North America
Last week, U.S. markets declined as concerns about the disruptive impact of artificial intelligence weighed heavily on technology and growth stocks, leading the Nasdaq lower while the S&P 500 and Dow also posted losses, though value stocks continued to outperform growth for the seventh consecutive week and extended their year-to-date lead. On the economic front, January’s jobs report surprised on the upside with stronger-than-expected hiring and a slight drop in the unemployment rate, signaling labor market resilience despite sharp downward revisions to prior data; this reduced expectations of near-term interest rate cuts and increased the likelihood that the Federal Reserve will keep rates unchanged through mid-year. Inflation data showed mixed signals, with headline CPI easing month over month and year over year due to lower energy prices, while core inflation ticked higher on a monthly basis, suggesting underlying price pressures remain persistent. Retail sales were flat and missed expectations, reflecting softer consumer spending across several categories. In fixed income markets, U.S. Treasuries advanced as investors sought safety amid equity volatility, pushing yields lower, particularly on the 10-year note, while investment-grade corporate bonds posted modest gains but lagged Treasuries due to spread movements, and high-yield bonds remained relatively resilient supported by steady institutional demand and short covering.

Europe & UK
Last week, European markets were volatile, with the pan-European STOXX Europe 600 Index briefly reaching a new high but finishing largely flat, up just 0.09% in local currency terms, as investors balanced stronger-than-expected U.S. jobs data with growing concerns about the impact of artificial intelligence. Among major indexes, Germany’s DAX rose 0.78%, France’s CAC 40 gained 0.46%, the UK’s FTSE 100 added 0.74%, while Italy’s FTSE MIB fell 0.97%. The eurozone economy continued to expand, growing 0.3% in Q4 2025 and 1.5% year on year, with Spain leading at 0.8% quarterly growth. Employment in the euro area rose 0.2%, exceeding expectations, driven by strong job gains in Spain, while German employment contracted slightly. In contrast, France’s unemployment rate increased to 7.9%, the highest since Q3 2021, with youth unemployment remaining elevated at 21.5%. Inflationary pressures persisted in Germany, where wholesale prices climbed 1.2% year on year in January due to higher metals and food prices. In the UK, political uncertainty surrounding Prime Minister Keir Starmer weighed on sentiment, though economic data showed modest growth, with Q4 GDP up 0.1% quarter on quarter and 1% year on year; manufacturing expanded, construction declined, and retail sales rose 2.3% annually in January, marking the fastest pace since last August.

Japan
Last week, Japan’s stock markets surged, with the Nikkei 225 rising 4.96% and the TOPIX up 3.24%, following the February 8 lower house election in which Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a supermajority. The decisive win reflected strong public support for Takaichi’s policies on fiscal spending, investment, and targeted tax cuts, and paved the way for potential constitutional changes, including a boost in defense spending. Japanese government bond yields remained largely unchanged at around 1.23% after initially spiking, as investors were reassured by Takaichi’s comments on funding consumption tax cuts without issuing new debt. The yen strengthened to roughly JPY 153 against the U.S. dollar following verbal intervention by government officials aimed at stabilizing the currency. On the economic front, Japan’s real wages fell 0.1% year over year in December, as nominal pay growth lagged behind inflation, marking the second consecutive month of decline.