AI disruption narrative collides with tariff risks

EU Mid-Market Update: AI disruption narrative collides with tariff risks; All eyes on Trump's State of the Union speech and Anthropic presentation today and Nvidia results after close on Weds.

Notes/observations

- European equities opened lower amid mixed Asian trading, while US futures edge higher. Market sentiment continues to be shaped by AI-disruption risk and a volatile trade backdrop. A Citrini Research note warning of AI displacing intermediation-heavy business models triggered renewed selling across software, while IBM’s sharp decline underscored sensitivity to advances from Anthropic’s Claude. Trade remains central after the Supreme Court voided IEEPA tariffs, with President Trump threatening further increases and markets awaiting clarity in tonight’s State of the Union.

- Europe’s focus remains on trade tensions. EU delayed ratifying its US trade agreement, leaving exports subject to a 15% tariff and pressing Washington for details. The fourth anniversary of Russia’s invasion of Ukraine adds geopolitical weight, amplified by Slovakia’s suspension of emergency power flows.

- Yen saw selloff triggered by piece on Japan PM Takaichi feeling apprehension against BOJ rate hikes, a dovish tilt; US dollar is uneven, firmer versus JPY/EUR/CHF, softer against AUD/NZD. Global yields are mostly higher, JGBs softer. Oil inches up ahead of US-Iran nuclear talks; Copper benefits from China’s post-holiday return; Gold consolidates after Monday’s haven bid. Bitcoin stays under pressure as risk appetite remains fragile. EU natural gas prices soften on warmer weather and stronger LNG inflows.

- Today, Anthropic’s 9:30 a.m. ET keynote ("The Briefing: Enterprise Agents") is positioned as a 2026 Claude roadmap event with new product announcements, live demos, and technical guidance on deploying enterprise agents "with confidence" - signaling a push from prototype excitement to production-grade adoption. In the current AI-agent fear environment - where buyers are increasingly focused on reliability, governance, and security risks, and Anthropic itself is simultaneously elevating model misuse/distillation concerns.

- Yesterday’s Citrini’s memo which was blamed for another tech sell-off was strongest as a stress test of valuation assumptions and profit-pool vulnerability - not as a literal timeline forecast - because it usefully surfaces how AI can pressure "intelligence rents" and "friction rents" through bargaining power, procurement behavior, and belief-driven repricing before full technical automation arrives. What it gets wrong is time compression, simultaneity, and missing transmission plumbing: it often blurs pricing pressure into functional displacement, under-specifies demand recycling (capex as rerouted income vs demand sink), and skips threshold mechanics in areas like insurance, private credit, and mortgages where liability, regulation, and capital structure determine whether pressure becomes a crisis.

- JPMorgan’s Investor Day read as a "strong now, cautious later" message: management raised FY26 firmwide NII to $104.5B (with NII ex-markets unchanged at ~$95B and markets-related NII now ~$9.5B), said pipelines/activity/consumer trends remain strong, and flagged Q1 IB fees and markets revenue as running mid-teens YoY (potentially high teens) if conditions stay constructive. At the same time, Dimon and team emphasized macro and structural risks - tariffs, AI disruption, geopolitics, deficits and remilitarization - while defending heavy investment spending (tech/AI/branches), adding a succession signal with Dimon saying he expects to remain CEO for a few more years and could stay on afterward as executive chairman or chairman, subject to the board.

- FedEx’s lawsuit to recover all IEEPA duties paid (after the U.S. Supreme Court ruled those emergency tariffs unlawful) creates a potentially material earnings/cash-flow offset to prior tariff headwinds, especially given FedEx had previously flagged about a $1.0B FY26 trade headwind and a $170M FY25 tariff headwind, though the refund amount and timing are still uncertain because no formal refund process has been established yet. Reuters reports FedEx filed in the U.S. Court of International Trade seeking a full refund, and the ruling has opened the door to potentially very large refund claims across importers more broadly.

- Notable results: Telefónica and Endesa outperform on strong prints and upgraded medium-term guidance, while MTU Aero Engines and Fresenius Medical Care lag on weak FY26 outlooks. Solvay, Edenred and Forvia also trade higher following earnings and strategic updates. In Asia, Meituan’s delivery losses narrowed modestly but CGS cut the stock to hold given ongoing subsidy-war uncertainty.

- Asia closed mixed with KOSPI outperforming +2.1%. EU indices -0.1% to -0.6%. US futures +0.2-0.3%. Gold -1.0%, DXY +0.1%; Commodity: Brent +0.3%, WTI +0.4%; Crypto: BTC -4.7%, ETH -4.6%.

Asia

- China PBOC Monthly Loan Prime Rate (LPR) Setting: leaves rates unchanged, as expected.

