🌟 Tech Wobbles, Rate Hopes Keep the Boat Steady
It was a week of cross‑currents: big tech earnings and profit‑taking created choppy sessions, but hopes of further interest‑rate cuts and calmer inflation kept global markets broadly on track. UK shares quietly ground higher as the Bank of England signalled that more rate reductions are likely, even as it kept Bank Rate unchanged this week. Under the surface, money continued to rotate across regions and sectors, with Europe and Asia soaking up fresh inflows while some US growth funds saw the pace of buying cool.
📈 Weekly Scoreboard
| Index | Weekly Change (%) | Current Level |
|---|---|---|
| S&P 500 | -0.10% | 6,932.30 |
| Nasdaq Composite | -1.84% | 23,031.21 |
| EURO STOXX 50 | +0.85% | 5,998.40 |
| FTSE 100 | +1.43% | 10,369.75 |
| Nikkei 225 | +1.75% | 54,253.68 |
| MSCI Emerging Markets | -1.42% | 1,506.38 |
| China (SSE Composite) | -1.27% | 4,065.58 |
🌍 Global Drivers & Macro
- The Great Rotation: Investors shifted capital from “growth” stocks (like AI and Tech) into “value” sectors like industrials and financials. This was driven by a feeling that tech valuations have outpaced actual earnings growth.
- AI Fatigue: Major reports suggested that massive investments in Artificial Intelligence are taking longer to pay off than hoped. This caused a temporary “risk-off” mood in the middle of the week for big tech names like Nvidia.
- Data Drought: A partial US government shutdown delayed the official January jobs report. This lack of clarity made markets more sensitive to “private sector” data, which showed some cooling in the US labor market.
- Central Bank Caution: While the US Federal Reserve’s future path remains the main focus, investors are closely watching the transition to a new Fed Chair, Kevin Warsh, which has added a layer of uncertainty.
🇬🇧 UK Corner
- Steady as She Goes: The Bank of England (BoE) kept interest rates held at 3.75% this week. Governor Andrew Bailey hinted that if inflation continues to behave, further rate cuts could be on the horizon later this year.
- Budget Optimism: Markets are reacting positively to recent cost-of-living measures, such as utility bill caps. The BoE believes these moves could help bring inflation down to the 2% target faster than previously thought.
- FTSE Resiliency: The FTSE 100 outperformed many of its global peers this week. Its heavy weighting in banks and energy helped it benefit from the global shift away from tech and into “steady” value stocks.
🏦 Asset Movers
- FX (GBP/USD): The Pound remained relatively firm, closing around $1.36. Strength in the pound was supported by the BoE’s cautious stance compared to a slightly more volatile US Dollar.
- Gold: Gold remained elevated near record territory, with spot prices around $4,900 and analysts still highlighting strong buyer interest; that combination of high price and ongoing demand shows that many investors still want portfolio insurance against inflation and macro shocks.
- Oil (Brent): Brent crude started to claw back earlier losses, with prices rebounding from support levels as technical analysts talked about a recovery phase; higher oil, if sustained, can feed back into inflation expectations and energy‑heavy indices like the FTSE 100.
📰 Key Headlines
- Reuters – Global fund flows: Europe and Asia led global equity fund inflows this week as investors sought diversification beyond the US and added to bond funds for income, underlining a broad but more selective “risk‑on” stance.
- Bank of England – February decision: The BoE kept Bank Rate at 3.75% and signalled that more cuts are likely if inflation keeps easing, supporting UK asset prices but reminding investors that the path from here will be data‑dependent.
- Share Talk – UK stocks rebound: UK indices finished the week higher, with the FTSE 100 around 0.6% up and the FTSE 250 up roughly 0.5%, as investors bought the dip in tech and AI‑exposed names after a rocky patch.
- Global Risk Monitor – Stress below the surface: A global risk review highlighted that while headline indices remain firm, stress is rising in certain regions and credit markets, warning investors not to be lulled by calm index levels alone.
- Forbes / Big Tech – AI spend in focus: Alphabet and Amazon earnings put AI investment and guidance in the spotlight, with markets reacting sharply to any hint that growth in cloud and AI‑related revenue might slow.
- AAII / Sentiment – Cautious optimism: The AAII bull‑bear spread stayed positive at around 10–11%, above its long‑run average, suggesting US retail investors are still more optimistic than pessimistic, though slightly less exuberant than in recent weeks.
📑 Companies Reporting
- Alphabet (Google): Strong cloud momentum, but the market focused on $175–$185bn 2026 capex guidance (near-term cash flow pressure was the fear).
- Amazon: Results landed in the shadow of an eye-catching ~$200bn 2026 capex plan; shares reacted badly as investors questioned payback timing.
- Shell: Q4 profit missed expectations, but shareholder returns stayed front-and-centre (dividend lift and steady buyback pace).
- GSK: Upbeat earnings helped push UK healthcare higher and supported the FTSE’s mid-week record close.
⚖️ Investor Sentiment
The message from sentiment indicators was: cautious The VIX ended at 17.76, down sharply from Thursday’s spike, suggesting stress eased into Friday.
Retail sentiment softened too: AAII’s bull–bear spread was still positive at +10.7, investors stepping back rather than leaning aggressively bullish.
Meanwhile, the CNN-style Fear & Greed reading sat around 45 (“neutral”), which fits the week’s “risk-on Friday / risk-off mid-week”.
Fund flows backed that up: US equity fund inflows roughly halved to $5.58bn, with technology funds seeing outflows, while bond funds drew $11.11bn and money markets pulled in $83.09bn.
📅 Next Week’s Radar
- US Retail Sales: Tuesday, 10 Feb (1:30 PM UK). A vital health check on whether the US consumer is still spending.
- UK GDP Data: Thursday, 12 Feb (7:00 AM UK). This will reveal how much the UK economy grew (or didn’t) in the final quarter.
- US CPI (Inflation): Friday, 13 Feb (1:30 PM UK). The “big one” for markets; a high reading could kill hopes of a spring rate cut.
- BoE Speeches: Various members of the MPC are scheduled to speak throughout the week, providing more clues on the timing of the next rate cut.
⚡ The Final Take
This week taught us that “The Market” is not just “Big Tech.” While the Nasdaq suffered, the broader economy—represented by the Dow and the FTSE—showed remarkable strength.
© Clearly Investments Ltd. Educational information only. This is not investment advice.
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