Markets brace for delayed jobs report

General market commentary

US equity markets were mostly weaker on Tuesday as investors digested a softer than expected December retail sales report and fresh developments in artificial intelligence. The S&P 500 fell 0.3 per cent to 6,941.81 and the Nasdaq Composite declined 0.6 per cent to 23,102.47, while the Dow Jones Industrial Average edged up 0.1 per cent to 50,188.14 after touching a new intraday high. Utilities, materials and real estate led the gainers, supported by falling bond yields, whereas communication services, financials and technology lagged. Brokerage and asset management shares came under notable pressure after an AI tool announcement raised competitive concerns, weighing heavily on names such as Raymond James, Charles Schwab and LPL Financial.

Government bond yields moved lower after retail sales were flat in December against expectations for a 0.4 per cent increase, signalling a pause in consumer spending momentum at the end of 2025. The two year Treasury yield fell to 3.45 per cent and the 10 year yield declined to 4.14 per cent, offering support to interest rate sensitive sectors. Other data releases were mixed, with business inventories rising modestly and the employment cost index easing in the fourth quarter. In corporate news, Datadog shares surged after stronger than expected results, while S&P Global dropped sharply on an earnings miss and weaker outlook. Commodity markets were softer, with gold, silver and oil prices all edging lower.

Latest market and economic update

Most Asian markets edged higher on Wednesday, led by Australia where the S&P/ASX 200 rose 1.5 per cent to a 15 week high, supported by strong earnings from Commonwealth Bank, AGL Energy and James Hardie. South Korea and Hong Kong also advanced, while Chinese shares were little changed amid soft inflation data, and Japan was closed for a public holiday.

US equity futures edged higher overnight, with contracts on the S&P 500, Nasdaq 100 and Dow Jones Industrial Average rising modestly after major indices ended the regular session lower. Investors await delayed jobs and inflation data. In after hours trade, Robinhood and Lyft shares fell sharply on disappointing results, while Ford shares edged higher despite an earnings miss.

The US dollar extended recent losses in Asian trade, with the dollar index slipping up to 0.2 per cent ahead of key payrolls data. Softer December retail sales added pressure, fuelling concerns over slowing growth and reinforcing expectations of a more cautious Federal Reserve stance. The weaker tone saw the dollar ease broadly, including against the euro.

Europe’s STOXX 600 closed broadly flat on Tuesday, slipping 0.07 per cent as losses in energy and insurance offset strong gains in autos and luxury goods. BP fell after suspending buybacks, while Ferrari surged on an upbeat outlook, lifting the autos sector. Kering also jumped, whereas Standard Chartered and TUI declined despite mixed updates.

The US dollar extended recent losses in Asian trade, with the dollar index slipping up to 0.2 per cent ahead of key payrolls data. Softer December retail sales added pressure, fuelling concerns over slowing growth and reinforcing expectations of a more cautious Federal Reserve stance. The weaker tone saw the dollar ease broadly, including against the euro.

Oil prices rose this morning, with Brent at $69.35 a barrel and WTI at $64.53, as fragile US Iran nuclear talks sustained geopolitical risk premiums. Expectations of easing surplus supply and stronger Indian demand also lent support. Traders now await US inventory data, after industry figures showed a sizeable crude stock build.

US retail sales were unexpectedly flat in December, signalling slower consumer spending heading into the new year. Core retail sales fell and November data were revised lower, prompting economists to reassess growth forecasts. While saving rates have dropped, rising household wealth has supported spending. The weaker data may lead to revisions to fourth-quarter GDP estimates.

China’s consumer price inflation rose just 0.2 per cent year on year in January, below expectations, as Lunar New Year timing effects distorted comparisons. Producer prices fell 1.4 per cent, marking a 40th month of contraction. The data highlight persistent deflationary pressures, increasing expectations of further fiscal and monetary stimulus from Beijing.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Robinhood reported record fourth quarter revenue of $1.28 billion, up 27 per cent year on year, driven by strong equities and options trading as retail investor activity remained robust. However, profit fell to $605 million due to a tax provision, and shares dropped 7 per cent after hours. Crypto revenue declined sharply, while Gold subscribers rose 58 per cent to 4.2 million.