- China MOFCOM: Bans dual-use exports to 20 Japanese companies on national security grounds; Adds the companies to Export Control List.

- Japan PM Takaichii said to have voiced to BOJ Gov Ueda 'apprehension' on more rate hikes - Japanese press.

- Jan FX rate check was initiated by US Treasury Sec Bessent - Nikkei.

-Japan MOF said to be considering “tweaking” of liquidity support JGB auctions as “volatility persists”; the move would be effective from Apr – financial press, citing sources.

- China Foreign Ministry: Can Not confirm reported date of Trump's planned visit.

- China Govt Official: Signed 'price undertaking pact' with South Korea on hot-rolled steel, resolves steel-coil issue.

- Shanghai Gold Exchange reportedly cuts some contract's margin requirements.

Europe

- EU Foreign Policy Chief Kallas: Working with Hungary and Slovakia to find solution; Loan blockage puts Russia frozen asset plan back on table.

- Fourth anniversary of Ukraine-Russia war.

- ASML reportedly has boosted power of its EUV light source for lithography machines from 600W to 1000W for stable production (enabling up to 50% more chips by 2030).

Trade

- China MOFCOM: May adjust countermeasures against U.S. on tariffs.

- Trump’s 10% global tariff goes into effect (as expected).

- Reportedly Trump Admin considers new national-security tariffs under Section 232 (separate from the new 15% levy) on half a dozen industries, including large scale batteries, energy grid, telecom equipment, plastic pipe, cast iron, and iron fittings - WSJ.

- EU warns US that Trump's new tariff policy breaks the trade agreement, as the 15% global tariff would increase levies on some EU exports by more than permitted by the pending trade agreement - press.

- Japan govt: Phone conversation was held between Japan Trade Min Akazawa and US Commerce Sec Lutnick; both sides affirmed investment plans in call [follows recent US Supreme Court ruling on the Trump tariffs].

- Japan Trade Min Akazawa: Japan's US-bound investment deal not disadvantageous for Japan, will work closely with US on each agreed project

- Taiwan Vice Premier: Preferential terms reached with the US in trade deal will not change; Have already been in touch with the US.

- Malaysia PM Anwar: US-Malaysia trade agreement not yet ratified.

Tensions/Conflicts

- US Pres Trump is frustrated regarding the limitations of military options in Iran - press.

- Reportedly US Joint Chiefs Chairman Gen. Caine said to warn Trump that striking Iran comes with significant risks, possibly involving a prolonged conflict - Axios.

- Reportedly Iran Army helicopter crashed in market area in Ishfahan (industrial hub) - press.

- Iran reportedly nears deal to purchase anti-ship missiles CM-302 from China - press.

Speakers/fixed income/FX/commodities

Equities

Indices [FTSE -0.2%, DAX -0.1%, CAC-40 -0.1%, IBEX-35 -0.6%, FTSE MIB -0.3%, SMI +0.5%, S&P 500 Futures +0.3%].

Market Focal Points/Key Themes: European indices opened mixed with a downward bias and failed to gain momentum through the early part of the session; rotation out of tech stocks as theme for the markets; better performing sectors include industrials and materials; financials and communication services sectors leading to the downside earnings expected in the upcoming Americas session include Home Depot, American Tower, HP and Saipem.

Equities

- Industrials: Gerresheimer [GXI.DE] -4.5% (analyst downgrade), MTU Aero Engines [MTX.DE] -6.5% (earnings).

-Healthcare: Novo Nordisk [NOVOB.DK] -3.0% (analyst downgrades), Fresenius Medical Care [FME.DE] -6.5% (earnings).

-Financials: Standard Chartered [STAN.UK] -1.5% (earnings).

-Tech: Elmos Semiconductor [ELG.DE] +4.5% (earnings).

-Telecom: Telefonica [TEF.ES] -0.5% (earnings).

Speakers

-Thailand Central Bank Gov Vitai: Confirms to tighten rules on cash withdrawals/deposits, effective from Mar.

- Thailand Fin Min Ekniti: Need to boost investment this year; To invest more in clean energy.

Economic data

-(PL) Poland Jan Unemployment Rate: 6.0% v 6.0%e.

-(PL) Poland Q4 Unemployment Rate: 3.2% v 3.1%e.

-(CZ) Czech Dec Consumer Confidence: 107.6 v 108.5e; Business Confidence: 99.8 v 99.0e; Consumer & Business (Composite) Confidence: 101.1 v 100.4e.

-(FR) FRANCE FEB BUSINESS CONFIDENCE: 97 V 99E; Manufacturing Confidence: 102 v 104e; Production Outlook Indicator: -6 v -4e; Own-Company Production Outlook: 10 v 14e.

-(ZA) South Africa Dec Leading Indicator: 117.2 v 118.4 prior.

