Pre-market stock futures for the three major U.S. indices all climbed higher on Tuesday, February 10th. At the time of writing, Dow Jones futures were up 0.06%, S&P 500 futures gained 0.11%, and Nasdaq futures advanced 0.06%.
In European markets, Germany's DAX index rose 0.09%, while Britain's FTSE 100 index fell 0.22%. France's CAC 40 index increased by 0.31%, and the Euro Stoxx 50 index was up 0.18%.
In commodities, WTI crude oil rose 0.42% to $64.63 per barrel. Brent crude increased by 0.52% to $69.40 per barrel.
Market sentiment is anticipating potential interest rate cuts, with U.S. Treasury yields declining further ahead of the retail sales data release. Economists predict that U.S. retail sales growth for December will slow to 0.4% from the previous 0.6%, while the employment cost index for the fourth quarter is expected to remain stable at 0.8%. These economic figures, along with subsequent commentary from Federal Reserve officials, could reinforce the argument for further monetary easing.
The yield on the 10-year U.S. Treasury note fell 2 basis points to 4.18%, nearing its lowest level since mid-January. The more policy-sensitive 2-year Treasury yield dropped 1 basis point, displaying a "bull-flattening" pattern where long-term yields decline faster than short-term yields. Money markets are now pricing in approximately a 25% probability of three 25-basis-point rate cuts by the Fed this year, compared to expectations for just two cuts a week ago.
BNP Paribas has set a bullish $6,000 per ounce year-end target for gold, with David Wilson, Head of Commodity Strategy, stating the rally is "justified." He suggests the gold-to-silver ratio could also rise amid persistent macroeconomic and geopolitical risks. Wilson noted that while the ratio remains below its two-year average from the 1980s, it has rebounded, indicating potential for further divergence. He emphasized gold's unique role in providing risk protection unmatched by silver. The outlook is further supported by continued central bank purchasing, including Poland's recent announcement to buy an additional 150 tonnes of gold, following its status as last year's largest buyer. Wilson also noted stable inflows into gold ETFs, which recovered after a brief dip during last week's market adjustment.
Ahead of a new round of chip tariffs, the Trump administration is reportedly considering exemptions for major U.S. tech giants like Amazon, Google, and Microsoft. Sources indicate these exemptions are linked to their massive investments in building AI data centers, deemed crucial for the U.S. economy. The Commerce Department would grant these exemptions following trade investigations, closely tied to TSMC's multi-billion dollar commitment to manufacture advanced AI chips and other sub-3nm process nodes in the U.S. However, the plan is still under adjustment and has not yet received formal approval.
Deutsche Bank analysts have issued a warning, identifying the software and tech sectors as the largest concentration risk in the speculative-grade credit market. The team, led by Steve Caprio, highlighted that software and tech account for $597 billion and $681 billion, representing about 14% and 16% of the market, respectively. Speculative-grade debt includes high-yield bonds, leveraged loans, and U.S. private credit. The analysts cautioned that a rise in software sector defaults could severely impact overall market sentiment, potentially mirroring the 2016 energy crisis. They added that, unlike 2016, stress would likely emerge first in private credit, Business Development Companies (BDCs), and leveraged loans, with the high-yield market following. The rapid adoption of AI tools could further pressure SaaS companies' valuation multiples and revenue, while the Fed's hawkish stance since 2022 continues to strain corporate cash flows.
Federal Reserve Governor Michelle Bowman commented that the central bank should reduce its balance sheet size but cautioned this should not prevent large-scale asset purchases during future economic crises. She noted that a smaller balance sheet would reduce the Fed's footprint in financial markets while preserving policy options. While supporting a gradual reduction plan, Bowman emphasized the process cannot be rushed. Citi strategists echoed that any restart of Quantitative Tightening (QT) would likely be gradual to avoid reigniting money market tensions, noting potential pressure on the $12.6 trillion repo market.
In corporate news, Taiwan Semiconductor Manufacturing (TSM) reported a 37% year-over-year surge in January revenue to NT$401.3 billion (approximately $12.7 billion), exceeding its full-year growth forecast of 30%. This indicates sustained growth in global AI spending, despite bubble concerns. The data may be somewhat volatile due to the Lunar New Year holiday falling in January 2025. Strong demand for data center chips is driving the company's capital expenditure budget for this year to as high as $56 billion, a 25% increase from 2025. Last week, Nvidia CEO Jensen Huang described this capital expenditure surge as a "once-in-a-generation infrastructure buildout."
Following a $20 billion bond sale, Alphabet (GOOGL) is issuing bonds denominated in British pounds and Swiss francs for the first time, including a rare 100-year bond. The sterling issuance includes bonds with maturities from 3 to 32 years, plus the century bond. The Swiss franc issuance includes 3, 6, 10, 15, and 25-year bonds. Both offerings are expected to be priced later today. On Monday, Alphabet raised $20 billion via a seven-part dollar bond sale, surpassing the initially expected $15 billion and attracting over $100 billion in orders, one of the strongest corporate bond sales on record.
