 25 — U.S. Consumer Confidence: Reflects household sentiment and spending outlook.
• Feb 26 — U.S. New Home Sales: Provides insight into housing market resilience.

Markets Hold Steady as Geopolitics and AI Capital Dominate Headlines

U.S. equities remained under pressure as investors balanced rising geopolitical tensions with critical economic data ahead. The Dow fell 267 points (-0.5%), while the S&P 500 and Nasdaq each slipped roughly 0.3%. Futures were little changed overnight as markets awaited fourth-quarter GDP data, expected at 2.5%, and the Fed’s preferred PCE inflation reading, forecast at 2.8% year over year.

Meanwhile, oil prices climbed amid escalating U.S.-Iran tensions, adding a geopolitical risk premium to energy markets and reinforcing investor caution across risk assets.

Oil Rallies as Trump Weighs Military Action Against Iran

President Donald Trump said he will decide within 10 days whether to launch military strikes against Iran, fueling concerns over potential supply disruptions in the Strait of Hormuz. U.S. crude (WTI) rose 1.9% to $66.43, while Brent gained 1.86% to $71.66, extending weekly gains above 5%.

A significant U.S. military buildup is underway in the region, including two aircraft carriers, while Iran has conducted military exercises and partially restricted activity near the strait. Energy markets are closely monitoring diplomatic talks, though officials remain far apart on key nuclear issues.

White House Urges Iran Deal as Military Tensions Escalate

The White House warned Tehran it would be “very wise” to make a nuclear agreement, as joint Russia-Iran naval drills and increased U.S. deployments heighten regional risk. Analysts describe the situation as “extremely dangerous,” with both sides reinforcing assets across the oil-producing Middle East.

Approximately 13 million barrels per day — about 31% of global seaborne crude — transited the Strait of Hormuz last year, underscoring the market’s sensitivity to disruptions. While diplomacy remains the stated priority, markets are pricing elevated geopolitical uncertainty.

Nvidia in Talks for $30 Billion OpenAI Investment

Nvidia is reportedly negotiating an investment of up to $30 billion in OpenAI as part of a funding round that could value the AI company at $730 billion pre-money. The proposed investment is separate from the previously announced $100 billion infrastructure partnership between the firms and is not tied to deployment milestones.

The broader round could total around $100 billion and may include other strategic investors. The discussions highlight continued concentration of capital in AI infrastructure and reinforce Nvidia’s central role in the sector’s long-term growth trajectory.

Conclusion

Financial markets are navigating a complex environment defined by geopolitical risk, policy uncertainty, and structural investment shifts in artificial intelligence. Rising U.S.-Iran tensions have injected volatility into energy markets, while investors await key economic data that could shape the Federal Reserve’s next move.

At the same time, Nvidia’s potential multibillion-dollar investment in OpenAI underscores sustained capital deployment into AI infrastructure. With equities broadly range-bound and multiple catalysts ahead, near-term market direction is likely to be driven by macroeconomic data releases and geopolitical developments.

Investment Insights

• Energy Risk Premium Rising: Escalating Middle East tensions support short-term strength in crude and energy-linked equities.
• Macro Catalysts Ahead: GDP and PCE inflation data will be critical for resetting rate expectations and bond yields.
• AI Capital Concentration: Nvidia’s proposed OpenAI investment reinforces long-term structural demand for AI infrastructure.
• Volatility Likely Elevated: Geopolitical uncertainty and policy decisions may keep markets range-bound but reactive.

Key Points

• U.S. Equities Advance: Major indexes gained as investors assessed Fed minutes and awaited PCE inflation data.
• Fed Policy Split: Officials remain divided on rate cuts, with some even acknowledging potential hike risks.
• Airbus Delivery Target: 870 aircraft goal highlights production constraints amid tightening Boeing rivalry.
• Meta Faces Legal Scrutiny: Zuckerberg testimony underscores mounting regulatory pressure on social media platforms.

February Economic Calendar

Feb 20 — U.S. Initial Jobless Claims: Early indicator of labor market resilience.

Feb 20 — Pending Home Sales (U.S.): Signals housing market momentum amid rate uncertainty.

Feb 21 — U.S. PCE Inflation (YoY/Monthly): Fed’s preferred inflation gauge; pivotal for rate expectations.

Feb 21 — Eurozone PMI Flash Estimates: Measures manufacturing and services momentum.

Feb 24 — Germany Ifo Business Climate: Insight into Europe’s largest economy’s corporate confidence.

Feb 24 — U.S. Treasury Auction (2-Year): Reflects demand for short-duration debt and rate expectations.

U.S. Stocks Rise as Investors Weigh Fed Minutes and Earnings

U.S. equity futures were little changed after the major averages posted gains, with the Dow up 129 points (0.3%), the S&P 500 advancing nearly 0.6%, and the Nasdaq rising 0.8%. Gains were driven by strength in mega-cap technology, financials, and energy shares, while oil prices jumped more than 4% amid geopolitical tensions involving Iran.

Investors digested January Federal Reserve minutes showing policymakers divided on the path forward for rates, with some favoring a pause in cuts and others even floating potential hikes if inflation remains elevated. Markets now turn to Walmart earnings and Friday’s PCE inflation report for further direction.

Fed Officials Signal Policy Uncertainty as Inflation Risks Linger

Minutes from the Federal Reserve’s January meeting revealed a split among policymakers over whether additional rate cuts are appropriate. While several participants said further easing could resume later this year if inflation declines, others argued rates should remain steady until clearer disinflation progress is evident, and some even suggested hikes could be warranted if price pressures persist.

