🎯 The week's 5 stories
"Software-mageddon"
Earnings season brought its share of punishment. This week's sessions were punctuated by a string of drops of 10% and more. One sector suffered particularly badly: software, seen by the market as an AI loser. Anthropic's launch of a new legal-assistance tool sparked another wave of selling this week. A genuine "Software-mageddon" for companies long prized by investors for their high margins and recurring revenue.
Enough is enough
With $660bn in capital spending announced for 2026, the hyperscalers - Alphabet, Amazon, Meta and Microsoft - have no intention of easing off this year. However, the market is buying this spending frenzy less and less, and wants to see revenues to match. This week, it was Amazon and its $200bn in Capex that took the hit. Alphabet limited the damage, thanks to strong cloud growth in the last quarter (48%).
ECB and Bank of England on hold
Unsurprisingly, the ECB maintained its status quo on Thursday. It would now take a clear shift in the economic backdrop to push the ECB away from it. The pressure point is the currency, as EUR/USD recently touched $1.20. On the Bank of England side, as always, a very close vote by the Monetary Policy Committee (5 votes to 4) kept rates unchanged. But economists now expect a rate cut in March, as inflationary pressures ease.
Mini-shutdown and a disrupted calendar
The mini-shutdown triggered by the standoff over funding for the Department of Homeland Security (DHS) lasted only three days, but it was enough to disrupt the release of statistics once again. The jobs report, due today, will ultimately be published on Wednesday 11 February, while the inflation report has been pushed back to Friday 13 February.
An early turn in the US labour market?
While the jobs report was not released, the JOLTS survey showed the number of job openings fell to its lowest level since 2020, while weekly jobless claims rose to 231,000. But the most striking figure of the week likely comes from the Challenger, Gray & Christmas report, which says planned layoffs by US companies totalled 108,435 in January. That is the highest January figure since 2009. Enough to vindicate Christopher Waller, who voted against the Fed's status quo last week, warning of a "substantial deterioration in the labour market".
Best of the rest
Is he a hawk or a dove? Is he promising rate cuts to please Donald Trump, or has he truly changed sides? Since his nomination was announced late last week, investors have struggled to decide where to place Kevin Warsh. And the market, too, judging by the lack of reaction in rates. But his appointment to lead the Fed raises issues that go far beyond monetary policy.
It is another bitter statistic for France. According to the European Union's statistical office, Eurostat, in 2024 France's gross domestic product (GDP) per capita fell below the average of the European Union's 27 member states.
