Silver, bitcoin and parts of the tech sector are taking a heavy battering

The software sector is continuing to be purged in the United States. Fears that artificial intelligence could upend business software are unnerving investors, who are using the opportunity to liquidate positions deemed a little too risky. The result has been spectacular declines across equities and other asset classes, including precious metals and cryptocurrencies. In this environment, Europe, largely spared thanks to the modest size of its technology sector, is emerging as a relative winner.

As a rule of thumb, sessions that end with the Nasdaq 100 down 1.8% and the Dow Jones up 0.5% signal investor disenchantment with the so-called new economy and a comeback for the old. That is broadly what is happening at present, although it should be noted that Apple contributed significantly to the Dow's advance, rising 2.6%. In the current climate, being something of a laggard on AI has its virtues. The Nasdaq 100 has not fallen this sharply over two consecutive days since October. It has shed 4.9% over the past five sessions. The bloodbath among software publishers eased for some names yesterday, though not for all. It also prompted precautionary selling in other assets, either because their recent gains had become unsustainable (gold and silver slid again) or because their risk profile looks excessive amid heightened volatility (bitcoin is gravitating towards $70,000, down 30% over three months).

Old Europe is taking advantage of the situation to pull ahead. The Stoxx Europe 600 is up 4.4% since the start of the year, compared with a gain of just 0.5% for the S&P 500, or a 0.5% decline once currency effects are taken into account. Not all markets moved in the same direction yesterday. Paris stood out across its traditional sectors, particularly the most defensive ones such as consumer staples, telecoms and energy. Frankfurt, by contrast, suffered from its heavy exposure to defence stocks, a sector hit by the prospect of a compromise in the war in Ukraine. Overall, however, the picture looks far brighter than across the Atlantic at the start of February.

To be precise, a significant number of US-listed companies are performing well and delivering solid results. But the noise surrounding the technology heavyweights can trigger chain reactions driven by risk aversion. This is the most dangerous aspect, as it can lead to situations that are hard to control.

Today's corporate earnings calendar is exceptionally crowded. Roughly a hundred listed companies with market capitalisations above $20 billion are due to report. This morning, BNP Paribas, Sony, BBVA, Shell, Compass, Anglo American and ArcelorMittal set the tone. In the United States, Amazon will be centre stage after the close. Ahead of that, Linde, KKR, ConocoPhillips and Bristol-Myers Squibb will publish their numbers. Last night, Alphabet impressed with its results but unsettled investors with higher spending on AI. After the close, the stock initially fell 7% before recovering to near break-even. Qualcomm, down 9.6%, and Arm Holdings, down 7.5%, were less fortunate, their performances being harshly judged by investors who remain extremely nervous.

Beyond company results, the agenda today is dominated by two central banks. The Bank of England and the European Central Bank are both expected to keep interest rates unchanged. Markets will be scrutinising the comments of Andrew Bailey and Christine Lagarde to assess the stance of the two institutions in the months ahead. The dollar's rebound against the euro, after its recent slump, is easing some of the pressure on the ECB. In the United States, investors will also be watching the JOLTS job openings survey, as they will not have access to the monthly employment report tomorrow, its publication having been officially postponed until 11 February.

Finally, Donald Trump and Xi Jinping exchanged pleasantries during a telephone call. There is little to report: cordial words for the cameras, even as each side harbours ambitions to overpower the other.

In Asia and Oceania, red dominates the screens. Markets in Japan, mainland China, Hong Kong, India and Australia all fell by less than 1%. The highly sensitive South Korean market plunged 4.5%, weighed down by its large technology component. This marks the third session since the beginning of February to record a move of more than 4%, in either direction. Europe is expected to open slightly lower.

Today's economic highlights:

Today's agenda includes: the balance of trade in Australia; factory orders in Germany; industrial production in France; retail sales in Italy and the Euro Area; in the United Kingdom, the S&P Global Construction PMI, the BoE interest rate decision, MPC meeting minutes, BoE monetary policy report, and MPC votes; in the Euro Area, the ECB interest rate decision, deposit facility rate, and ECB press conference; in the United States, initial jobless claims, JOLTs job openings, and Fed Bostic's speech. See the full calendar here.

• GBP / USD: US$1.36
• Gold: US$4,909.89
• Crude Oil (BRENT): US$67.95
• United States 10 years: 4.26%
• BITCOIN: US$70,681.6

In corporate news:

• Brookfield Private Capital clarified it does not plan to make an offer for Hikma Pharmaceuticals amid recent press speculations.
• There are still sticking points between Glencore and Rio Tinto over a potential merger, the Financial Times reports.
• The Bank of England is expected to keep interest rates on hold and leave its options open about when it will cut them again.
• Shell is set to launch a boardroom pay policy that could give CEO Wael Sawan a multimillion-pound annual boost.
• Barclays and NatWest are set to table rival bids for £2 billion wealth manager Evelyn.
• Lloyds Banking Group plans to expand its corporate and institutional banking business, aiming to grow its U.S. office and other international locations.
• Santander's acquisition of Webster Financial reflects its ambition to become a significant player in U.S. retail banking.
• NatWest Group committed a further £10 billion in funding before the end of 2028 to support UK social housing.
• Metlen Energy & Metals agreed to sell UK solar power assets to Schroders Greencoat as part of its global asset rotation strategy.
• Watches of Switzerland Group raised full-year revenue guidance after strong holiday sales but trimmed margin outlook.
• Grainger reported continued demand growth amid an undersupply of rental housing in the UK.
• GlobalData plans to move to the London Stock Exchange's Main Market from AIM in March.
• GSK delivered strong financial performance in 2025, driven by double-digit sales growth in specialty medicines.
• Novo Nordisk will launch the Ozempic tablet for the treatment of diabetes in the second quarter of 2026.
• Siemens AG will make a final decision on the successor to the president by February 2027.
• FLSmidth appoints Toni Laaksonen as CEO.
• Ciena will join the S&P 500, taking the place left vacant by Dayforce, which was acquired by the Thoma Bravo fund.
• Trump announces he will stay out of the conflict between Netflix and Paramount over Warner Bros, according to NBC.
• Boeing will cut about 300 jobs in the supply chain of its defense division, Bloomberg reveals.
• FMC Corp is evaluating its strategy and may be looking for a buyer.
• Roblox unveils generative AI capable of creating interactive models in natural language.

See more news from UK listed companies here