The benchmark rate remains in a 3.5%–3.75% range following last year’s cumulative 75-basis-point cuts. Inflation remains near 3% on the Fed’s preferred measure, and futures markets currently price the next possible rate cut around mid-year.

Airbus Targets 870 Deliveries in 2026 as Boeing Rivalry Intensifies

Airbus set a target of 870 aircraft deliveries in 2026, slightly below market expectations, underscoring ongoing production and supply-chain constraints as competition with Boeing tightens. The guidance signals cautious optimism in commercial aviation demand while acknowledging operational bottlenecks that have weighed on global aerospace manufacturers.

Investors are closely monitoring execution risk, production ramp-ups, and margin recovery as airlines continue replenishing fleets amid sustained travel demand.

Zuckerberg Testifies in Landmark Social Media Safety Trial

Meta CEO Mark Zuckerberg testified in a Los Angeles courtroom that he reached out to Apple CEO Tim Cook regarding teen wellbeing, as part of a broader defense in a high-profile social media safety trial. The case, described by experts as the industry’s “Big Tobacco” moment, centers on allegations that social media platforms knowingly designed addictive features harmful to minors.

Zuckerberg defended Meta’s policies, emphasized internal debate over safety features, and argued that causation between platform use and mental health harm remains unproven. The trial adds regulatory and reputational risk to the sector.

Conclusion

Markets are navigating a complex intersection of monetary policy uncertainty, corporate earnings signals, and sector-specific regulatory developments. The Federal Reserve’s divided stance reinforces a data-dependent approach, with inflation progress critical to shaping rate expectations.

Aerospace manufacturers face operational constraints even as demand remains resilient, while social media companies contend with heightened legal scrutiny that may influence future compliance and business models. Together, these developments highlight a market environment characterized by selective strength, policy sensitivity, and increasing scrutiny of platform-driven growth sectors.

Investment Insights

Policy Uncertainty = Tactical Positioning: Fed division suggests volatility around inflation data; maintain flexibility in rate-sensitive sectors.

Aerospace Execution Matters: Airbus delivery targets highlight supply-chain risks; focus on operational visibility and backlog strength.

Tech Legal Risk Premium: Ongoing social media trials may compress valuation multiples in platform-driven models.

Energy & Geopolitics Watch: Oil price volatility linked to geopolitical tensions may influence inflation expectations and sector rotation.

Key Points

• U.S. Markets in Holding Pattern: Futures remain flat as investors await Fed minutes and PCE inflation data.
• Nvidia Bets on India’s AI Rise: Expanded VC partnerships reinforce India’s strategic role in global AI development.
• Japan Trade Rebounds: January exports jump nearly 17%, led by stronger shipments to China.
• China Consumption Shift: Businesses reposition toward services and experiential spending growth.

February Economic Calendar

Feb 19 — FOMC Meeting Minutes (U.S.): Insight into the Fed’s rate path and inflation outlook.

Feb 20 — U.S. Initial Jobless Claims: High-frequency gauge of labor market resilience.

Feb 20 — Japan CPI: Key inflation reading that could influence Bank of Japan policy stance.

Feb 21 — U.S. PCE Inflation (Monthly/YoY): The Fed’s preferred inflation metric; critical for rate expectations.

Feb 21 — Germany PMI Flash Estimates: Early signal on Eurozone manufacturing and services momentum.

Feb 21 — China Loan Prime Rate Decision: Indicator of credit conditions and domestic growth support.

U.S. Futures Steady as Markets Await Fed Minutes

U.S. stock futures were little changed in overnight trading as investors positioned ahead of the Federal Reserve’s January meeting minutes and Friday’s PCE inflation report. Dow futures slipped 32 points, while S&P 500 and Nasdaq 100 futures edged lower by less than 0.1%. In regular trading, major indexes posted modest gains of roughly 0.1%, even as software stocks such as CrowdStrike and ServiceNow declined amid persistent AI disruption concerns.

Amazon rebounded 1.2%, snapping a nine-day losing streak after shedding nearly 18% and over $450 billion in market value earlier this month. Investors remain in a holding pattern ahead of key inflation data.

Nvidia Expands India AI Push Through VC Partnerships

Nvidia is deepening its commitment to India’s artificial intelligence ecosystem, partnering with leading venture capital firms including Peak XV, Accel India, Elevation Capital, Nexus Venture Partners and Z47 to identify and fund AI startups. The initiative aligns with India’s “IndiaAI” mission and broader government-backed semiconductor and data center investments.

More than 4,000 Indian startups have already joined Nvidia’s global startup program, while collaborations with local cloud providers aim to accelerate sovereign AI infrastructure. The expansion underscores India’s growing role as a strategic AI hub, supported by both domestic capital and global hyperscaler investments exceeding $50 billion.

Japan Exports Surge 17% as China Demand Rebounds

Japan’s exports rose nearly 17% year-over-year in January, driven largely by a sharp rebound in shipments to China, signaling renewed momentum in regional trade flows. The surge reflects stronger demand for machinery and electronic components, offering support to Japan’s manufacturing sector amid global supply chain realignments.

The data reinforces optimism surrounding Japan’s external sector while highlighting China’s continued role as a key trading partner despite broader geopolitical tensions.

China’s Experiences Economy Gains Momentum

Businesses are increasingly pivoting toward China’s growing “experiences economy,” as consumer demand shifts toward travel, entertainment and premium services. The trend reflects Beijing’s broader push to rebalance growth toward domestic consumption, particularly among middle-income households seeking lifestyle upgrades.

Companies are adapting product strategies and marketing models to capture discretionary spending growth, signaling structural changes in China’s post-pandemic consumption landscape.

