US futures
Dow futures 0.40%, S&P futures -0.13% & Nasdaq futures -0.97%
In Europe
FTSE -1.5 & DAX -0.27%
- Tech falls, and cyclicals benefit from rotations
- Alphabet and Amazon to report this week
- ADP payrolls miss forecast, ISM services PMI up next
- Oil looks to US-Iran tensions
Nasdaq falls while the Dow Jones benefits from rotation
U.S stocks open mixed, with the Nasdaq underperforming after a sharp rotation out of tech stocks that dragged major benchmarks lower on Tuesday continued into Wednesday.
The tech sector saw a broad sell-off on Tuesday, with investors rotating into more cyclical names as fears over AI-driven disruption weighed on the market. The selloff was fueled by a new automation tool from Anthropic, which spilt into financial services and asset managers.
The Dow Jones briefly reached a fresh record high before closing 0.3% lower, whilst tech and software stocks came under pressure with the Nasdaq finishing 1.4% lower.
While losses in tech continue, sentiment remains fragile. Investors continue to price in competition and the pricing power of an AI-driven environment.
The stock selloff drove safe-haven demand for gold, which once again crossed above the $ 5,000 level.
Attention is also on the labour market data, with the ADP payroll showing that 22,000 jobs were added in January, below the 45,000 forecast. Job creation in 2025 by private employers was 398,000, down from 771,000 in 2024, although wage growth has held up. The data comes as a brief partial government shutdown means a likely delay to Friday's nonfarm payrolls report.
US ISM services PMI data is also due, which will provide clues on how the largest sector of the US economy is holding up. Expectations are for PMI to ease slightly to 53.3, down from 54.4. The jobs component and prices paid will also be in focus in the labour market and inflation.
Corporate news
Alphabet is up over 1% ahead of quarterly earnings, which come amid growing optimism on Wall Street that Alphabet's AI revenue is expected to rise 15% to $111.4 billion and earnings are expected to increase to $2.65 from $2.15 a year ago. Google Cloud revenue is expected to grow 35% to $16.2 billion, which will also serve as guidance. Capital expenditure
AMD is set to fall over 9% after the semiconductor company reported a slight drop in quarterly revenue, raising concerns over how effectively it can take on NVIDIA
Uber is set to open 9% lower after the ride-hailing and delivery giant posted Q4 earnings that fell short of expectations.
Dow Jones forecast – technical analysis.
The Dow Jones continues to trade in a tight range around its record high.. Thhe upside is capped by 49,600. Buyers will need a close above this level, which could come in the coming sessions. However, there are signs that momentum is fading. Sellers need a break below 48,750 to break down the range towards 48,300.
FX markets – USD rises, USD/JPY rises
The USD is broadly unchanged despite the weaker-than-expected ADP payroll. The USD recovered from a four-year low reached last week after Trump elected Kevin Wash as the next head of the US central bank, amid concerns about an overly dovish Fed.
USD/JPY is rising for a fourth straight day ahead of weekend elections, which are expected to give Prime Minister Takaichi a mandate to allow more spending, tax cuts, and a faster defence buildup. The yen has depreciated by over 2% since January 30
EUR/USD is holding steady despite eurozone inflation cooling by more than expected to 1.7% year on year in January, down from 1.9% in December. The data comes ahead of the ECB's rate decision on Thursday, where the central bank is expected to leave rates unchanged. However, if the disinflation trend continues, it could amplify dovish sentiment within the council, putting downward pressure on the euro and U.S. dollar.
Oil looks to US-Iran tensions
Oil prices were steady on Wednesday, following a 1.7% jump in the previous session, as investors closely monitor developments between the US and Iran amid renewed tensions.
News that the US had downed an Iranian drone aimed at the aircraft carrier in the Arabian Sea pointed to heightened tensions, boosting oil's risk premium.
US-Iranian talks are still scheduled for Friday, and investors will be closely watching developments. Any sign of a lack of a stalling in the talks could lead to higher oil prices as the geopolitical risk premium is reinjected.
Separately, investors are also looking to EIA inventory data to assess the impact of a massive winter storm on recently hit parts of the US.