-(NO) Norway Jan Credit Indicator Growth Y/Y (NOK): 4.4% v 4.4% prior.

-(MY) Malaysia mid-Feb Foreign Reserves: $127.9B v $126.9B prior.

-(FI) Finland Jan Unemployment Rate: 10.4% v 9.8% prior.

-(NO) Norway Q1 Consumer Confidence (NOK): -9.4 v -4.7 prior.

-(EU) Euro Zone Jan EU27 New Car Registrations: -3.9% v 5.8% prior.

Fixed income issuance

-Austria Debt Agency (AFFA) sells €1.86B vs. €2.25B indicated in 3-month Bills; Avg Yield: 1.945% v 1.950% prior; Bid-to-cover: 2.07x v 1.78x prior.

-Italy Debt Agency (Tesoro) sells total €2.0B vs. €1.5-2.0B indicated range in I/L 2031 and 2036 bonds (BTPei).

- ITALY DEBT AGENCY (TESORO) SELLS €2.5B VS. €2.5B INDICATED RANGE IN 2.20% FEB 2028 BTP BONDS; AVG YIELD: 2.16% V 2.26% PRIOR; BID-TO-COVER: 1.62X V 1.64X PRIOR.

-UK DMO SELLS £3.0B IN 4.125% MAR 2033 GILTS; AVG YIELD: 4.075% V 4.296% PRIOR; BID-TO-COVER: 3.37X V 3.18X PRIOR; TAIL: 0.2BPS V 0.2BPS PRIOR.

- South Africa sells total ZAR3.0B vs. ZAR3.0B indicated in 2033, 2038 and 2053 bonds.

- Indonesia sells total IDR20T in Islamic bills and bonds (sukuk).

- Philippines sells total PHP35B in 3-year and 25-year bonds.

-South Korea sells KRW500B in 2.75% 20-year Bonds:Avg Yield: 3.58%.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

-06:00 (EU) ECB3-month LTRO Tender.

- 06:00 (BR) Brazil Feb FGV Construction Costs M/M: No est v 0.6% prior.

- 06:00 (UK) Feb CBI Retailing Reported Sales: No est v -17 prior; Distribution Reported Sales: No est v -34 prior.

- 06:30 (BR) Brazil Jan Current Account Balance: No est v -$3.4B prior; Foreign Direct Investment: No est v -$5.2B prior.

- 07:00 (CL) Chile Jan PPI M/M: No est v 3.8% prior.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending Feb 7th: No est v +10.3K prior.

- 08:30 (US) Feb Philadelphia Fed Non-Manufacturing Activity: No est v -4.2 prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) Dec FHFA House Price Index M/M: No est v 0.6% prior; Q/Q: No est v 0.2% prior.

- 09:00 (US) Dec S&P Cotality House Price Index (20-city) M/M: No est v 0.5% prior; Y/Y: No est v 1.4% prior; House Price Index (overall) Y/Y: No est v 1.4% prior.

- 10:00 (US) Feb Richmond Fed Manufacturing Index: No est v -6 prior.

- 10:00 (US) Feb Consumer Confidence: 88.0e v 84.5 prior.

- 10:00 (US) Dec Final Wholesale Inventories M/M: No est v 0.2% prior; Wholesale Trade Sales M/M: No est v 1.3% prior.

- 10:30 (US) Feb Dallas Fed Services Activity: No est v 2.7 prior.
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 13:00 (US) Treasury to sell 2-Year Notes.

- 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: No est v -0.3% prior; Y/Y: No est v -0.3% prior.

- 16:00 (KR) South Korea Feb Manufacturing Business Survey: No est v 97.5 prior; Non-Manufacturing Survey: No est v 91.7 prior.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 18:50 (JP) Japan Jan PPI Services Y/Y: No est v 2.6% prior.

- 19:30 (AU) Australia Jan CPI M/M: No est v 1.0% prior; Y/Y: No est v 3.8% prior; CPI Trimmed Mean M/M: No est v 0.2% prior; Y/Y: No est v 3.3% prior.

- 19:30 (AU) Australia Q4 Construction Work Done: No est v -0.7% prior.

- 22:00 (KR) South Korea Q4 Short-Term External Debt: No est v $161.6B prior.

- 22:30 (TH) Thailand Jan Customs Trade Balance: No est v -$0.4B prior; Exports Y/Y: 8.0%e v 16.8% prior; Imports Y/Y: 10.0%e v 18.8% prior.

- 22:35 (CN) China to sell CNY120B in 1.54% 2031 Bonds.

- 23:00 (SG) Singapore to sell 2.625% 2028 Bonds.

- 23:30 (TW) Taiwan to sell NT$25B in 20-year Bonds.