Conclusion

Global markets remain balanced between policy anticipation and structural growth themes. In the U.S., investors are awaiting clarity from the Federal Reserve amid persistent AI-driven sector rotation. Meanwhile, Asia presents contrasting dynamics: Japan’s export resurgence signals renewed external demand strength, while China’s evolving consumption model highlights deeper economic transformation.

Nvidia’s expanding footprint in India underscores the intensifying global competition for AI leadership and infrastructure dominance. Together, these developments reflect a market environment defined by technological investment cycles, shifting trade flows, and central bank sensitivity to inflation data.

Investment Insights

• Fed Watch = Volatility Risk: Markets remain sensitive to inflation and policy signals; short-term positioning should account for rate-driven swings.
• India’s AI Acceleration: Nvidia’s partnerships reinforce long-term structural growth in India’s semiconductor and data center ecosystem.
• Japan Trade Tailwind: Strong export growth supports selective exposure to manufacturing and capital goods exporters.
• China Consumption Evolution: The pivot toward experiential spending suggests opportunities in travel, entertainment and premium services.

Key Points

• U.S. Futures Under Pressure: AI disruption fears extend market volatility as the Nasdaq logs its fifth consecutive weekly loss.
• China Accelerates AI Push: Alibaba’s Qwen3.5 reinforces the shift toward agent-based AI systems.
• Europe Opens Lower: Earnings and inflation data drive cautious positioning across regional indices.
• Consumer Staple Risk Emerges: A French probe into infant formula recalls elevates reputational and earnings uncertainty.

February Economic Calendar

• Feb 18 — U.S. Retail Sales (Monthly): Measures consumer spending strength, a primary driver of U.S. GDP and a key indicator for Federal Reserve policy calibration.
• Feb 18 — Eurozone CPI (Final): Confirms the inflation trajectory and shapes European Central Bank rate expectations.
• Feb 19 — U.S. Initial Jobless Claims: High-frequency labor market data offering insight into employment stability and wage pressure trends.
• Feb 19 — U.S. Industrial Production: Tracks manufacturing output and capacity utilization, signaling business investment momentum.
• Feb 20 — Japan CPI: A critical inflation reading that may influence Bank of Japan policy normalization discussions.
• Feb 20 — UK Retail Sales: A key gauge of UK consumer resilience and implications for Bank of England policy.
• Feb 21 — China Loan Prime Rate Decision: Impacts credit conditions, property sector activity, and the broader Chinese growth outlook.
• Feb 21 — U.S. Fed Speakers (Various Officials): Commentary may influence rate expectations and near-term equity and bond market volatility.

U.S. Futures Slide as AI Disruption Weighs on Sentiment

U.S. equity futures traded lower following two consecutive losing weeks, with S&P 500 futures down 0.42%, Nasdaq 100 futures off 0.75%, and Dow futures declining 133 points. Markets remain under pressure as concerns about artificial intelligence disruption ripple across industries including financial services, trucking, and real estate.

The S&P 500 and Dow both fell more than 1% last week, while the Nasdaq posted its fifth straight weekly decline, marking its longest losing streak since 2022. Investors are now focused on upcoming Federal Reserve meeting minutes and Friday’s PCE inflation report for clearer direction on monetary policy.

Alibaba Launches Qwen3.5 as China’s AI Race Shifts to Agents

Alibaba unveiled Qwen3.5, its latest large language model, offering both open-weight and hosted API versions with enhanced cost efficiency and performance. The model supports agentic capabilities and multimodal inputs, aligning with the accelerating global shift toward AI agents capable of executing multi-step tasks autonomously.

Alibaba claims benchmark performance comparable to leading Western models, though results are self-reported. The release underscores intensifying competition among Chinese AI firms as ByteDance and others roll out upgraded systems, highlighting China’s push to narrow the gap with U.S. AI leaders.

European Markets Set to Open Lower Amid Earnings Watch

European equities were poised to open lower, with the FTSE seen down 0.2% and Germany’s DAX, France’s CAC 40, and Italy’s FTSE MIB projected to fall 0.4%. Investors remain focused on earnings from major miners including Antofagasta and BHP, alongside InterContinental Hotels Group and EssilorLuxottica.

Data releases on German inflation, economic sentiment, and U.K. unemployment are also in focus. The cautious tone follows modest gains earlier in the week and subdued trading in Asia due to Lunar New Year holidays.

France Investigates Nestlé and Danone Over Baby Formula Recalls

French prosecutors have opened investigations into five baby formula manufacturers, including Nestlé and Danone, following global recalls linked to potential cereulide contamination. Recalls have affected more than 60 countries and involve major brands such as Aptamil, Cow & Gate, and SMA.

While no causal link has been established in reported infant deaths, the probe raises reputational and financial concerns. Infant formula accounts for approximately 5% of Nestlé’s revenue and an estimated 21% of Danone’s revenue, heightening investor sensitivity ahead of upcoming earnings.

Conclusion

Markets remain in a consolidation phase as artificial intelligence disruption concerns weigh on U.S. equities and earnings season drives selective positioning in Europe. At the same time, China’s accelerating push into AI agents signals intensifying global competition in advanced technologies.

Regulatory and reputational risks are also resurfacing within defensive sectors, as demonstrated by the expanding baby formula investigation in France. With inflation data and central bank communications ahead, investors face a backdrop defined by technological transformation, policy uncertainty, and earnings sensitivity across global markets.

Investment Insights

• AI Volatility Expands Beyond Tech: Disruption concerns are spreading across industries; prioritize companies with durable pricing power and clear competitive moats.
• China’s AI Escalation: Alibaba’s agentic pivot reinforces long-term structural growth in AI infrastructure and cloud ecosystems.
• European Earnings Selectivity: With markets opening lower, stock-specific fundamentals and margin resilience remain key differentiators.
• Consumer Brand Risk Monitoring: Reputational events in defensive sectors can introduce unexpected earnings volatility; balance exposure within staples.