Cloudflare forecast 2026 and first quarter sales above market expectations, citing strong demand driven by artificial intelligence and growing use of AI agents. Quarterly revenue rose 33.6 per cent, beating estimates, while its net loss narrowed. Shares jumped nearly 12 per cent in extended trade, easing concerns after a November service outage.

Spotify reported fourth-quarter results well ahead of expectations, driven by strong user growth and improving profitability. Earnings and revenue beat forecasts, while monthly active users and premium subscribers rose sharply. Margins, operating income and free cash flow strengthened. For early 2026, Spotify guided to higher users but slightly softer revenue, citing currency headwinds.

Ferrari forecast at least 6% growth in core earnings in 2026, supported by new models, after beating expectations in fourth-quarter 2025 results. Chief executive Benedetto Vigna said demand remained strong, with orders extending to 2027. The carmaker expects EBITDA above €2.93 billion in 2026 and confirmed a revised electrification strategy, focused on brand exclusivity worldwide.

Kering reported a smaller-than-expected fall in fourth-quarter sales, as new chief executive Luca de Meo struck an upbeat tone on growth and margins in 2026. Gucci’s decline eased, costs fell and debt was reduced. De Meo said sales momentum was improving, though early and fragile, as the group begins a multi-year turnaround amid a luxury slowdown.

BP suspended its share buyback programme after writing down about $4 billion in renewables and biogas assets, as it prepares for a new chief executive. The company said excess cash will be redirected towards oil and gas projects to improve returns and reduce debt. Quarterly profit met expectations, while net debt fell, reflecting a renewed focus on hydrocarbons over renewables.

AstraZeneca forecast steady profit growth in 2026, supported by strong cancer drug demand and new launches, despite patent expiries and pricing pressure. The drugmaker said it remains on track for its 2030 sales target and will raise its dividend. Results met expectations, with growth led by the US and resilient performance in China overall.

CVS Health reported a fall in fourth-quarter profit but beat forecasts, supported by strong prescription volumes and its pharmacy benefit unit. Revenue rose sharply, helped by assets bought from Rite Aid. The company maintained its 2026 profit outlook, as cost cuts and restructuring offset ongoing pressure in its insurance business, particularly from higher Medicare-related medical costs.

S&P Global posted a narrow fourth-quarter earnings miss and weaker-than-expected 2026 guidance, raising concerns about slowing growth. Revenue edged ahead of forecasts, but analysts flagged soft momentum in Ratings, lower free cash flow and guidance below prior targets, pointing to challenges for the data and analytics group amid broader industry headwinds ahead.

Barclays reported a 12% rise in annual profit and set more ambitious targets through to 2028, aiming to lift returns by focusing on its UK business and cutting costs using technology such as AI. The bank raised its return target, announced new buybacks and dividends, and said it plans to return more than £15 billion to shareholders over the period.

Coca-Cola forecast slower revenue growth in 2026 after missing fourth-quarter sales expectations, as soda demand softened in North America and Asia. Price rises helped offset costs but pressured consumers. Volumes were flat overall, while growth came from zero-sugar drinks and health-focused products. The outlook was cautious amid shifting consumer preferences.

Datadog beat fourth-quarter forecasts, driven by strong demand for its cloud monitoring tools as AI adoption increased data complexity. Revenue and profit exceeded expectations, while customer spending broadened. However, the company issued cautious full-year guidance, with revenue and profit forecasts below estimates, reflecting ongoing uncertainty despite near-term momentum.

Cisco launched a new Silicon One G300 chip and router aimed at boosting data centre networking for artificial intelligence workloads. Built using advanced chipmaking technology, the products are designed to speed data flows and reduce congestion. Cisco said the technology could improve AI processing efficiency as it competes with Nvidia and Broadcom for infrastructure spending.

