A look at the day ahead in U.S. and global markets from Mike Dolan
As the week’s tariff rollercoaster levels out a bit, Wall Street stocks are tilting lower again – clouded by a poor reception for Alphabet’s results, lingering China tariff hike plans and fresh interest rate rise speculation in Japan.
U.S. stock futures were back in the red ahead of Wednesday’s bell as shares in megacap Alphabet plunged 7% overnight. The drop came amid doubts about the Google parent’s cloud computing business, much like Microsoft last week, and anxiety about its huge investment in artificial intelligence – especially in the light of last week’s DeepSeek news.
Following the previous day’s sideswipe from Beijing on an anti-monopoly probe into Google there, Alphabet said it would spend $75 billion on its AI buildout this year, 29% more than Wall Street expected, and it missed its cloud revenue target.
Adding to the overnight pressure, shares in Advanced Micro Devices fell 9% after the company’s AI chip revenue failed to meet lofty expectations.
With a deluge of earnings updates across the world this week, the news on global macro policy did not help either.
Japan’s yen surged to its best levels of the year so far after domestic wage numbers rekindled talk of another Bank of Japan rate hike this year.
Japan’s December inflation-adjusted real wages rose 0.6% year-on-year thanks to a wintertime bonus bump, with government officials expressing optimism that wage hike momentum is growing.
“We will continue to raise interest rates and adjust the degree of monetary support, if underlying inflation accelerates toward 2% as we project,” Kazuhiro Masaki, director-general of the BOJ’s monetary affairs department, told parliament.
As Chinese markets returned from the week-long lunar new year holiday, there was a lot to unpack – not least this week’s 10% U.S. tariff hikes on Chinese imports, planned retaliation from Beijing by Feb. 10 and the DeepSeek AI developments.
But both mainland China and Hong Kong stock indexes fell on Wednesday as prior day’s hopes of a meeting between U.S. President Donald Trump and China’s President Xi Jinping to avert the tariff war were doused. U.S. plans to slap tariffs on Canada and Mexico were postponed for a month this week after similar calls between Trump and the leaders of those countries.
Trump said late on Tuesday he was in no hurry to speak to Xi. White House spokeswoman Karoline Leavitt told reporters a Trump-Xi call still needed to be scheduled.
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