Key Points

• Japan GDP Rebounds, But Misses Forecasts: Q4 growth of 0.1% avoids recession but underwhelms expectations, reinforcing cautious optimism in Japanese markets.
• OpenAI Strengthens AI Agent Strategy: OpenClaw’s creator joins OpenAI as AI agents become core to enterprise automation competition.
• TikTok Stabilizes U.S. Operations: Regulatory restructuring eases uncertainty, supporting platform continuity and advertiser confidence.
• India Positions for AI Leadership: Global tech CEOs gather in New Delhi as India advances its artificial intelligence strategy.

February Economic Calendar

Feb 18 — U.S. Retail Sales (Monthly): Measures consumer spending strength, a primary driver of U.S. GDP and a key indicator for Fed policy calibration.

Feb 18 — Eurozone CPI (Final): Confirms inflation trajectory and shapes European Central Bank rate expectations.

Feb 19 — U.S. Initial Jobless Claims: High-frequency labor data offering insight into employment stability and wage pressure trends.

Feb 19 — U.S. Industrial Production: Tracks manufacturing output and capacity utilization, signaling business investment momentum.

Feb 20 — Japan CPI: Critical inflation reading that may influence Bank of Japan policy normalization discussions.

Feb 20 — UK Retail Sales: Key gauge of UK consumer resilience and Bank of England policy implications.

Feb 21 — China Loan Prime Rate Decision: Impacts credit conditions, property sector activity, and broader Chinese growth outlook.

Feb 21 — U.S. Fed Speakers (Various Officials): Commentary may influence rate expectations and near-term equity and bond market volatility.

Japan Avoids Recession as Growth Rebounds Modestly

Japan’s economy returned to growth in the fourth quarter, expanding 0.1% quarter-on-quarter and year-on-year, narrowly avoiding a technical recession after a 0.7% contraction in Q3. However, the rebound fell short of the 0.4% expansion expected by economists. Annualized growth came in at just 0.2%, well below forecasts of 1.6%.

Private consumption supported the modest expansion, offsetting weakness in exports and public spending. Following the release, the Nikkei 225 rose slightly while the yen weakened to 153.06 against the dollar. The data reinforces expectations of continued accommodative policy from the Bank of Japan.

OpenClaw Creator Joins OpenAI as AI Agent Race Intensifies

OpenAI CEO Sam Altman announced that OpenClaw creator Peter Steinberger is joining the company, with the viral AI agent set to operate as an open-source foundation within OpenAI. AI agents capable of autonomously managing tasks have rapidly gained traction among businesses and consumers.

Altman indicated the technology will become central to OpenAI’s product offerings as competition intensifies with rivals such as Anthropic and Google. The move underscores accelerating consolidation and aggressive talent acquisition in the generative AI sector, where valuations and capital deployment continue to expand.

TikTok U.S. Venture Stabilizes After Early Regulatory Uncertainty

TikTok’s U.S. joint venture appears to have regained operational stability following a period of regulatory scrutiny and political pressure. The restructuring framework aims to address national security concerns while preserving user growth and advertiser engagement.

Early concerns over potential forced divestment have eased, providing greater clarity for partners and investors. The development highlights how major technology platforms are adapting governance structures to navigate geopolitical risks while protecting market access and monetization strategies.

India AI Summit Signals Strategic Push for Global Tech Leadership

China’s automotive landscape saw a major domestic EV victory as Xiaomi’s electric SUV surged past Tesla’s Model Y in January sales, selling roughly twice as many units. This reflects intensifying competition within global EV markets and underscores China’s manufacturing scale and pricing strategy advantages in electrified transport.

Investors tracking auto supply chains and EV material demand may need to reassess exposure within evolving tech and consumables sectors.

Conclusion

Global markets are navigating a mix of cautious economic stabilization and accelerating technological transformation. Japan’s modest rebound highlights fragile but improving growth conditions, while AI consolidation signals intensifying competition among technology leaders.

Regulatory adaptation remains a defining theme, from TikTok’s U.S. restructuring to India’s strategic AI ambitions. Investors are balancing macroeconomic moderation with structural innovation trends that continue to reshape capital allocation. As policy frameworks evolve and digital infrastructure expands, market leadership may increasingly favor regions and firms positioned at the intersection of growth resilience and technological advancement.

Investment Insights

Japan Growth Stabilizes, Policy Remains Supportive: Japan’s narrow avoidance of recession reinforces expectations for continued accommodative policy, supporting selective exposure to exporters and domestic cyclicals benefiting from yen weakness.

AI Consolidation Accelerates: OpenAI’s recruitment of OpenClaw’s creator highlights intensifying competition in AI agents, reinforcing long-term structural opportunities in enterprise automation and digital infrastructure.

Platform Regulation Is Becoming Strategic: TikTok’s stabilized U.S. structure underscores how geopolitical oversight is reshaping technology governance—investors should monitor regulatory risk premiums across global platforms.

India’s AI Push Signals Emerging-Market Opportunity: The AI Impact Summit reflects India’s ambition to expand its digital ecosystem, potentially unlocking investment opportunities in cloud infrastructure, semiconductors, and public-private tech partnerships.