Paramount has revised its all cash $30 per share bid for Warner Bros Discovery, adding a ticking fee of 25 cents per share for each quarter beyond December 31 2026, potentially increasing costs by $650 million per quarter. Meanwhile, Ancora Holdings has built a $200 million stake, opposing the Netflix deal and backing Paramount ahead of March’s shareholder vote.

Shares in US brokerages fell sharply after Altruist unveiled AI enabled tax planning tools, heightening fears of disruption to traditional wealth managers. LPL, Raymond James and Charles Schwab led declines. While analysts argue AI may enhance advisers’ capabilities rather than erode pricing power, investors reacted nervously, suggesting the sell off may be overdone.

Blackstone is increasing its investment in Anthropic to about $1 billion, joining a funding round that values the Claude chatbot maker at roughly $350 billion. The move underscores strong investor appetite for leading generative AI firms. Anthropic recently launched its Opus 4.6 model, prompting renewed concerns over disruption across traditional software companies.

Alphabet sold $20 billion of bonds in a multi-part offering to help fund heavy investment in artificial intelligence infrastructure, marking a shift towards greater use of debt by big tech groups. The move highlights rising capital spending on data centres and AI chips, as firms pour vast sums into the technology despite uncertain near-term returns.

Stellantis is reportedly considering exiting its US battery joint venture with Samsung SDI as it reins in electric vehicle ambitions, according to Bloomberg. The move follows $26.5 billion in writedowns that hit its shares. No final decision has been made, and a withdrawal could prove costly and complex, with options including a potential stake sale.

MicroStrategy said it will continue buying Bitcoin every quarter and has no plans to sell its holdings, according to chief executive Michael Saylor. The company recently raised $89.5 million through a share sale and used the funds to buy more bitcoin. It now holds over 714,000 bitcoin, acquired at an average cost below current market prices.

Capital Economics expects the tech-led S&P 500 rally to regain momentum after a volatile start, arguing AI concerns have not undermined strong earnings growth and reiterating an 8,000 end-2026 target. In contrast, UBS turned cautious, downgrading US technology to neutral over slowing hyperscaler spending, rising AI competition in software and stretched hardware valuations.

Morgan Stanley said accelerating public-cloud growth is improving prospects for Snowflake, MongoDB and Datadog, despite recent share price weakness. It highlighted faster expansion at major hyperscalers, supported by AI and cloud migration. The bank sees strengthening demand across database and observability markets and expects 2026 to be a strong growth year.

Jefferies said AppLovin’s recent sell-off has created an attractive buying opportunity, reiterating its Buy rating and $860 target. The broker argued growth fundamentals remain strong despite investor concerns around ad platforms and AI. Jefferies expects a strong fourth quarter, sees valuation as compelling, and believes risks are overplayed relative to long-term growth prospects.

Citi downgraded Under Armour to Sell, warning risks to its North America turnaround are rising despite a recent earnings beat. The broker cited weak direct-to-consumer traffic, intense competition and heavier marketing needs. It also flagged slowing growth in EMEA and warned of negative free cash flow and limited EPS growth, leaving risk skewed to the downside.

JPMorgan cut its price target on Coinbase to $290 from $399, citing a weaker cryptocurrency operating environment, while keeping an overweight rating. The bank expects a sharp year-on-year fall in fourth-quarter earnings due to lower trading volumes and market values. Softer crypto prices and staking yields are seen weighing on revenue, partly offset by Deribit contributions.

Morgan Stanley kept Société Générale as its preferred French bank, citing stronger earnings growth and capital returns. It became more positive on BNP Paribas after cost cuts and improved capital discipline, but stayed cautious due to litigation risk. Crédit Agricole was seen as solid but lacking near-term catalysts, limiting upside despite a sound business mix.

Upcoming data and events

Investors will today be focusing on the January jobs report, including nonfarm payrolls, unemployment and average hourly earnings, alongside the EIA crude inventories update and remarks from Federal Reserve officials. Earnings due include Cisco, McDonald’s, T Mobile, AppLovin, Shopify, TotalEnergies, EssilorLuxottica and Siemens Energy.

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