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Market Outlook

Weekly market commentary

Last Updated: 6 Feb 26 5 min read

By M&G Treasury and Investment Office (T&IO)

Contents

  1. Market review

  2. Outlook

  3. Movers table

 

Market review

Equity markets had a difficult week, with many giving back a large share of their gains for the year so far. Technology companies were hit hardest, particularly software firms. Even though many reported stronger‑than‑expected revenues, investors focused on the large amounts being spent on Artificial Intelligence (AI). Major tech firms are committing vast sums to AI infrastructure, raising questions about how soon these investments will start to deliver returns. Amazon’s shares fell 11% after it announced a $200bn AI spending plan, while Alphabet, Google’s parent company, saw its shares drop 7% after outlining its own $185bn investment. The rapid development of AI tools also weighed on software companies. Anthropic’s launch of a new AI automation tool for legal work was seen as a potential threat to more traditional software providers.

Central banks also drew attention. Both the Bank of England and the European Central Bank (ECB) kept interest rates on hold, as widely expected. However, the Bank of England struck a softer stance. The vote was closer than anticipated at 5-4, with four members calling for a 0.25% rate cut. The Bank signalled that further reductions are likely and noted that inflation risks have eased. The ECB meeting was more straightforward, supported by inflation rising just 1.7% over the past year, below its 2% target.

Economic data from the US provided a mixed picture. Manufacturing activity was stronger than expected, but labour market indicators weakened. Unemployment claims rose to an eight‑week high, and job openings fell to their lowest level since 2020. These developments pressured risk assets and pushed US government bond yields lower as markets anticipated further rate cuts.

Outlook

Markets remain focused on shifting economic data and global tensions. Different inflation trends and uneven growth mean central banks are taking varied approaches. Changing government spending and liquidity add complexity, leading to wider differences in how assets and regions may perform.

Movers table

Equities

1 Week

YTD

1 Year

S&P 500

-2.02%

-0.60%

13.18%

FTSE 100

0.41%

3.41%

21.76%

Euro Stoxx 50

-0.48%

2.27%

13.16%

MSCI Asia Pacific ex Japan

-1.15%

6.75%

35.64%

MSCI China

-3.04%

1.52%

27.53%

Source: Bloomberg as at 8:48am on 6.02.26

This content has been prepared by M&G Treasury and Investment Office (T&IO) for information purposes only and does not contain or constitute investment advice. Information provided herein has been obtained from sources that T&IO believes to be reliable and accurate at the time of issue but no representation or warranty is made as to its fairness, accuracy, or completeness. The views expressed herein are subject to change without notice. Neither T&IO, nor any of its associates, nor any director, or employee accepts any liability for any loss arising directly or indirectly from any use of this document. The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back less than the original amount invested and past performance information is not a guide to future performance.

‘M&G Treasury & Investment Office (T&IO)’ includes the team formerly known as Prudential Portfolio Management Group (PPMG), Prudential Portfolio Management Group Limited, is registered in England and Wales, registered number 2448335.

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