Key Points

• U.S. Stocks Slide as AI and Macro Risks Resurface: Major U.S. indices fell sharply, led by tech and risk assets, as investors wrestle with AI disruption concerns and macro data ahead of key inflation prints.
• Panama Canal Ports Dispute Signals Geopolitical Trade Risk: CK Hutchison warns of legal action over Panama Canal terminals after contract annulment, spotlighting U.S.–China strategic competition.
• U.S.–Taiwan Trade Deal Lowers Tariffs, Spurs Investment: Washington and Taipei finalize a tariff reduction framework and large-scale semiconductor investments, recalibrating Asia-Pacific trade dynamics.
• Chinese EV Momentum: Xiaomi SUV Tops January Sales: In China’s passenger EV market, Xiaomi’s electric SUV outpaced Tesla Model Y by a wide margin, underlining domestic EV competitiveness.

February Economic Calendar

Feb 13 — U.S. CPI (YoY & MoM): The key inflation release of the month. Core and headline readings will heavily influence Federal Reserve rate expectations, Treasury yields, equity valuations, and USD direction. Markets remain highly sensitive to upside inflation surprises.

Feb 13 — 30-Year U.S. Treasury Auction: Long-duration demand will offer insight into investor confidence in long-term inflation and fiscal sustainability. Weak demand could steepen the yield curve and pressure equity multiples.

Feb 13 — Continuing Jobless Claims: Provides additional clarity on labor market durability following strong payroll data. A softening trend may ease wage pressure concerns; resilience supports the “higher-for-longer” narrative.

Feb 13 — Fed Balance Sheet (H.4.1 Release): Weekly update on Federal Reserve asset holdings. Balance sheet contraction pace impacts liquidity conditions and short-term funding markets.

Feb 13 — Reserve Balances with Federal Reserve Banks: A key liquidity gauge reflecting banking system reserves. Movements influence repo markets, short-term rates, and credit conditions.

Feb 14 — U.S. Retail Sales (Monthly): Critical measure of consumer demand, which accounts for roughly two-thirds of U.S. GDP. Strong spending reinforces economic resilience but may complicate the Fed’s disinflation path.

Feb 14 — U.S. Industrial Production: Assesses manufacturing and output momentum. Particularly relevant given ongoing trade policy shifts and supply chain recalibrations.

Dow & Major U.S. Indexes Pull Back on Risk Aversion

U.S. equities registered notable declines Thursday, with the S&P 500 and Nasdaq leading losses as tech and AI-linked sectors sold off. Broader market pressure pulled the Dow below significant thresholds, marking notable downside amid thin seasonal liquidity.

Cisco and other cyclicals weighed on performance after profit margin cautions, while defensive sectors outperformed modestly. Treasury yields softened ahead of Friday’s CPI release, highlighting risk-off positioning.

Panama Canal Ports Dispute Amplifies Geopolitical Risk

Hong Kong’s CK Hutchison warned of potential legal action over Panama Canal ports, stating it may pursue legal remedies against a Danish ports operator tapped to manage strategic terminals after Panama’s Supreme Court voided a long-standing concession.

The dispute underscores escalating U.S.–China commercial and geopolitical rivalry in critical trade infrastructure and maritime routes. Continued uncertainty may pressure logistics stocks and reinforce risk premiums on emerging-market exposure.

U.S.–Taiwan Trade Deal Boosts High-Tech Commerce

In a significant policy shift, the U.S. and Taiwan concluded a tariff and investment agreement that trims bilateral duties, deepens semiconductor and high-tech cooperation, and aims to strengthen supply chains for critical technology sectors.

The accord includes phased tariff reductions and Taiwanese commitments to invest at scale in U.S. advanced manufacturing and AI infrastructure. Analysts see this as a strategic pivot in Asia-Pacific economic policy that could spur equity rotations within tech, industrial, and export-dependent sectors.

Xiaomi EVs Dominate China January Sales

China’s automotive landscape saw a major domestic EV victory as Xiaomi’s electric SUV surged past Tesla’s Model Y in January sales, selling roughly twice as many units.

This reflects intensifying competition within global EV markets and underscores China’s manufacturing scale and pricing strategy advantages in electrified transport. Investors tracking auto supply chains and EV material demand may need to reassess exposure within evolving tech and consumables sectors.

Conclusion

Market sentiment remains fragile as macro data, technological disruption fears, and geopolitical trade tensions converge on investor decision-making. U.S. equities retreated on risk asset selling and AI-linked pressures, while external developments—from Panama Canal legal tensions to the U.S.–Taiwan tariff deal—reshape international trade narratives.

Against this backdrop, cyclical and policy-sensitive sectors warrant cautious, data-driven positioning, as inflation prints and geopolitical policy shifts loom in the near term.

Investment Insights

• Risk Repricing ≠ Reversal: Tech and AI concerns may persist — monitor sector rotation into defensive and cyclical plays.
• Global Trade Risk Premium Rising: Geopolitical port disputes and evolving tariff frameworks warrant close watch in supply chain-linked equities.
• Policy-Led Growth Themes Alive in Asia: The U.S.–Taiwan trade deal and Chinese EV adoption suggest selective regional growth opportunities.
• Macro Data Still King: CPI and labor data in the next 24–48 hours will likely recalibrate rate expectations and equity risk premia.

Key Points

• Strong Jobs Data Clouds Fed Rate Outlook: U.S. markets closed slightly lower as robust January payrolls complicated expectations for monetary easing.
• Japan Equities Extend Gains on Policy Optimism: The Nikkei 225 surged past 58,000 as investors welcomed Prime Minister Takaichi’s post-election mandate.
• House Challenges Trump on Tariffs: A symbolic but bipartisan vote in Congress pushes back against Canada tariffs, exposing GOP fractures.
• Tariff Revenues Soar Ahead of Supreme Court Ruling: U.S. customs collections surged 304% year-to-date, providing temporary fiscal relief amid legal uncertainty.

