2nd February 2026

U.S.

Stock market performance:

• The S&P 500 Index advanced during the period, briefly topping the 7,000 level before retreating from its new intraday high by the end of the session.

• Large-cap value stocks recorded gains and outperformed large-cap growth stocks over the week.

• Small-cap and mid-cap stocks underperformed broader markets and finished the week lower overall.

• Within the S&P 500 Index, the communication services and energy sectors delivered the strongest performance.

• Health care stocks were the weakest-performing sector and experienced the largest pullback.

Consumer confidence slides; weekly jobless claims little changed:

• After a modest increase in December, the Conference Board’s consumer confidence index fell sharply in January to 84.5, down from 94.2 in the previous month.

• The January reading represented the lowest level of consumer confidence since May 2014 and was significantly weaker than market expectations.

• Survey results indicated that U.S. consumers became more pessimistic about both the broader economy and labour market conditions.

• Initial jobless claims rose slightly to 209,000 for the week ended 24 January, coming in above the consensus forecast.

• Despite the increase, initial claims were marginally lower than the 210,000 applications recorded in the prior week.

• Continuing jobless claims declined to approximately 1.83 million in the week ended 17 January, marking the lowest level since September 2024.

Durable goods orders rebound; producer prices rise:

• A delayed Commerce Department report showed that U.S. durable goods orders rose by 5.3% month on month in November.

• This increase followed a revised decline of 2.1% recorded in October.

• Core capital goods orders, which exclude volatile items such as aircraft and military equipment, increased by 0.7% over the same period.

• Producer prices rose by 0.5% month on month in December, exceeding expectations for a 0.2% increase.

• Services prices increased by 0.7% and were the primary driver of the stronger-than-expected producer price data.

• Around two-thirds of the rise in services prices was attributed to a 1.7% increase in margins earned by wholesalers and retailers.

Fed holds rates steady; former Fed governor Warsh nominated to chair central bank:

• Following three consecutive interest rate cuts, the Federal Reserve kept the federal funds rate unchanged within the 3.50% to 3.75% range.

• The decision aligned with market expectations and was supported by a 10–2 vote among policymakers.

• The two dissenting members voted in favour of a further 25-basis-point rate cut.

• The Fed’s policy statement described economic activity as expanding at a solid pace.

• Inflation was characterised as somewhat elevated, while job growth was noted to be low but stabilising.

• Fed Chair Jerome Powell stated that interest rates did not appear to be significantly restrictive given the strength of the economy.

• Powell emphasised that future interest rate decisions would be made on a meeting-by-meeting basis.

• President Donald Trump announced the nomination of Kevin Warsh to serve as Chair of the U.S. central bank.

• If confirmed, Warsh would replace Jerome Powell when his term expires in May.

Europe

Stock market performance:

• In local currency terms, the STOXX Europe 600 Index ended the week 0.44% higher.

• Positive earnings sentiment outweighed concerns related to trade and geopolitics.

• Germany’s DAX Index declined by 1.45%.

• France’s CAC 40 Index slipped by 0.20%.

• Italy’s FTSE MIB Index rose by 1.55%.

• The UK’s FTSE 100 Index gained 0.79%.

Eurozone economy continues modest recovery, confidence strengthens:

• The eurozone economy expanded by 1.5% in 2025, up from 0.9% in 2024.

• Growth exceeded the European Commission’s forecast of 1.3%.

• Investment, household consumption, and exports supported output despite uncertainty.

• Fourth-quarter GDP grew 0.3% quarter on quarter, matching the previous period.

• Stronger growth in Germany, Spain, and Italy offset weakness in France.

• Consumer and business sentiment improved at the start of 2026.

• The European Commission’s sentiment indicator rose to 98.2 in January.

• Confidence increased across all sectors except construction.

• Sentiment in France improved following the adoption of the 2026 budget.

Germany trims growth forecast:

• The German government lowered its 2026 growth forecast to 1.0% from 1.3%.

• Growth remains well above the 0.2% recorded in 2025.

• The 2027 GDP forecast was trimmed to 1.3%.

• The downgrade reflected delays to major policy measures.

Sweden central bank holds rates steady:

• The Riksbank left its policy rate unchanged at 1.75%.

• Policymakers expect rates to remain at this level through at least 2026.

UK mortgage approvals fall:

• Mortgage approvals fell to 61,013 in December from 64,072 in November.

• This marked the lowest level in 18 months.

• Economists had expected a modest increase.

Japan

Stock market performance:

• Japanese equity markets ended the week lower.

• The Nikkei 225 Index fell 0.97%.

• The TOPIX Index declined 1.75%.

• Technology stocks were pressured by concerns over AI investment sustainability.

• Yen strength weighed on export-oriented companies.

Currency, bonds, and macro developments:

• The yen fluctuated sharply amid political uncertainty following the snap election announcement.

• Speculation about currency intervention drove a surge against the U.S. dollar.

• Japanese officials issued verbal warnings against excessive currency movements.

• The 10-year government bond yield fell to 2.23%.

• Inflation data disappointed expectations, reducing near-term rate hike expectations.

• Tokyo-area core inflation rose 2.0% year on year in January.

• Slower inflation was driven by easing food prices and petrol subsidies.

China

Stock market performance:

• Mainland Chinese equities finished the week broadly flat.

• The CSI 300 Index rose 0.08%.

• The Shanghai Composite Index fell 0.44%.

• Hong Kong’s Hang Seng Index rose 2.38%.

Economic outlook:

• Thirteen of 20 provinces lowered their 2026 GDP growth targets.

• Most reductions were around half a percentage point.

• Guangdong and Zhejiang were among provinces lowering targets.

• These provinces are key economic and technology hubs.

Other Key Markets

Hungary:
The base rate was held at 6.50%.

• The overnight lending rate remained at 7.50%.

• The overnight deposit rate stayed at 5.50%.

• Retail sales continued to grow while industrial output declined.

• Inflation fell to 3.3% in December.

• Policymakers assessed inflation risks as balanced.

Brazil:
The Selic rate was held at 15.00%.

• The decision was unanimous.

• Inflation projections remain above target but are improving.

• Policymakers signalled that rate cuts could begin at the next meeting if trends continue.

• Any easing is expected to be gradual and cautious.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.