Are AI fears overblown?

What to look out for today

Companies reporting on Tuesday, 17^th February: Allegion, Devon Energy, EQT, FirstEnergy, Kenvue, Medtronic, Palo Alto Networks, Vulcan Materials

Key data to move markets today

EU: Germany’s CPI and Harmonised Index of Consumer Prices, ZEW Survey Current Situation and Economic Sentiment, Eurozone ZEW Survey Economic Sentiment, EcoFin Meeting, and a speech by Bank of Spain Governor José Luis Escrivá
UK: Claimant Count Rate and Change, Employment Change, ILO Unemployment Rate, and Average Earnings
USA: ADP Employment Change 4-week Average, New York Empire State Manufacturing Index and speeches by San Francisco Fed President Mary Daly and Fed Governor Michael Barr
JAPAN: Exports, Imports, Merchandise Trade Balance, and Adjusted Merchandise Trade Balance

European Stock Indices

CAC 40 +0.06%
DAX -0.46%
FTSE 100 +0.26%

In Wednesday’s trading session, Banks experienced a sharp recovery amid concerns about disruption in wealth management due to AI. NatWest Group announced a £750 million share buyback following robust FY 2025 results. According to the Financial Times, cross-border M&A among European banks has reached its highest levels since the 2008 financial crisis, fuelled by rising profits and valuations.

Basic Resources underperformed, with gold and metal prices under pressure due to reduced liquidity because of the Presidents Day holiday in the US and Chinese Lunar New Year celebrated across Asia and a stronger US dollar. European steelmakers were still digesting news of President Trump’s tariff rollback from Friday, SSAB and Acerinox saw modest recoveries despite their exposure to US production, while Thyssenkrupp benefitted as a pure exporter. ArcelorMittal faces a months-long halt at its Avilés furnace, which may tighten regional supply.

Technology also traded lower as the debate about AI disruption continues. The software sector remains subdued at a PE ratio of 16x (down from 25x), though Jefferies emphasised that selectivity is more important than blanket pessimism, with cost-advantaged winners emerging over those suffering from revenue impacts.

Food & Beverage also underperformed after the Paris public prosecutor opened five investigations into contamination with cereulide toxin, weighing on baby formula manufacturers. Nestlé and Danone have been affected as regulatory scrutiny over product safety concerns intensifies.

Commodities

Gold spot -0.99% to $4,992.09 an ounce
Silver spot -1.06% to $76.58 an ounce
West Texas Intermediate +1.50% to $63.75 a barrel
Brent crude +1.54% to $68.67 a barrel

Gold prices declined by nearly one percent on Monday amid thin trading conditions. The decline was further exacerbated by a firmer US dollar, which weighed on bullion prices. 

Spot gold fell -0.99% to $4,992.09 per ounce. US markets were closed for Presidents Day, while China and several other Asian markets were shut for the Lunar New Year holiday.

Silver prices also weakened, with spot silver falling -1.06% to $76.58 per ounce.

Oil prices settled higher on Monday as investors assessed the potential market impact of upcoming US – Iran talks aimed at de-escalating geopolitical tensions, against expectations of increased supply from OPEC+.

Brent crude futures rose $1.04, or +1.54%, to settle at $68.67 per barrel. US WTI crude traded at $63.75 per barrel, up 94 cents, or +1.50%. The WTI contract did not officially settle due to the US Presidents Day holiday.

US and Iranian officials are scheduled to hold a second round of negotiations in Geneva today regarding Iran’s nuclear programme. While ongoing tensions between the two countries have supported oil prices, this upward pressure has been partially offset by indications that OPEC+ may resume output increases from April, following a three-month pause, after its meeting on 1^st March.

China absorbs Russian flows, India retreats. As reported by Reuters, China’s imports of Russian crude oil are expected to rise for a third consecutive month in February, reaching a new record high. This increase follows a reduction in Indian purchases due to US pressure, according to traders and ship-tracking data. 

Russian crude shipments to China are estimated at approximately 2.07 million barrels per day (bpd) for February deliveries, exceeding January’s estimated 1.7 million bpd, based on preliminary assessments by Vortexa Analytics. Kpler’s provisional data indicates February imports of 2.083 million bpd, representing a 20.5% m/o/m increase from January.

