In summary
- From tech wobble to broader sell-off
- Data swings reset US rate expectations
- AI disruption extends beyond technology
- The week ahead
From tech wobble to broader sell-off
Market turbulence that began within the US technology sector two weeks ago has broadened meaningfully last week. Software companies led a sharp decline on Thursday, but weakness extended across financials, wealth management, logistics and commercial real estate, with several companies seeing double digit downward moves. Defensive assets also wavered midweek before stabilising into Friday. Overall, major US indices finished lower (S&P 500 −1.39%, Nasdaq −2.10%, Magnificent 7 −3.24%), while Europe proved more resilient, with modest gains across the STOXX 600, DAX and FTSE 100. In fixed income, UK gilt and German Bund yields fell, helped by softer UK growth data and easing political concerns after a volatile start to the week.
Data swings reset US rate expectations
A series of US data releases created meaningful swings in interest rate expectations. Early in the week, softness in retail sales, job openings and wage indicators pushed Treasury yields lower and supported expectations for a Federal Reserve cut to come earlier in the year. That view was challenged mid-week as a stronger than expected payrolls print and a lower unemployment rate lifted shorter-dated yields and dampened hopes of further easing in April. Sentiment settled again after Friday’s January CPI release largely matched forecasts: core inflation rose 0.3% month-on-month and headline inflation 0.2% month-on-month, with annualised readings continuing to moderate. Markets now see June as the most likely starting point for Fed rate cuts, with April still possible but no longer the base case.
AI disruption extends beyond technology
AI related uncertainty continued to act as a powerful undercurrent for markets. While software and IT services remained under pressure, concerns broadened across industries as investors reassessed which business models may prove most vulnerable. Logistics, commercial real estate and selected financials saw notable declines after company updates highlighted how automation and AI enabled processes could reshape long-term margins and demand. Earlier optimism that AI would act as a broadly positive force for corporate profitability has given way to more nuanced differentiation, creating greater dispersion both within technology and across the wider equity market.
The week ahead
With US markets closed for Presidents’ Day on Monday, attention now shifts to a full week of data releases including UK CPI, the FOMC minutes, global flash PMIs and Friday’s US PCE and Q4 GDP readings. Several delayed US releases tied to last year’s government shutdown will also be published, offering further clarity on the economy’s momentum into early 2026. Friday is likely to be the most consequential day, bringing the advance estimate of Q4 GDP alongside December’s personal income and consumption data, as these are key inputs for shaping growth expectations. Corporate earnings updates from global consumer names such as Walmart and Nestle should provide an additional read through on consumer demand trends. Against a backdrop of ongoing AI related repricing and data-dependent rate expectations, we expect cross-currents to persist, reinforcing the case for a measured approach to risk and a focus on companies with reasonable valuations and high-quality balance sheets.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
Weekly Market Commentary
In summary
From tech wobble to broader sell-off
Market turbulence that began within the US technology sector two weeks ago has broadened meaningfully last week. Software companies led a sharp decline on Thursday, but weakness extended across financials, wealth management, logistics and commercial real estate, with several companies seeing double digit downward moves. Defensive assets also wavered midweek before stabilising into Friday. Overall, major US indices finished lower (S&P 500 −1.39%, Nasdaq −2.10%, Magnificent 7 −3.24%), while Europe proved more resilient, with modest gains across the STOXX 600, DAX and FTSE 100. In fixed income, UK gilt and German Bund yields fell, helped by softer UK growth data and easing political concerns after a volatile start to the week.
Data swings reset US rate expectations
A series of US data releases created meaningful swings in interest rate expectations. Early in the week, softness in retail sales, job openings and wage indicators pushed Treasury yields lower and supported expectations for a Federal Reserve cut to come earlier in the year. That view was challenged mid-week as a stronger than expected payrolls print and a lower unemployment rate lifted shorter-dated yields and dampened hopes of further easing in April. Sentiment settled again after Friday’s January CPI release largely matched forecasts: core inflation rose 0.3% month-on-month and headline inflation 0.2% month-on-month, with annualised readings continuing to moderate. Markets now see June as the most likely starting point for Fed rate cuts, with April still possible but no longer the base case.
AI disruption extends beyond technology
AI related uncertainty continued to act as a powerful undercurrent for markets. While software and IT services remained under pressure, concerns broadened across industries as investors reassessed which business models may prove most vulnerable. Logistics, commercial real estate and selected financials saw notable declines after company updates highlighted how automation and AI enabled processes could reshape long-term margins and demand. Earlier optimism that AI would act as a broadly positive force for corporate profitability has given way to more nuanced differentiation, creating greater dispersion both within technology and across the wider equity market.
The week ahead
With US markets closed for Presidents’ Day on Monday, attention now shifts to a full week of data releases including UK CPI, the FOMC minutes, global flash PMIs and Friday’s US PCE and Q4 GDP readings. Several delayed US releases tied to last year’s government shutdown will also be published, offering further clarity on the economy’s momentum into early 2026. Friday is likely to be the most consequential day, bringing the advance estimate of Q4 GDP alongside December’s personal income and consumption data, as these are key inputs for shaping growth expectations. Corporate earnings updates from global consumer names such as Walmart and Nestle should provide an additional read through on consumer demand trends. Against a backdrop of ongoing AI related repricing and data-dependent rate expectations, we expect cross-currents to persist, reinforcing the case for a measured approach to risk and a focus on companies with reasonable valuations and high-quality balance sheets.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
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