Market Report.
🧧 This week will be filled with festivities for the Chinese New Year of the Fire Horse.
⚠️ Top 3 Weekly Risks: The FOMC meeting minutes, UK CPI (inflation) data, and the EU flash PMIs for manufacturing and services all pose key risks this week.
📉 But let’s start by reviewing Friday’s inflation data.
📈 Inflation data on Friday caused optimism in markets, but it was not enough to dispel cross-sector tensions, with technology and AI distortions affecting other sectors being the main concern.
💵 The U.S. consumer price index (CPI) for January 2026 showed a lower-than-expected increase of 2.4% year-over-year, down from 2.7% in December 2025. Core CPI, which excludes volatile food and energy prices, came in at 2.5%, the lowest level since April 2021.
✅ This lower-than-expected inflation data is seen as “welcome news” for markets and the presumptive incoming Federal Reserve Chair, Kevin Warsh.
📊 If this trend of moderating inflation continues, it could pave the way for lower interest rates and better control of inflation.
🇯🇵 Japanese data dampened the Nikkei’s momentum after GDP badly missed expectations.
📉 The economy grew just 0.2% annualized in the December quarter, far below forecasts for a 1.6% rebound, following a contraction in Q3. The weak print raises concerns about the strength of Japan’s recovery and could complicate the policy outlook for the Bank of Japan.
🤖 Global markets are preparing for another week of AI-related headlines and “scare trading” as investors assess which sectors could be disrupted by the rise of AI technology.
🏦 Analysts at UBS warn that the credit implications of AI disruption have only been partially priced in so far, and expect the risk to increase throughout 2026 and into 2027, particularly in the U.S.
🇮🇳 This week, the focus will shift to India as New Delhi hosts the “AI Impact Summit”, which has attracted high-profile speakers from companies like Anthropic, Microsoft, Mistral AI, and Meta. We could see a range of big deals, partnerships, and customer announcements as tech giants look to tap into India’s large, tech-forward customer base and engineering talent pool.
⚡ Energy and the development of AI and its data centers are the great challenge for the future, as we discussed in reports months ago.
🏛️ The US administration may force data center builders like Meta to pay for the full costs of the electricity, resiliency, and water used by their facilities, rather than passing those costs on to consumers.
🗣️ Navarro said the data center builders “need to pay for the electricity that they’re using on the grid, but they have to pay for the resiliency that they’re affecting as well. They need to pay for the water.”
🔌 This potential action comes as the Trump administration seeks to address the strain that data centers are placing on the U.S. electricity grid and the resulting rise in utility costs for consumers.
💧 Microsoft has also pledged not to raise utility costs near its data centers and to replenish water used, suggesting the administration is negotiating with other tech giants on similar commitments.
🇪🇺 The ECB is taking advantage of the uncertainty generated by Trump’s trade war, and the corresponding falls in the dollar, to promote its currency among the banking and financial systems of the rest of the world.
💶 The ECB will extend repo lines to “all central banks, unless excluded on the grounds of, in particular, money laundering, terrorist financing or international sanctions.”
🌍 This aims to enable central banks globally to address risks of euro liquidity shortages swiftly and make the facility more flexible, broader in reach, and more relevant for holders of euro-denominated securities.
🔐 The ECB says this will reinforce the role of the euro and boost confidence for central banks, investors, borrowers and traders to use the currency, knowing euro liquidity will be available during market disruptions.
📢 The ECB will no longer publish information on which central banks access the repo lines, but will provide details on the overall weekly drawings of euro liquidity across all repo lines.
🧭 They are also taking advantage of geopolitical tensions in the north, such as those experienced by Denmark over Greenland, and potential threats over resources, to promote the accession of new partners to the euro.
🇸🇪 Geopolitical concerns, including “the russian threat”, China, and the unpredictable policies of former U.S. President Donald Trump, have added a new dimension to Sweden’s debate on adopting the euro.
🛡️ Sweden’s status as a full NATO member now, but still standing “with one foot outside” the EU’s currency cooperation, is seen as a vulnerability.
