MARKET WRAPS
Stocks:
European shares fell as investors pulled back after indexes hit a suite of record highs on Wednesday.
Miners weighed on the U.K., with Rio Tinto down after announcing falling profits.
Airbus was down more than 6%, dragging both the CAC 40 and the DAX.
Oil prices rose, adding to Wednesday's gains after the U.S. said the use of military force against Iran remained an option.
Price Futures Group said oil hitting $70 a barrel could signal a breakout on fear relating to potential U.S. military action.
The Wall Street Journal reported Wednesday night that the U.S. has amassed the most air power in the Middle East since the 2003 invasion of Iraq , and was in position to strike Iran.
However Montis Financial said oil ran up significantly last summer in the weeks leading up to the airstrikes in Iran, and it quickly gave back much of those gains after the strikes.
"Given that inflation and affordability are front and center for the White House right now, we'd have to think that protecting the flow of oil through the Strait of Hormuz is a priority, meaning that the priority is a diplomatic solution."
Market Insight
One of the more interesting items teased out from the Federal Reserve minutes was that the central bank seems to think financial--stability risks were building under the surface, according to LPL Financial.
Asset valuations are high, credit spreads are tight and AI-related investment has created new pockets of risk--especially in private credit, leveraged firms and highly concentrated tech names.
Meanwhile, hedge fund leverage and Treasury market vulnerabilities remain key concerns.
"Looking ahead, we should monitor potential spillovers from volatile global bond markets and FX."
U.S. Markets:
Markets were headed for modest losses at the open, after a session where the rotation away from tech stocks appeared to slow.
Wednesdy's rally was reinforced by solid U.S. economic data with industrial production and factory output both exceeding expectations.
Next up, U.S. weekly jobless claims data at 1330 GMT will be closely watched given their overlap with the February employment survey period.
Earnings from Walmart are due.
Forex:
The euro could fall if Friday's eurozone purchasing managers' surveys reinforce doubts over the economic recovery, Commerzbank said.
"This would make the euro more vulnerable in the coming weeks if fundamental and price data come in weaker than expected, as speculation about interest-rate cuts could pick up again."
Tuesday's German ZEW survey damped bets that fiscal stimulus will boost growth and traders were now less certain the ECB won't cut rates further.
The PMI data therefore could gain importance for the euro, it added.
The Swiss franc should remain strong, ING said, adding that until the U.S. turns away from the Middle East, the euro looked set to stay pressured versus the franc.
The DXY dollar index was weaker, but the currency was near a two-week high after the Fed minutes showed several policymakers were open to potentially raising interest rates if inflation remained elevated.
"The mere suggestion that the key interest rate could rise again is obviously making some market participants sit up and take notice," Commerzbank said.
A rate cut in March appears unlikely and the market wasn't even fully pricing in two rate cuts this year.
Friday's PCE inflation and fourth-quarter economic growth data could boost the dollar further if they exceed expectations, it added.
ING said today's focus will be on the December trade balance.
"A narrower-than-expected December trade deficit today would add to expectations of a decent 4Q GDP figure tomorrow and could provide the dollar with a little short-term support."
Bonds:
Treasury yields rose in a steepening manner after the Fed's minutes indicated upside risks to inflation.
"The FOMC minutes from the January meeting showed officials remained surprisingly cautious about cutting rates, with several even noting that another hike could be warranted if inflation proves sticky," Danske Bank said.
Eurozone government bond yields rose, matching moves in Treasurys.
"Bunds remain supported at key levels but U.S. Treasury pose headwinds this morning," Commerzbank said.
Energy:
Oil extended its gains from the previous session as traders grow increasingly worried about potential U.S. action against Iran.
"With a deal looking increasingly difficult to reach, it also means it will be more challenging to find a route to de-escalation, especially following the US military build-up we have seen in the region," ING said.
"And if de-escalation is not possible, the key question will then be what type of action the U.S. takes and how Iran responds to this."
Metals:
Gold climbed back above $5,000, as inconclusive U.S.-Iran nuclear talks and concerns over potential military escalation in the region boosted the metal's appeal.
"Buyers took advantage of the price drop ahead of the release of the Federal Reserve's meeting minutes," ANZ said.