February Economic Calendar

Feb 12 — Initial Jobless Claims & Existing Home Sales (U.S.): Weekly labor market data and housing activity provide early signals on employment trends and consumer confidence ahead of key inflation readings.

Feb 12 — IEA Monthly Oil Market Report: Offers insights into global oil supply and demand dynamics, with implications for energy markets and CPI components.

Feb 13 — Continuing Jobless Claims (U.S.): Tracks ongoing unemployment support claims, providing further visibility into labor market durability.

Feb 13 — 30-Year U.S. Treasury Auction: Signals demand for long-term debt and influences benchmark yields, equities, and currency markets.

Feb 13 — Fed Balance Sheet Release: A weekly snapshot of Federal Reserve asset holdings that can affect liquidity conditions and money market pricing.

Feb 13 — Reserve Balances with Federal Reserve Banks: Reflects banking system liquidity, influencing credit markets and short-term rate stability.

Feb 13 — U.S. CPI (YoY/Monthly): A critical inflation gauge likely to shape Federal Reserve policy expectations and currency movements.

Feb 14 — U.S. Retail Sales (Monthly): Measures consumer spending, a primary driver of GDP, and contributes to inflation and growth analysis.

Feb 14 — U.S. Fed Speak (Various Officials): Comments from policymakers can shift rate expectations and risk sentiment, particularly around inflation trends.

Dow Edges Lower as Strong Jobs Data Clouds Fed Outlook

U.S. equities ended modestly lower Wednesday, with the Dow dipping after a three-day winning streak. The January jobs report showed a surprise gain of 130,000 positions, reinforcing labor market strength but complicating the Federal Reserve’s interest rate trajectory.

Investors weighed the implications for inflation, with attention turning to the upcoming CPI report. Cisco fell 7% in extended trading on soft guidance, while McDonald’s edged lower despite surpassing earnings expectations. Futures opened little changed as markets awaited additional labor and housing data later in the week.

Nikkei Hits 58,000 as Post-Election Rally Extends in Asia

Asian equities advanced broadly, led by Japan’s Nikkei 225, which briefly surpassed the 58,000 level for the first time, extending its post-election rally.

Optimism surrounding Prime Minister Sanae Takaichi’s mandate and policy agenda lifted sentiment, with strong participation across sectors. South Korea’s Kospi and Singapore’s STI also reached record highs, while China and Hong Kong markets posted mixed results. Regional markets largely brushed aside hotter U.S. labor data, even as it reduces the likelihood of near-term Federal Reserve rate cuts.

House Rebukes Trump Over Canada Tariffs in Symbolic Vote

The U.S. House of Representatives passed a resolution disapproving of President Trump’s tariffs on Canadian imports, marking a rare bipartisan rebuke. Several Republicans joined Democrats in opposition, citing concerns about higher consumer costs and economic strain.

Although the measure is expected to face a veto and remain largely symbolic, it highlights internal GOP divisions ahead of the 2026 elections and increasing scrutiny over executive trade authority. Financial markets showed limited reaction, but analysts noted growing legislative attention on trade policy.

U.S. Tariff Revenue Surges Over 300% as Court Decision Looms

Tariff collections climbed to $124 billion fiscal year-to-date, representing a more than 300% increase compared to the previous year. The surge has helped narrow the federal deficit to $95 billion in January.

The increase follows across-the-board duties introduced last April, while the legality of those measures awaits review by the Supreme Court. A ruling against the administration could require the Treasury to reimburse collected duties, creating fiscal and market uncertainty. The case is closely watched for its broader implications on trade authority and federal revenue structures.

Conclusion

This week’s developments highlight the delicate balance between economic resilience, policy direction, and geopolitical trade tensions. Strong U.S. labor data reinforces economic momentum but tempers expectations for imminent Federal Reserve rate cuts, leaving markets highly sensitive to inflation readings.

In Asia, political clarity has supported a powerful rally in Japanese equities, reinforcing confidence in reform-driven growth. Meanwhile, U.S. trade policy remains under both legislative and judicial pressure, adding another layer of uncertainty. Investors face a near-term environment shaped by solid domestic fundamentals, external volatility, and evolving global policy signals.

Investment Insights

• Labor Resilience Equals Rate Caution: Continued job strength may support equities in the short term but could delay rate relief. Inflation-sensitive sectors require careful positioning.
• Japan Policy Tailwinds: A strong mandate for the Takaichi government supports Japanese equities, particularly domestic cyclicals and export-oriented sectors.
• Monitor U.S. Trade Risks: While congressional opposition to tariffs may be symbolic, legal outcomes could materially affect fiscal forecasts and supply chains.
• Tariff Revenue Carries Legal Risk: Elevated customs receipts provide short-term deficit relief, but a potential Supreme Court reversal could introduce budgetary and market volatility.

Key Points

• AI Disruption Hits Financials: The S&P 500 slipped 0.33% as fears over AI’s impact on brokerage models pressured financial stocks, while the Dow closed at another record high.
• Broker Stocks Reprice on Tech Risk: LPL Financial and Schwab fell sharply as investors factored in potential AI-led erosion of traditional advisory business lines.
• China Inflation Miss Adds Pressure for Stimulus: Subdued CPI and persistent PPI deflation point to lingering demand weakness, prompting speculation over further policy support.
• Hong Kong Pushes Ahead with Stablecoin Regulation: Regulatory clarity in Hong Kong stands in contrast to Beijing’s crypto stance, boosting its standing as a digital finance hub.