🗳️ Adopting the euro would tighten political ties with the EU and give Sweden a seat at the table for pan-European monetary matters, which is viewed as an advantage in the current geopolitical climate.
🚧 However, significant hurdles remain, including the need for a referendum, lack of broad political support, and lingering public skepticism towards giving up the krona.
📉 Europeans’ trust in European institutions is at an all-time low, with France and Germany experiencing a surge in anti-European parties.
🎬 The corporate world is also experiencing new developments. The war for entertainment media is underway, with Netflix, considered a platform with strong progressive and inclusive content, facing off against the more traditional Paramount.
🤝 Warner Bros. Discovery Inc. is considering reopening sale talks with rival studio Paramount Skydance Corp. after receiving Paramount’s latest amended offer.
💰 Paramount’s amended terms address several concerns, including covering a $2.8 billion fee owed to Netflix if the Warner Bros. deal is terminated, and offering to backstop a Warner Bros. debt refinancing.
📊 The Warner Bros. board is discussing whether Paramount’s new offer could lead to a superior deal, which may prompt Netflix to increase its existing $27.75 per share bid.
🔥 Both Paramount and Netflix have indicated they would be willing to raise their bids to secure the acquisition of Warner Bros., one of the largest U.S. media companie
🔄 If Warner Bros. decides to re-engage with Paramount, it would need to notify Netflix first, and Netflix would have the right to match any superior offer from Paramount.
Geopolitics.
🤝 Another source of reassurance for investors — and more broadly for global markets — is evidence of easing tensions between the U.S. and Iran.
📰 According to the BBC, citing Iran’s Deputy Foreign Minister Majid Takht‑Ravanchi, the two countries will hold their second round of talks on Tuesday in Geneva. He added that Tehran is prepared to discuss limiting its nuclear program in exchange for lighter sanctions and economic benefits for both sides, signaling potential diplomatic progress.
🇺🇸 On Iran negotiations, Marc Rubio said the US is willing to engage in talks but will not accept a deal that does not fully address Iran’s nuclear program and regional aggression.
🛩️ CBS News reports that President Donald Trump has promised Israeli Prime Minister Benjamin Netanyahu that he would support Israeli strikes on Iran’s ballistic missile program, signaling potential U.S. backing for expanded military action targeting Iran’s missile capabilities.
⚔️ NBC News reports that Trump wants any military action in Iran to be “swift and decisive,” delivering a “decisive blow to the Iranian regime” while avoiding a drawn‑out war, based on U.S. and White House–adjacent sources.
🇬🇧 The British Prime Minister, in the midst of a political crisis related to the Epstein case, decides that measures must be taken in digital control to combat bots and AI, ‘for the sake of children’.
🧒 The Prime Minister plans to take action to close this regulatory loophole and make AI chatbots accountable under laws meant to safeguard minors online.
🛢️ Commodities: A possible bullish scenario for the crude market. if China stops adding to its strategic reserves or if Russia and Iran have to cut production due to geopolitical tensions, the surplus barrels could tighten the global market and push prices higher.
Market Review.
📈 A modest recovery is unfolding across markets.
📉 S&P 500 futures have rebounded from Friday morning’s lows near 6,800 points to around 6,870 points. Similarly, Nasdaq 100 futures, which fell to 24,580 points on Friday, have recovered to approximately 24,863 points.
💲 The US Dollar Index (DXY) has eased slightly, hovering around the 97 level, which continues to limit upside momentum in EUR/USD. The pair has retreated from last week’s highs near 1.1925 to around 1.1865.
🇩🇪 In Europe, sentiment appears more constructive. DAX 40 futures are currently trading above 25,050 points, while Euro Stoxx 50 futures have also moved back above the 6,000‑point mark, standing near 6,020 points.
🛢️ The oil market maintains its upward bias, albeit slightly below last week’s highs, with spot Brent crude trading around $68.10 per barrel.
🥇 Gold futures, which dipped below $5,000 per ounce last Thursday, have regained strength and are currently trading around $5,025 per ounce.
₿ Finally, Bitcoin remains above the $68,600 level, attempting to establish a base and support, though still well below the levels seen one month ago.
