European Midday Briefing : Shares Mixed as Tech Jitters Weigh on Sentiment

MARKET WRAPS

Stocks:

European stocks were mixed after Thursday's lower close, as investor worry about artificial-intelligence capital expenditures and the disruptive potential of new AI coding tools continue to weigh .

With this week of trading approaching its end, European indexes initially followed Asian stocks , with the FTSE 100, the CAC 40 the DAX and the Dutch AEX falling at the opening bell, dragged by tech stocks.

The Stoxx 600 index would recover close to midday, however, eking slight gains.

Among the day's biggest moves, Stellantis shares plunged after the company said it would book charges of around $26.15 billion as part of a shift away from electric vehicles. European car names suffered as a result.

This as officials from Iran and the U.S. meet in Oman for talks hoping to avert a new conflict in the Middle East as the U.S. builds up forces there.

President Trump on Thursday said that he wanted a new strategic-arms treaty with Russia after the lapse of the last major nuclear pact with the country. Meanwhile, two days of Ukraine peace talks appeared to show only modest progress.

Elsewhere, Germany's industrial output fell more sharply than expected in December, ending three-straight months of growth, and Saudi Arabia cut the price of crude for Asian buyers for the fourth consecutive month.

Economic Insight

In the wake of the European Central Bank's policy decision to hold rates at 2% Thursday, Jefferies is of the view that a cut will likely be the bank's next policy step.

"Cuts are still more likely than hikes, in our view, given the deflationary pull from euro strength, technological disinflation, and China's push to diversify global trading partnerships."

Stocks to Watch

Rio Tinto said it was no longer considering a merger with Glencore, sending weeks of talks which could have led to the world's largest mining company into the bin.

The collapse of the deal will likely raise questions about Glencore's strategic future with investors to focus on copper growth and potential other deals and divestments, JPMorgan said.

U.S. Markets:

Futures pointed to shares closing the week on a high Friday after losses booked at the end of Thursday's session due to tech jitters and concerns regarding the health of the U.S. labor market.

Forex:

The euro rose against the dollar after European Central Bank President Christine Lagarde made it reasonably clear the ECB wouldn't cut interest rates in response to the currency's strength, ING said adding that the euro could rise further if European investors pare back dollar exposure.

The dollar traded flat against a basket of currencies after reaching a two-week high on Thursday as investors shrugged off weak U.S. jobs data. U.S. job openings fell to the lowest level in more than five years in December, the Labor Department said Thursday.

Sterling rose slightly against the dollar and against the euro, but it could extend recent declines on concerns about a leadership challenge for U.K. Prime Minister Keir Starmer, ING said.

Bitcoin recovered slightly but remained below $70,000 after reaching its lowest level since October 2024 overnight.

"A number of retail investors buying cryptocurrencies are also likely long tech as both were favored among retail investors," Jefferies said.

Bonds:

Eurozone government bond yields fell, tracking Treasury yields that declined on renewed signs of labor market weakness

"Bunds have more upside thanks to support from abroad and risk-off," Commerzbank said.

Yields on U.K. government bonds fell, and bond prices rose as concerns about AI stock valuations and the tech sector have pushed demand for safe haven assets.

Treasury yields declined in Asian trade with the 10-year yield falling to a three-week low overnight before rebounding slightly. The fall comes on fresh signs of labor market weakness in the U.S., keeping the door open to a rate cut potentially sooner than expected, Pantheon Macroeconomics said.

SEB feels investors should take the rise in Treasury yields since December with a pinch of caution, saying it has been accompanied by a notable increase in term premium.

SEB still expects the 10-year Treasury yield to retrace most of its mid--January gains as the Federal Reserve outlook softens.

Energy:

Oil prices edged higher in early trading but were on track for their first weekly decline in several weeks with markets focusing on upcoming talks between the U.S. and Iran.

Metals:

Gold was headed for a weekly gain of 3% while silver fell.

"Until volatility subsides and price discovery improves, gold, and especially silver is likely to trade violently in both directions," Saxo Bank said.

EMEA HEADLINES

Banco De Sabadell Appoints TSB's Marc Armengol as Next CEO

Spain's Banco de Sabadell appointed TSB's Marc Armengol as its next chief executive.

The Spanish bank said Thursday that Armengol's appointment would probably come into effect from May onwards, after Sabadell's next annual general meeting and as long as the move has received the approval of the European Central Bank by then.

Novo Nordisk Accuses Hims & Hers of 'Illegal Mass Compounding' Over Cheaper Wegovy Version

Novo Nordisk accused Hims & Hers of "illegal mass compounding" after the telehealth platform said it would offer a cheaper, compounded version of the Wegovy pill.

Earlier Thursday, Hims & Hers said it would begin offering copies of Wegovy for an introductory price of $49 for the first month with a five-month plan, with the version made from the same active ingredient, semaglutide, as Novo Nordisk's treatment.

GLOBAL NEWS

Bitcoin's latest selloff is shattering many of its most enduring myths

As bitcoin prices press lower, investors and proponents are being forced to confront an uncomfortable reality regarding the nature of the pioneering cryptocurrency.

Perhaps the biggest myth that has been busted so far: During its early days, bitcoin was said to be a hedge against fiscal excess, government money-printing and inflation. Yet bitcoin prices have continued to trend lower since October, even as the U.S. dollar has weakened and worries about unsustainable levels of government debt have been blamed, at least in part, for driving a huge rally in gold.

Atlanta Fed's Bostic Makes the Case for Keeping Interest Rates Steady

It appears most Federal Reserve officials remain committed to keeping interest rates steady in the near term, including Atlanta Fed President Raphael Bostic.

On Thursday, Bostic was the latest policymaker to stress the importance of keeping the central bank's benchmark interest rate unchanged to help bring inflation sustainably down to the Fed's goal of 2%.

The Car Industry Is Racing to Replace Chinese Code

How Chinese is your car? Automakers are racing to work it out.

Modern cars are packed with internet-connected widgets, many of them containing Chinese technology. Now, the car industry is scrambling to root out that tech ahead of a looming deadline, a test case for America's ability to decouple from Chinese supply chains.

White House Debuts Drug-Buying Site TrumpRx, With Roughly 40 Medications

The White House on Thursday launched its drug-pricing website, dubbed TrumpRx, the culmination of efforts by the administration to bring down pharmaceutical costs for some consumers.

When it launched, it had roughly 40 drugs available, including obesity treatments Novo Nordisk's Wegovy and Eli Lilly's Zepbound and infertility treatments such as Gonal-F from EMD Serono. The prices for the drugs on TrumpRx were generally much lower than their sticker price, with President Trump touting some discounts of hundreds of dollars a month. The website, TrumpRx.gov, allows customers to search for specific medicines and purchase them through a manufacturer's direct-to-consumer site, or in some cases gives users coupons that they can present at certain pharmacies.

A Second Wave of Popular Anger Is Building in Iran

A new wave of popular anger is rising in Iran, as people enraged by last month's mass killings of protesters vent their antipathy for the regime despite the risks of a continuing crackdown.

Mourning families are shouting antiregime slogans at funerals and memorials. Students are refusing to sing patriotic songs at school. Medical workers are publicly condemning the arrests of colleagues who treated people injured in the protests. And groups of local activists are openly calling for the fall of Supreme Leader Ali Khamenei.

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

(END) Dow Jones Newswires

02-06-26 0515ET