Since November, China has overtaken India as Russia’s largest buyer of seaborne crude, as Western sanctions related to the war in Ukraine and pressure to conclude a trade agreement with the US have prompted India to scale back imports to a two-year low. Indian purchases are expected to decline further, to an estimated 1.159 million bpd in February.

As a result, Russian oil prices have fallen to discounts of $9 to $11 per barrel below ICE Brent for January and February deliveries to China, marking the lowest levels in years for Urals crude. Other Russian export grades, including Sokol and Varandey, have increasingly competed with Iran by joining regular shipments of the ESPO blend from the Kozmino port in Russia’s Far East.

Independent Chinese refiners, commonly referred to as teapots, remain the world’s largest consumers of US-sanctioned oil from Russia, Iran, and Venezuela. ESPO blend for March delivery has traded at discounts of $8 to $9 per barrel to ICE Brent, while Iranian Light has been assessed at $10 to $11 below Brent. 

However, uncertainty regarding the possibility of US military action against Iran has reduced buying activity. Vortexa estimates that Iranian oil deliveries to China declined to 1.03 million bpd in February from 1.25 million bpd in January.

Note: As of 4 pm EST 16 February 2026

Currencies

EUR -0.15% to $1.1849
GBP -0.16% to $1.3626
Bitcoin -0.03% to $68,845.12
Ethereum -2.63% to $1,998.98

The Japanese yen weakened on Monday as the US dollar strengthened amid thin liquidity, with markets closed in the US and several Asian countries. The US dollar index rose +0.21% to 97.09, recovering some ground after a -0.82% decline last week.

The euro slipped -0.15% to $1.1849. Sterling remained range-bound ahead of key UK labour market and inflation data due later in the week, which could influence expectations for BoE policy. Futures markets are currently pricing in nearly two quarter-point rate cuts this year. Sterling edged down -0.16% to $1.3626 on Monday. 

The yen fell -0.54% to ¥153.51 per US dollar, following a sharp +2.88% appreciation last week, its largest weekly gain in approximately 15 months, after Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a landslide election victory.

Economic data released on Monday highlighted ongoing challenges for Japan, with the economy recording only a marginal GDP annualised growth rate of 0.2% in Q4. The BoJ is scheduled to meet in March, with markets assigning a 20% probability to a rate hike. The central bank raised its key rate to a 30-year high of 0.75% in December, although this remains well below rates in most major economies.

Fixed Income

US Bond markets closed due to Presidents Day
German 10-year -0.1 basis points to 2.758%
UK 10-year gilt -1.8 basis points to 4.402%

Eurozone government bond yields fell to their lowest levels since early December, extending a six-day decline. 

German 10-year yields eased -0.1 bps to 2.748%, marking the longest streak of daily declines since late November 2024. Over the previous week, yields fell by -8.4 bps, the largest weekly drop since March.

Although the week began quietly, several key economic indicators are scheduled for release this week, including business activity surveys in Germany and France, as well as German economic sentiment data. 

Market expectations for an ECB rate cut by December eased slightly after recent US inflation data, with money markets assigning a probability of around 40%. 

The German two-year yield edged up +0.3 bps at 2.048%, while the 30-year yield was relatively unchanged, up +0.1 bps to 3.434%. Italian and French 10-year yields were +0.3 bps and -0.5 bps, respectively, at 3.371% and 3.344%.

Note: As of 5 pm EST 16 February 2026

Global Macro Updates

Industrial setback offsets gains in eurozone’s Q4. Eurozone industrial production ended 2025 on a subdued note. The December figure registered a 1.4% m/o/m decline, which was slightly better than the anticipated 1.5% drop. This followed a 0.3% gain for November that was subsequently revised down from 0.7%. The breakdown revealed a significant 1.9% decrease in the production of capital goods. All four major euro area economies experienced declines, with Germany recording a particularly sharp fall of 2.9% in output. Year-on-year, industrial production rose by 1.2%, aligning with market expectations, though this represented a deceleration from the previously reported 2.2% rise, itself revised from 2.5%. On a three-month rolling average, output ended the year flat, as earlier gains in October and November were offset by the weak December result.

The eurozone’s GDP expanded by 0.3% in Q4, driven primarily by the services sector. While the December PMI indicated some improvement in manufacturing, underlying production growth remained muted and new factory orders continued to fall. The outlook for a cyclical recovery may be determined by the capacity of German industry to regain momentum and by the stabilisation of global trade. The ECB is basing its recovery expectations on a resurgence in household consumption and increased business investment.

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