GGMA Morning Brief: Tech stocks under pressure over AI fears, Trump pushes for Fed rate cuts, Starmer's premiership faces crisis, Will the RBA hike again in May?, Lower growth target for China GDP?, China’s Xi reasserts Taiwan stance, Today: BOE & ECB Rate Decision, US jobless claims & Jolts, Fed speak
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
Markets: Tech stocks under pressure over AI fears
US tech stocks came under pressure again yesterday, driven by concerns that AI is on the verge of supplanting the business models of a broad range of companies. The spark for the selloff was AI startup Anthropic PBC's release of a new tool for legal work, which was taken seriously as a sign of AI's potential to change the world. BBG) Nasdaq futures are in the green this morning, though.
South Korean markets led declines in Asia-Pacific on Thursday, tracking Wall Street losses as the tech sell-off gained momentum. Seoul’s Kospi index tumbled 3.66%, leading losses in Asia, as chip heavyweights Samsung and SK Hynix fell 5.68% and 5.44%, respectively. (CNBC) European equity futures are slightly in the red.
Bitcoin was on the cusp of breaking below the key $70,000 level on Thursday as a slide in the world's largest cryptocurrency showed no signs of stopping. Bitcoin tumbled more than 3% in the Asian session to $70,052.38, its lowest level since November 2024. (RTRS)
Oil prices declined for the first time in three sessions after Iran confirmed plans to engage in negotiations with the United States, which helped to reduce immediate concerns over potential military actions against the OPEC member. Silver experienced a significant downturn, erasing gains from a two-day rebound as the market continued to struggle to establish support following a historic sell-off. Spot silver fell by as much as 17% on Thursday and has now dropped more than one-third from its record high set on January 29. (BBG, (BBG)
US bond futures and the US dollar were only a little changed.
Fed’s Cook says central bank must maintain inflation credibility
Federal Reserve Governor Lisa Cook said it’s essential that the central bank maintain its credibility by returning inflation to target in the near future. “Until I see stronger evidence that inflation is moving sustainably back down to target, that is where my focus will be, in the absence of unexpected changes in the labour market,” Cook said in remarks prepared for an event on Wednesday in Miami. (BBG – Continue Reading)
Meanwhile, President Donald Trump said Wednesday that his pick to lead the Federal Reserve would not have received the job offer had he expressed a desire to raise interest rates. And while he said he believes the central bank is “in theory” an “independent body,” Trump suggested the Fed should follow his lead because he thinks he knows the economy “better than almost anybody.” Trump said there was “not much” doubt in his mind that interest rates would soon be lowered. Pressed about how he could be so sure, he said: “I just think they’re going to be lowered. I mean, they should be lower.” (NBC)
Starmer's premiership faces crisis after dramatic day in parliament
Labour MPs report unrest in the party, with some questioning Keir Starmer's leadership after his appointment of Peter Mandelson to a diplomatic role. The prime minister is facing criticism from Conservative leader Kemi Badenoch over Mandelson's ties to Jeffrey Epstein, prompting speculation about a possible leadership challenge. (BBG)
Will the RBA hike again in May?
The Reserve Bank of Australia may be forced to raise interest rates for a second consecutive time in March, according to Westpac Banking Corp. Chief Economist Luci Ellis, as the central bank embarks on the world’s first tightening cycle of 2026. “I can’t rule out back-to-back in March,” Ellis, who previously worked as an RBA assistant governor, said in an interview on Wednesday. Her central forecast is also for a May move. “If there’s even more momentum in the data flow between now and the March meeting, well, maybe that happens.”
Here is a summary of Westpac’s piece on the RBA: The Reserve Bank of Australia raised its cash rate by 25 basis points to 3.85% on February 3, 2026, responding to persistent inflationary pressures from stronger-than-expected demand and a tight labour market, with trimmed mean inflation projected at 3.2% annually by the end of 2026. The RBA expressed discomfort with this elevated inflation trajectory, which is expected to reach the 2.5% midpoint only by mid-2028, suggesting further rate hikes remain possible—potentially another 25 basis points in May if the March quarter data aligns with forecasts—though restrictive policy is expected to dampen growth and could enable rate cuts in late 2027 or early 2028.
Australia's December trade balance rises less than expected; exports lag
Australia's trade surplus rose to A$3.37 billion ($2.36 billion) in December, slightly below forecasts of A$3.42 billion. The increase from November's A$2.60 billion surplus was supported by a 1% month-on-month rebound in exports, following a 2.9% drop previously. Imports decreased amid weak global demand. (Inv – Continue Reading)
Chinese provinces set lower growth targets for 2026
Most Chinese provinces are targeting lower economic growth this year, which many economists believe signals that Beijing will set a historically low target range of 4.5-5 per cent for its official goal in 2026, the FT reports.
China’s Xi reasserts Taiwan stance in call with Trump, while U.S. president pushes trade
U.S. President Donald Trump said Wednesday that he had a “long and thorough call” with his Chinese counterpart Xi Jinping, naming Iran, Russia’s war in Ukraine, China’s energy purchases and his upcoming visit in April among the key talking points. Beijing’s statement, however, singled out Taiwan as “the most important issue” in bilateral relations, urging the U.S. to “handle the issue of arms sales to Taiwan with prudence.” (CNBC)
Today’s Macro Roadmap: BOE & ECB Rate Decision, US jobless claims & JOLTS, Fed speak
With little likelihood of a policy move from the Bank of England this week, investor attention will centre on the accompanying statement and updated economic forecasts. The latest economist poll expects the Monetary Policy Committee to vote to keep the Base Rate unchanged at 3.75%, with the decision due at midday on Thursday. How policymakers communicate their future intentions will be closely scrutinised. This may be reflected in the voting split, though analysts are divided on whether the outcome will be 6–3 or 7–2. (LS – Continue Reading)
The European Central Bank is expected to keep interest rates unchanged at 2% for a fifth consecutive meeting, as global tensions and euro strength have not yet impacted the economy. Analysts predict rates will stay at this level through next year, with a rate hike unlikely before 2026. (BBG)
On the data front, the most important release today will be the December US JOLTs report at 16:00 CET, which was originally scheduled for release on February 3rd but was delayed due to the partial government shutdown. The consensus expects an increase in job openings. Some labour market indicators have stabilised recently, including the Indeed series.
We will watch out for the private quits rate, which correlates well with wages and ticked up in the last report.
Initial and continuous jobless claims are expected to edge higher.
Good luck today, and feel free to ping me in the chat to discuss markets and views!