February Economic Calendar

U.S. Market Mixed as AI Concerns Hit Financials

The S&P 500 closed lower after softer‑than‑expected U.S. retail sales data and heightened investor concern that AI‑driven tools could disrupt financial sector earnings, with broker‑dealer names such as LPL Financial, Charles Schwab and Morgan Stanley sliding sharply. While the Dow Jones Industrial Average hit a fresh record above 50,180, defensive sectors like materials and utilities saw rotation inflows, and a broad set of names in the S&P 500 reached 52‑week highs. Investors are now focused on key upcoming labor and inflation reports that could steer monetary policy expectations.

AI Risk Expands from Software to Brokers

Weakness in software equities tied to fears that AI may displace legacy revenue models has bled into financial services, with broker stocks enduring significant losses as investors reassess earnings vulnerability. The sell‑off reflects broader skepticism about near‑term implications of AI adoption and pricing pressure across sectors previously insulated from technology disruption. Market participants are closely watching how technology shifts could alter valuation frameworks for both software and financial firms.

China Inflation Data Underscore Deflation Risks

China’s latest inflation data showed muted consumer price growth, signaling persistent demand weakness and continued producer‑price deflation across manufacturing sectors — a trend that has lingered for months amid structural economic headwinds. The soft pricing environment reinforces expectations that Beijing may deploy further monetary or fiscal stimulus to support domestic consumption and counteract deflationary pressures that cloud near‑term growth prospects.

Hong Kong Presses Ahead with Stablecoin Licensing

Hong Kong is advancing plans to issue its first stablecoin licences as early as March 2026 under a new regulatory regime, positioning the city as an Asia‑Pacific hub for regulated digital assets. This move contrasts sharply with mainland China’s stringent crypto ban and reflects a calibrated approach to integrating digital currency infrastructure while managing risk and compliance requirements for issuers under the supervision of the Hong Kong Monetary Authority.

Conclusion

This week’s cross-market movements reflect the growing influence of artificial intelligence on sector valuations, ongoing macroeconomic fragility in China, and regulatory divergence in digital finance. While the Dow continues to set new highs, sector-level volatility remains pronounced, particularly among tech-adjacent financials. Meanwhile, Hong Kong’s stablecoin licensing initiative signals opportunities in regulated crypto frameworks, just as mainland China reinforces its digital firewall. As investors await pivotal U.S. inflation data, portfolio resilience will depend on navigating a landscape shaped by technology disruption, deflation risk, and regional policy asymmetries.

Investment Insights

• Macro Data as a Market Driver: Upcoming U.S. jobs and CPI releases remain central to shaping Fed expectations and equity valuations.
• AI Impact Across Sectors: Continued AI‑linked volatility suggests careful differentiation between firms with sustainable earnings and those vulnerable to technological disruption.
• Emerging Asia Opportunities: China’s softened price pressure and Hong Kong’s stablecoin framework highlight differentiated growth and policy responses worth monitoring for regional allocation.
• Risk Diversification Critical: With episodic rotation into defensive and non‑cyclical segments, investors may benefit from diversified exposure amid rising dispersion in asset performance.

Key Points

• Taiwan Pushes Back on U.S. Chip Relocation Goals: Taiwan rejected Washington’s ambition to relocate 40% of advanced chip production to the U.S., highlighting geopolitical and operational limits to rapid semiconductor reshoring.
• SoftBank Shares Surge on AI Optimism: SoftBank jumped over 10% after its telecom unit raised its outlook and Arm’s performance reinforced investor confidence in AI-driven chip demand.
• Tesla Executive Departure Raises Strategic Questions: Long-time Tesla executive Raj Jegannathan announced his departure after 13 years, prompting scrutiny over leadership transitions at the EV maker.

February Economic Calendar

Taiwan Pushes Back Against U.S. Chip Supply Shift

Taiwan pushed back firmly against U.S. calls to relocate up to 40% of advanced semiconductor production to American soil, describing the target as unrealistic given the complexity, cost, and ecosystem concentration of chip manufacturing. Taiwanese officials emphasized that while diversification of supply chains is ongoing, the island’s dominance in advanced chip fabrication remains structurally entrenched.

The response underscores growing tension between geopolitical ambitions and industrial realities as Washington seeks to reduce dependence on Asian semiconductor supply. Markets interpreted the stance as confirmation that near-term global chip supply dynamics will remain heavily Taiwan-centric, reinforcing the strategic importance of regional stability for technology and AI-driven sectors.

SoftBank Rallies as Arm Reinforces AI Narrative

SoftBank Group shares surged more than 10% after its telecom subsidiary raised its earnings outlook, while continued strength at Arm Holdings bolstered the group’s AI investment thesis. Arm’s chip architecture remains central to AI data-centre expansion and next-generation computing, reinforcing SoftBank’s positioning as a long-term beneficiary of AI infrastructure growth.

Investor sentiment improved sharply as the results validated SoftBank’s strategic pivot toward AI-linked assets following years of volatility. The move reflects renewed confidence in selective tech conglomerates with clear exposure to structural growth trends rather than speculative innovation.

Tesla Executive Exit After 13 Years

Tesla announced that Raj Jegannathan, a senior executive with over a decade of tenure, will depart the company after 13 years. While the automaker did not cite immediate operational concerns, the exit adds to investor focus on leadership continuity as Tesla navigates intensifying EV competition, margin pressure, and global regulatory challenges.

Markets reacted cautiously, viewing the departure as part of a broader maturation phase for Tesla rather than a disruption. Nonetheless, executive turnover remains a key variable for investors assessing long-term strategic execution and innovation capacity.

