A look at the day ahead in European and global markets from Kevin Buckland
Calmer heads appear to be prevailing after China’s DeepSeek triggered a sell-off in AI-related shares, with a relief rally overnight rippling into the few Asian markets not closed for Lunar New Year holidays.
Investors are converting to the idea that the startup’s cheap AI assistant won’t pull the rug out from under valuations for Nvidia and its ilk, just as they prepare to assess the parade of earnings that begin today from the so-called «Mag 7» tech megacaps.
Facebook owner Meta Platforms, Microsoft and Tesla are on deck for today, and Apple tomorrow.
Japan’s Nikkei was up about half a percent at the midday break, on track to snap a three-day losing run. Australia’s stock benchmark gained 0.9%, with additional momentum from a mild inflation print that boosted the odds for a rate cut when the Reserve Bank meets next month.
Asia’s equity markets were understandably cautious, however, considering the marquee Wall Street earnings ahead this week and a barrage of central bank policy decisions that include the Fed today and the ECB tomorrow.
Added to that is fogginess over how severe U.S. President Donald Trump’s looming tariff announcements might be.
After Trump’s comments late last week that he’d prefer not to slap Beijing with additional levies, following a «friendly» call with Xi Jinping, the White House reaffirmed that duties on Canada and Mexico are coming this Saturday, while Chinese tariffs are still under consideration.
It makes for a bit of a tense Lunar New Year celebration, with mainland markets on holiday until the middle of next week.
The dollar has been on a yo-yo string since Trump’s inauguration, reacting mainly to shifting tariff expectations. The dollar index is up about 0.4% so far this week but down 2% from the two-year peak reached on Jan. 13.
Traders expect the Fed to stand pat on monetary policy today, even with Trump demanding lower rates. Market pricing doesn’t factor in a quarter-point reduction until June, followed by one more by year-end.
In contrast, the ECB is widely expected to cut tomorrow, followed by rapid-fire reductions in March, June and possibly October.
Europe is also in Trump’s tariff cross-hairs, so Saturday’s announcement on Canada and Mexico could bring unwelcome news for the bloc as well.
Data due today include German GfK consumer sentiment surveys, Spanish and Belgian GDP, Italian business and consumer confidence, and Portugal’s jobless rate.
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