Global Markets Breathe a Sigh of Relief
After a tumultuous start to the week, calmer heads are prevailing in European and global markets. The initial shockwave triggered by China’s DeepSeek AI startup has subsided, and investors are regaining confidence that the cheap AI assistant won’t disrupt valuations for tech giants like Nvidia.
Earnings Season Kicks Off
Today marks the beginning of a critical earnings season, with the “Mag 7” tech megacaps taking center stage. Facebook owner Meta Platforms, Microsoft, and Tesla are set to report, followed by Apple tomorrow. This parade of earnings will provide valuable insights into the health of the tech sector.
Asian Markets Show Resilience
Despite the Lunar New Year holidays, Asian markets are showing signs of resilience. Japan’s Nikkei is up 0.5% at midday, poised to break a three-day losing streak. Australia’s stock benchmark has gained 0.9%, buoyed by a mild inflation print that increases the likelihood of a rate cut next month.
Central Banks Take Center Stage
This week, a barrage of central bank policy decisions will dominate the headlines. The Fed meets today, with traders expecting no changes to monetary policy. In contrast, the ECB is widely expected to cut rates tomorrow, followed by rapid-fire reductions in March, June, and possibly October.
Tariff Uncertainty Lingers
U.S. President Donald Trump’s looming tariff announcements continue to cast a shadow over global markets. While Trump has hinted at a more conciliatory approach towards China, the White House has reaffirmed plans to impose duties on Canada and Mexico this Saturday. The dollar has been volatile, reacting to shifting tariff expectations.
Data Deluge Ahead
Today’s data releases include German GfK consumer sentiment surveys, Spanish and Belgian GDP, Italian business and consumer confidence, and Portugal’s jobless rate. Sweden will also release GDP figures, with the Riksbank expected to cut rates by a quarter point. Later, the Bank of Canada is likely to follow suit with a quarter-point rate cut.
Key Developments to Watch
- US earnings from Meta, Microsoft, Tesla
- Policy decisions from U.S. Fed, Riksbank, Bank of Canada
- BoE Governor Bailey testifies to parliamentary committee
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