Overview
World markets resumed a muted tone as trading resumed in the United States following a long weekend. U.S. stock futures opened slightly in the red, reflecting some lingering caution after recent, more volatile movements in AI-focused segments of the technology sector. Despite these localized swings, broader investor sentiment remains upbeat.
Investor mood and survey signals
Bank of America’s monthly global fund manager survey for February continued to register very strong optimism, describing investor sentiment as "uber-bullish" about the economic outlook and corporate earnings for the year. The survey flagged one prominent concern: the potential for excessive spending on AI infrastructure, which market participants continue to watch.
Regional market moves
Across global bourses, trading was generally steady. In Asia, activity was light due to holiday-thinned volumes. Japan’s Nikkei fell after the latest GDP print came in below expectations. The Japanese economy expanded at an annualised rate of 0.2% in the fourth quarter, compared with a forecast of a 1.6% gain, a miss that dampened market sentiment in Tokyo.
The yen eased 0.4% against the dollar on Monday following the GDP surprise, reversing some of the currency’s nearly 3% rally from the prior week, before paring losses on Tuesday.
Fixed income and inflation backdrop
U.S. Treasuries remained supported by what market participants interpreted as a relatively benign headline consumer price inflation reading from Friday. Attention now turns to a busy calendar later in the week that could shed light on the Federal Reserve’s near-term policy direction - including Wednesday’s release of the minutes from the Federal Open Market Committee and Friday’s report on fourth-quarter U.S. GDP.
Additional inflation readings from Canada, the U.K. and Japan scheduled this week will also contribute to the global picture.
United Kingdom developments
In the U.K., unemployment ticked up to 5.2% - the highest level in more than ten years outside the pandemic period - prompting renewed speculation that the Bank of England could move to lower interest rates next month. Market pricing in money markets suggested roughly an 80% chance of another rate cut. The pound weakened against both the euro and the dollar, the FTSE 100 advanced, and two-year gilt yields fell to 18-month lows.
Geopolitics and commodities
Even amid subdued trading, geopolitical developments remained relevant. U.S. and Iran nuclear negotiations reconvened in Geneva, drawing attention from traders and policymakers. As the talks got underway, both oil and gold prices edged down slightly. Separately, President Trump said he believed Iran sought to reach a deal.
Chart of the day
U.S. retail giant Walmart, which will update earnings figures this week, joined the group of companies valued at one trillion dollars or more this year. That milestone places the retailer as the 12th most valuable publicly listed company globally.
Data and events to watch
- U.S. New York Fed business surveys for February (8:30 AM EST)
- NAHB Housing Market Index (10:00 AM EST)
- Canada January CPI (8:30 AM EST)
- Japan January trade balance (6:50 PM EST)
- Speeches by Fed Governor Michael Barr and San Francisco Fed President Mary Daly
- U.S. corporate earnings: Medtronic, Palo Alto Networks
Near-term outlook
With a relatively light U.S. economic calendar for Tuesday, market participants are focusing on the balance of data and central bank communications due later in the week for clearer signals on policy. Geopolitical developments in Geneva and labour market and inflation updates in major economies will further inform risk sentiment across equities, fixed income, currencies and commodities.
Note: The analysis above reflects described market conditions, survey results, economic releases and geopolitical events as reported. It does not include promotional content or subscription information.