MARKET WRAPS
Watch For:
EU CPI, PPI; Italy provisional CPI; services PMI data for EU, U.K., Germany, France, Italy; trading updates from UBS, Credit Agricole, Novartis, GSK, Banco Santander, Novo Nordisk, Equinor, Carlsberg, Infineon Technologies, OMV, Vodacom, DCC, SSE
Opening Call:
European stock futures were broadly higher early Wednesday; Asian stock indexes declined; the dollar weakened slightly; Treasury yields were little changed; oil and gold futures advanced.
Equities:
Stock futures in Europe were tracking broadly higher with a focus on corporate earnings. U.S. software stocks, especially those tied to legal software and data businesses, fell sharply on Tuesday as Wall Street panicked about new artificial intelligence features from Anthropic.
Tuesday's "tech sell-off was sharp, but it's just the latest episode in a trend that was evident toward the end of last year, and which picked up steam recently," said Daniel Skelly, head of Morgan Stanley's wealth management market research and strategy team.
Notably, rotation is also happening within tech itself, as investors flee software because of continued AI-disruption fears, and move toward other momentum winners, like memory, Skelly said.
The selloff came as tech earnings remain in focus with Alphabet due on Wednesday and Amazon.com on Thursday.
Forex:
The dollar weakened as markets face another U.S. data gap. Key labor reports are delayed even as lawmakers advance funding for the government. The greenback had been recovering from last week's decline as FX markets grappled with changing fiscal and monetary policy across the developed world.
However, the dollar may be supported by prospects that the Fed may take a long time to lower rates. Both Fed governor Michelle Bowman and Richmond Fed President Tom Barkin have signaled a longer wait for further rate cuts given elevated inflation, CIMB Treasury and Markets Research analysts said.
Bonds:
Treasury yields were little changed as U.S. lawmakers approved funding legislation to end a partial government shutdown. Key labor data releases, however, have already been delayed, including January payrolls originally scheduled for Friday.
The January ADP report due later in the day is expected to show private-sector hiring increasing to 45,000 from December's 41,000, in a WSJ consensus. January services PMI is forecast to slip to 53.5 from 54.4.
Energy:
Oil advanced amid U.S.-Iran tensions. The U.S. shot down an Iranian drone aimed at aircraft carrier USS Abraham Lincoln. This confrontation has raised worries of a further conflict between the U.S. and Iran, potentially leading to oil supply disruptions in the Middle East, CBA's Vivek Dhar said.
While the U.S. and Iran are set to start talks on Friday, President Trump's threat that "bad things would happen" if no agreement is reached over Iran's nuclear program justifies a risk premium, the analyst added.
Metals:
Gold gained, reversing earlier losses, amid ongoing geopolitical tensions in the Middle East, which typically enhance the safe-haven allure of the precious metal. "Structural supports for precious metals remain intact," OCBC Group Research said. "Portfolio diversification demand remains supported by geopolitical risks, rising debt burdens, and U.S. policy uncertainty," it added.
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Copper edged lower, giving up earlier gains. Stockpiles at the Shanghai Futures Exchange have been higher in recent weeks but remain below typical seasonal levels, ANZ analysts said. The metals market remains volatile.
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Iron ore declined. There are signs that capital has been rotating out of the ferrous metal sector and into other commodities, Nanhua Futures analysts said. Iron ore shipments remain relatively high, with rising port inventories and ample spot supply limiting upside potential for prices. However, steel mills are still expected to restock limiting downside risks in the near term as well, they said.
TODAY'S TOP HEADLINES
Threat of New AI Tools Wipes $300 Billion Off Software and Data Stocks
Investors' fears that new developments in artificial intelligence will supplant software reverberated through the stock market Tuesday, dragging down the shares of companies that develop, license and even invest in code and systems.
Traders have questioned whether AI will chip away at the competitive moat built by software makers like Adobe and Salesforce ever since generative AI models hit the market several years ago. Recent advancements in tools such as those from AI developer Anthropic are now prompting more scrutiny.
America's Critical-Minerals Strategy Looks Increasingly Chinese
The new U.S. strategy for rare-earth minerals looks a lot like China's old one.
A U.S. government agency is providing most of the funding for a $12 billion government-led stockpile of minerals, some of which will likely be sourced from mining companies partly owned by the government.
Trump Signs Bill Ending Government Shutdown
President Donald Trump signed a bill ending the four-day, partial government shutdown on Tuesday afternoon. "We've succeeded in passing a fiscally responsible package," he said during the Oval Office event while surrounded by Republican lawmakers.
"This is a big thing," House Speaker Mike Johnson, a Republican from Louisiana, said at the signing. "This is good for the country."
Banco Santander Strikes $12.3 Billion Deal for Webster Financial in U.S. Expansion
Banco Santander is buying Webster Financial in a cash-and-stock deal valued at $12.3 billion, marking an escalation in the Spanish banking giant's push to expand its presence in the U.S.
The deal would put Santander in contention with big regional U.S. banks. Santander called it "strategically significant" for its U.S. business and said it would make it a top bank in the Northeast. With more than $80 billion in assets, Stamford, Conn.-based Webster has dozens of branches throughout Connecticut, Massachusetts, Rhode Island and the New York metro area.
Without Immigrants, U.K. Economy Would Be Smaller, More Indebted, Says NIESR
The U.K. economy would be smaller, its debts larger and taxes higher within 15 years if immigration were to end, the National Institute of Economic and Social Research said Wednesday.
In its quarterly report on the economic outlook, the U.K.'s leading economic research body also said it expects inflation to settle at the Bank of England's 2% target later this year, and the central bank to lower its key interest rate twice more.
U.S.-Iranian Talks Are Still Expected After Gulf Flare-Ups
For a few hours Tuesday, two Iranian provocations against the U.S. raised questions as to whether nuclear talks between Tehran and Washington could be derailed. But negotiations are still expected this week, U.S. officials say, keeping diplomacy on the table even as President Trump amasses a military force in the Middle East and issues threats against Iran.
The U.S. shot down an Iranian drone aimed at the aircraft carrier USS Abraham Lincoln, and a U.S.-flagged ship outran an attempt by armed Iranian gunboats to force it to stop, spiking tensions in the Persian Gulf.
KKR Makes AI Play With Nearly $11 Billion Asia Data-Center Deal
A KKR-led consortium has agreed to acquire a Singapore data-center company valued at $10.9 billion, marking the U.S. firm's largest Asia-Pacific infrastructure investment yet as the AI frenzy fuels demand for tech assets.
The group of investors, which includes Singapore telecommunications company Singtel, will buy the rest of ST Telemedia Global Data Centres not already owned from its parent, the companies said Wednesday.
Write to singaporeeditors@dowjones.com
Expected Major Events for Wednesday
05:30/NED: Jan Flash Estimate CPI
08:15/SPN: Jan Spain Services PMI
08:45/ITA: Jan Italy Services PMI
08:50/FRA: Jan France Services PMI
08:55/GER: Jan Germany Services PMI
09:00/EU: Jan Eurozone Services PMI
09:30/UK: Jan S&P Global UK Services PMI
09:30/UK: Jan UK Official Reserves
09:30/UK: Jan Narrow money (Notes & Coin) and reserve balances
10:00/EU: Jan Flash Estimate euro area inflation
10:00/ITA: Jan Cities CPI
10:00/ITA: Jan Provisional CPI
10:00/EU: Dec PPI
10:00/CYP: Jan Registered Unemployed
11:00/POR: 4Q Employment statistics
16:59/POL: Polish interest rate decision
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(END) Dow Jones Newswires
February 04, 2026 00:00 ET (05:00 GMT)
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