European Midday Briefing : Stocks Look Past AI Concerns to Move Higher

MARKET WRAPS

Stocks:

European shares were higher Tuesday and looking to build on the previous session's gains despite AI concerns casting a heavy cloud over global stocks.

The continent's markets have held up better than their U.S. counterparts in recent weeks, but the nerves still seem to be creeping in.

Morgan Stanley estimated that the market was ascribing a risk of AI disruption to around 24% of the weight of the MSCI Europe index , up from just 4% a month ago.

On the data front, unemployment in the U.K. rose to a near five-year high of 5.2%. Wage growth also slowed.

"The U.K.'s jobs market is continuing to come apart at the seams as the stifling squeeze from spiralling labour costs pushes more businesses to pivot from simply freezing recruitment to actively cutting jobs," the Institute of Chartered Accountants in England and Wales said.

A Bank of England interest-rate cut edges closer but the data might not be enough to induce a reduction in March, according to the institute.

ING expects rate cuts in March and June , and doesn't rule out further reductions later on.

Germany's ZEW economic sentiment index due this morning is expected to show improvement in both current conditions and expectations in February.

Shares on the Move

London's miners dropped as metal prices slid. Antofagasta, Hochschild Mining and Fresnillo were among the sector's biggest fallers.

U.S. Markets:

Stock futures turned lower as traders return from the Presidents Day holiday with AI worries front of mind.

They await the Federal Reserve's meeting minutes Wednesday along with PCE inflation and fourth-quarter GDP data Friday.

Forex:

The dollar rose against a basket of currencies, supported by safe-haven flows as U.S. traders return from Monday's holiday.

Sterling weakened against the dollar and euro after the weaker-than-expected U.K. jobs data.

Bonds:

Treasury yields fell across maturities, as markets continue to anticipate interest-rate cuts by the Fed this year following Friday's inflation data.

On drivers other than data, Danske Bank pointed to declining investor concerns over the Fed's independence following the nomination of Kevin Warsh as its next chair, and easing trade war uncertainty.

The Revacy Fund said Treasury yields could decline further if new data strengthen expectations of more Fed rate cuts.

"Should those indicators validate a broader slowdown in inflation, downward pressure on both yields and the dollar could extend in the sessions ahead."

Eurozone government bond yields dropped, tracking Treasurys.

"Bunds remain supported, with 10-year yields now noticeably outside their recent trading range," Metzler said.

Decelerating inflation and the associated market tendency to price in rate cuts "should continue to provide support initially."

Gilt yields were down after the weak U.K. jobs data increased the prospect of BOE rate cuts.

Energy:

Oil prices fell ahead of direct talks between the U.S. and Iran in Geneva later on Tuesday.

"Thin liquidity due to Lunar New Year holidays has limited broader price moves."

However, tensions remain high with prices likely to stay volatile in the near term.

Investors are also watching for U.S.-brokered talks between Russian and Ukrainian officials.

Gas

European natural-gas prices continued to hover around 30 euros a megawatt-hour despite low storage levels across the region .

Metals:

Gold prices slipped back below $5,000 in thin trading, with much of Asia closed for the Lunar New Year and U.S. markets shut on Monday.

"Liquidity conditions remain thin, particularly across metals," Sucden Financial said.

"Unless speculative sentiment re-emerges decisively, this backdrop is likely to keep price action contained within relatively narrow ranges over the near term."

EMEA HEADLINES

InterContinental Hotels Group Posts Higher Revenue Despite Tough U.S. Market

InterContinental Hotels Group posted higher profit and revenue in 2025 despite turbulent business conditions in the U.S., supported by the expansion in key markets.

The London-listed group said Tuesday that it made $759 million in net profit for the year, compared with $628 million a year prior, on revenue that grew 5.4% to $5.19 billion.

Antofagasta Books Record Earnings, Driven by Higher Metal Prices

Antofagasta said higher copper and gold prices helped it deliver record full-year earnings.