Conclusion

Today’s developments highlight the intersection of geopolitics, AI-driven growth, and corporate transition across global markets. Taiwan’s resistance to rapid semiconductor reshoring underscores the limits of political ambition in reshaping complex supply chains, while SoftBank’s rally reflects renewed confidence in AI infrastructure plays anchored by Arm’s strategic relevance.

Meanwhile, Tesla’s executive departure brings leadership focus back into view amid an increasingly competitive EV landscape. Collectively, these themes reinforce a market environment driven by structural technology trends, geopolitical realities, and execution risk.

Investment Insights

• Semiconductor Supply Chains Remain Concentrated: Taiwan’s stance suggests advanced chip production will remain regionally concentrated, supporting valuations of dominant foundry ecosystems.
• AI Infrastructure Continues to Attract Capital: SoftBank and Arm demonstrate that credible AI exposure with proven earnings power remains highly attractive to institutional investors.
• Leadership Transitions Matter in Mature Growth Stories: Tesla’s executive exit highlights the importance of governance and succession planning as high-growth companies enter more competitive phases.
• Geopolitics as a Market Variable: U.S.–Asia technology policy will remain a source of volatility and opportunity across semiconductors and AI-linked equities.

Key Points

• Markets Eye Data-Heavy Week After Dow Milestone: U.S. futures edge higher as investors brace for key macro releases following the Dow’s close above 50,000 and a broad rebound across equities.
• Takaichi Win Triggers Japan Market Surge: Japanese stocks soared over 5% after Prime Minister Sanae Takaichi secured a supermajority, fueling expectations for pro-growth reforms and fiscal stimulus.
• Montage Tech Soars 50% in IPO Debut: Chinese chipmaker Montage Technology rallied in its Hong Kong debut, highlighting investor appetite for AI-linked hardware and renewed confidence in China’s tech listings.
• LDP’s Majority Win Bolsters Policy Continuity: Japan’s ruling party victory removes political uncertainty, paving the way for Takaichi to advance structural reforms and defense expansion.

February Economic Calendar

Market Edges Higher Ahead of Key Economic Data

U.S. stock futures ticked up Sunday night as markets looked past last week’s volatility and prepared for a slate of pivotal economic reports, including the delayed January jobs report, consumer price index, and retail sales data. The prior week saw a dramatic rebound, with the Dow Jones Industrial Average closing above 50,000 for the first time, while the S&P 500 and Nasdaq posted strong gains.

Broad sector participation supported the rally, led by chipmakers and technology names, while Bitcoin stabilized after sharp declines. Investors remain cautious but optimistic as earnings results and macroeconomic indicators come into sharper focus during the week ahead.

Japan Stocks Rally as Takaichi Secures Historic Mandate

Japanese equities rallied sharply after Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a historic landslide victory in the February 8 snap election, delivering a supermajority and renewed political clarity. The Nikkei 225 surged more than 5% to record highs as investors priced in accelerated fiscal stimulus, tax relief, and pro-growth reforms.

At the same time, Japanese government bonds weakened and the yen showed heightened volatility amid shifting expectations for monetary and fiscal policy coordination. Takaichi’s decisive win reduces political uncertainty and strengthens the outlook for Japanese risk assets.

Montage Technology IPO Sparks Rally in Hong Kong Tech Market

Shares of Chinese chip designer Montage Technology surged more than 50% in their Hong Kong Stock Exchange debut, opening well above the HK$106.89 offer price after the company raised HK$7.04 billion (approximately $900 million) in a heavily oversubscribed IPO.

As the world’s largest memory interconnect chip supplier, Montage attracted strong interest from global cornerstone investors. The proceeds will support research, strategic investments, and commercial expansion amid rising demand for data-center and AI infrastructure. The strong debut signals renewed institutional confidence in Chinese technology listings and provides an early boost to Hong Kong’s capital markets in 2026.

Takaichi’s LDP Clinches Outright Majority, Paving Way for Policy Push

Japan’s ruling Liberal Democratic Party, led by Prime Minister Sanae Takaichi, secured an outright parliamentary majority in the snap election, according to NHK projections. The outcome significantly strengthens Takaichi’s mandate and clears the path for bold policy initiatives.

Planned priorities include economic revitalization, tax reform, and expanded defense spending. Financial markets reacted positively, with investor sentiment buoyed by expectations of political stability and faster fiscal deployment. The result removes a key overhang for Japanese assets and reinforces the country’s position as a regional bright spot amid global volatility.

Conclusion

This week’s developments reflect growing investor confidence amid shifting political and macroeconomic dynamics. Japan’s equity markets surged following Prime Minister Takaichi’s decisive election victory, signaling potential for meaningful fiscal initiatives and structural reform.

Meanwhile, Montage Technology’s strong Hong Kong debut underscores robust demand for AI- and semiconductor-related exposure despite ongoing geopolitical tensions. In the United States, markets enter a data-driven week following the Dow’s historic close above 50,000, with inflation and labor data set to influence interest-rate expectations. Overall, leadership clarity and innovation momentum are reinforcing optimism across global equity markets heading into mid-February.

Investment Insights

• Japan Exposure Gains Appeal: Takaichi’s decisive mandate and pro-growth agenda support continued upside in Japanese equities, particularly across financials, infrastructure, and defense sectors.
• AI Hardware Demand Supports Semiconductor Bets: Montage Technology’s IPO success reinforces investor conviction in chipmakers tied to AI infrastructure and data-center growth.
• U.S. Data Will Drive Rate Expectations: Upcoming CPI and labor reports will be critical in shaping the Federal Reserve’s policy outlook, with implications for rate-sensitive sectors.
• Political Clarity Boosts Risk Sentiment: Reduced political uncertainty in Japan enhances stability across Asia-Pacific markets, encouraging capital reallocation toward regional equities.