Coca-Cola (KO) shares declined pre-market after its Q4 revenue of $11.8 billion missed expectations by $250 million. Adjusted EPS was $0.58, beating estimates by $0.02. The company forecast 2026 adjusted EPS in the range of $3.21-$3.24, above the prior expectation of $2.97. Capital expenditure for 2026 is projected at $2.2 billion, below the market consensus of $2.31 billion. At the time of writing, Coca-Cola shares were down nearly 4% in Tuesday's pre-market trading.
ON Semiconductor (ON) reported Q4 revenue fell 11% to approximately $1.53 billion, with adjusted EPS of $0.64, significantly lower than the $0.95 reported a year earlier. Both figures, however, beat analyst consensus estimates of about $1.52 billion and $0.62, respectively. For Q1 2026, the company expects revenue of about $1.49 billion and an adjusted EPS midpoint of $0.61, compared to Street expectations of $1.51 billion and $0.63. The weaker-than-expected guidance suggests the anticipated "super-cycle" of AI data center-driven revenue and profit growth has not yet fully materialized. Shares were down nearly 5% pre-market.
AstraZeneca PLC (AZN) expects steady double-digit profit growth this year, driven by robust demand for its cancer drugs. For the quarter ended December 31, core EPS was $2.12 on revenue that grew 2% to $15.5 billion, matching consensus estimates. Q4 cancer drug sales surged 20% to $7.03 billion, while cardiovascular drug revenue fell 6% to $3.05 billion, partly due to generic competition for drugs like Farxiga. The company forecasts 2026 revenue growth in the mid-to-high single digits at constant exchange rates, with core profit growth reaching the low double digits. AstraZeneca is betting on cancer drug demand while increasing R&D spending and investing in the U.S. and China to counter geopolitical pressures and patent expirations.
Royal Philips NV (PHG) delivered strong Q4 results, with sales and profit exceeding expectations. Q4 sales rose 1% to €5.1 billion, beating forecasts. Comparable sales growth was 7%, outperforming the analyst consensus of 4.9%. Adjusted EBITA reached €770 million, above the €672 million consensus, with the margin expanding 160 basis points to 15.1%, driven by sales growth, product mix benefits, and productivity gains, despite higher tariff costs. However, the company provided a cautious 2026 outlook, lowering its comparable sales growth forecast to 3%-4.5% from around 4.5% and expecting an adjusted EBITA margin between 12.5% and 13%, reflecting escalating U.S. tariff pressures and continued challenges in the Chinese market. Shares surged over 7% pre-market.
Honda (HMC) reported a sharp 61.4% decline in Q3 operating profit to ¥153.4 billion, missing the average analyst estimate of ¥174.5 billion, marking the fourth consecutive quarterly drop. Revenue fell 3.4% to ¥5.34 trillion. The decline was attributed to U.S. import tariffs and weak electric vehicle demand. Struggling with soft auto sales, high tariffs, and intensifying competition from China, the company found some offset from strong hybrid vehicle demand and profitable motorcycle operations. Honda raised its full-year sales forecast to ¥211 trillion from ¥207 trillion but maintained its operating profit guidance of ¥550 billion for the fiscal year ending March 2026, down from ¥1.21 trillion the previous year.
BP PLC (BP) reported a 32% jump in Q4 adjusted profit to $1.54 billion, matching analyst expectations. However, the company unexpectedly paused its share buyback program. The 2026 capital expenditure budget was set at $13-$13.5 billion, at the lower end of its guidance range, signaling a cautious approach. The move is seen as prioritizing cash reserves to strengthen the balance sheet for future energy investments amid ongoing oil price pressures. The company stated the pause aims to free up capital for oil and gas investment opportunities. Shares were down over 4% pre-market.
Barclays (BCS) reported better-than-expected Q4 results and pledged to return over £15 billion to shareholders. Q4 pre-tax profit was £1.9 billion, up from £1.7 billion a year ago and exceeding the £1.72 billion consensus. Fixed income trading revenue rose 9.6% to £1.02 billion, while equities trading revenue increased 16% to £703 million, both marking the best Q4 performance since the bank's 2016 reporting structure change. Investment banking revenue was £606 million, roughly flat year-on-year and slightly below expectations. As part of its long-term strategy to cut costs and boost profitability, the bank committed to returning at least £15 billion (approximately $20.5 billion) to shareholders via dividends and buybacks by 2028.
Key economic data and events scheduled for today include the U.S. December Retail Sales MoM report at 21:30 Beijing Time. The EIA will release its Monthly Short-Term Energy Outlook Report at 01:00 the following day. Speeches are scheduled from 2026 FOMC voters, Cleveland Fed President Loretta Mester on the "Banking and Economic Outlook" at 01:00, and Dallas Fed President Lorie Logan at 02:00 the following day.
Earnings preview for Wednesday includes reports from Robinhood (HOOD), Ford (F), Lyft (LYFT), and Cloudflare (NET) before the market opens. Pre-market reports are expected from TotalEnergies (TTE), NetEase (NTES), Youdao (DAO), T-Mobile US (TMUS), Shopify (SHOP), and Unity (U).
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