Prices of both metals climbed over 2025 and have continued to hit highs in recent months. Copper-which forms the majority of Antofagasta's output-has been buoyed by growing demand and supply shocks at major mines. The industrial metal is central to global electrification efforts and is a core component in the wiring used in artificial-intelligence data centers

In Iran, Payment Plans for Groceries Signal a Deepening Economic Crisis

Iran's economic meltdown, which around the new year triggered protests that threatened the regime's grasp on power, is getting worse.

A harsh crackdown on the demonstrations and the threat of U.S. military intervention have dragged the country's currency lower, crippling daily life for millions.

U.K. Regulator Weighs Rule Change to Attract Chinese Listings

The U.K.'s audit regulator is considering changing its accounting rules in order to encourage Chinese companies to list in London.

The Financial Reporting Council will consult on whether to allow Chinese-registered companies to follow Chinese accounting rules when listing global depository receipts in London, it said Monday.

GLOBAL NEWS

U.S. Tech Futures Down Ahead of Shortened Trading Week

U.S. equity futures were down in subdued trade as investors enter a shortened trading week after the Presidents Day holiday. Chinese and Korean markets were among those closed for Lunar New Year, while equities in Japan fell. In Europe, a quiet start to trading saw blue-chip indexes mostly rise. Continuing anxiety around both artificial-intelligence spending and competition lingered in the U.S., with futures tied to the tech-dominated Nasdaq falling 0.7%.

Oil prices slipped in early trading ahead of direct talks between the U.S. and Iran in Geneva later on Tuesday, while the dollar climbed to an 11-day high against a basket of currencies ahead of a busy week of economic data. Gold held below $5,000 a troy ounce. Traders await U.S. ADP employment figures due Tuesday, as well as inflation readings from the U.S. and Japan later this week.

Investors Should Look at Bonds, Stocks as U.K. PM Fights for Survival. Here's Why.

Prime Minister Keir Starmer is fighting for his political future, and the market thinks it's only a matter of time before the U.K. leader departs.

Members of Starmer's own Labour Party called for him to resign last week, after the latest batch of Jeffrey Epstein files revealed the close relationship his pick for ambassador to the U.S. had with the convicted sex offender.

The AI Selloff Has Covid Parallels, Say Analysts. These Sectors Can Survive.

It's not just U.S. investors getting jittery about the impact of artificial intelligence on stocks.

European markets have held up slightly better than their U.S. counterparts in recent weeks but the nerves still seem to be creeping in. Morgan Stanley analysts estimated that the market is ascribing a risk of AI disruption to around 24% of the weight of the MSCI Europe index, up from just 4% a month ago.

Jesse Jackson, Civil-Rights Leader and Democratic Presidential Candidate, Dies

The Rev. Jesse Jackson, a longtime civil-rights activist and Democratic political leader, has died.

Jackson died in the early hours of Tuesday morning, a spokeswoman for his family confirmed. He was 84.

In Iran, Payment Plans for Groceries Signal a Deepening Economic Crisis

Iran's economic meltdown, which around the new year triggered protests that threatened the regime's grasp on power, is getting worse.

A harsh crackdown on the demonstrations and the threat of U.S. military intervention have dragged the country's currency lower, crippling daily life for millions.

Giorgia Meloni's Mission: Persuading Trump and Europe to Be Friends

ROME-The U.S. under President Trump has lost trust across Europe, but Italian Prime Minister Giorgia Meloni is sticking with America.

Meloni is doing all she can to keep the troubled trans-Atlantic relationship alive. She has resisted European proposals to retaliate against Trump's trade threats and called for the U.S. and Europe to deepen their ties. This weekend, she broke with most of the continent by pledging to join Trump's Board of Peace-albeit only as an observer.

Britain's Monarchy Can't Escape the Shadow of the Epstein Scandal

LONDON-Prince Andrew, Duke of York, was preparing to board a flight to London in September 2010 when Jeffrey Epstein emailed asking to alter the pair's plans for a quiet dinner in Buckingham Palace.

The American financier, convicted in 2008 of soliciting a minor for prostitution, said he was accompanied by three women, including a Russian model. "Should i bring them all. so as to add some life," he wrote. Andrew agreed. Later that afternoon, Epstein wrote back to add one more guest, who he described as "Romanian, very cute."

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-17-26 0518ET