"Speculative positions are lean, and fresh longs can return as structural drivers are still in place."
Silver futures also rose.
Gold Chart
Comex gold futures were likely now trending upward, RHB Retail Research said, based on the daily chart.
As long as the commodity remains above strong support at $4,800, overall technical setup will favor gold bulls, and it could now attempt to climb toward immediate resistance at $5,500.
EMEA HEADLINES
Nestle to Shed Ice-Cream Business in Shakeup
Nestle said it plans to offload its ice-cream business, as the Swiss food giant slims down its structure to focus on four main categories.
The maker of KitKat chocolate bars and Nescafe coffee is pursuing a turnaround under recently appointed Chief Executive Officer Philipp Navratil after a string of snags, weaker-than-expected results and two abrupt CEO changes in a year have shaken the company. The group is also looking to move past a crisis that engulfed its infant-formula business and prompted product recalls across the industry.
Zurich Insurance Earnings Rise on Growth Across Business Lines
Zurich Insurance said it delivered record annual earnings across all of its businesses, putting it on the path to meet or surpass its mid-term targets.
The Swiss insurer on Thursday posted a 17% rise in net profit for 2025 to $6.80 billion, against a $6.53 billion estimate taken from a company-compiled consensus.
Air France-KLM Posts Swing to Profit Amid Drop in Costs
Air France-KLM posted a swing to net profit for its fourth quarter after costs dropped.
The Franco-Dutch carrier group on Thursday said it made 585 million euros ($693.5 million) in net profit in the final quarter of the year, compared with a net loss of 21 million euros a year earlier, on revenue that grew 3.9% to 8.19 billion euros.
GLOBAL NEWS
China Should Shift Economic Gears to Consumption-Led Growth, IMF Says
China's economy has held up remarkably well against shocks like U.S. tariffs but continued resilience will need consumption to drive growth, rather than external demand, according to a report by the International Monetary Fund.
The world's second-largest economy is built on a growth model that faces increasing challenges, top IMF officials said in a statement alongside one of the fund's periodic reviews.
The Reign of the Dollar Is Coming to an End. What Investors Can Do About It.
The dollar is in decline, and investors have to learn to live with it.
The past 12 months were tough for the greenback. The U.S. Dollar Index, which measures the dollar's value against a basket of developed currencies, slid 8% over the past year-and the list of potential concerns grows longer and longer. They include the breakdown in the U.S.-led multilateral system, growing concern that the dollar will continue to be weaponized through sanctions and seizures, worries about Federal Reserve independence, unease about profligate U.S. government spending, and a long overdue rebalancing as growth and yields abroad become more relatively attractive.
South Korean Leader Who Declared Martial Law Gets Life Sentence
SEOUL-A Seoul court sentenced former South Korean President Yoon Suk Yeol to life in prison for leading an insurrection during a short-lived attempt to impose martial law.
The court convicted the 65-year-old on Thursday on charges of insurrection and conspiring with military officials to mobilize troops in December 2024.
Ukraine's Neighbors Threaten to Cut Off Energy Supplies
KYIV, Ukraine-Hungary and Slovakia threatened to cut off energy supplies to Ukraine in a dispute over an oil pipeline, potentially compounding a crisis that has left millions of Ukrainians without reliable power during the coldest months of the year.
The countries are fighting over a disruption to the Russian Druzhba, or Friendship, oil pipeline, which crosses Ukraine. Kyiv says that the disruption was caused by a Russian attack near the western town of Brody in late January.
U.S. Is Withdrawing All Forces From Syria, Officials Say
WASHINGTON-The U.S. is in the process of withdrawing all of its roughly 1,000 troops from Syria, American officials said, bringing an end to a decadelong U.S. military presence that fought Islamic State.
The decision includes already completed troop withdrawals from strategic outposts in northeast Syria and the borderlands of Syria, Jordan and Iraq, some of the officials said, marking a new chapter in a war against Islamic State that continues today.
Environmental Groups Sue EPA Over Repeal of Climate Finding
A coalition of climate and health organizations sued the Environmental Protection Agency on Wednesday in an effort to combat its repeal of a landmark climate finding.
(MORE TO FOLLOW) Dow Jones Newswires
02-19-26 0516ET
