Financial markets continued to be shaped this week by a combination of corporate earnings reports, the ongoing interest in artificial intelligence, and monetary policy speculation. Major Western indices finished relatively flat yesterday, despite significant swings in individual stocks. Today’s economic calendar is packed, with key reports and earnings releases from sector leaders including L’Oréal, Hermès, Siemens, Unilever, and Mercedes-Benz.
The earnings season is in full swing, and as has been the case for several quarters, results are driving dramatic market reactions. When analyzing these movements, it’s essential to remember that a stock’s performance post-earnings isn’t solely determined by whether it met or missed expectations. It’s a more complex picture. Factors like comparable company performance, overall market trends, and management’s narrative all play a role, alongside a variety of rational and irrational circumstances. Currently, investors are quick to punish any results that don’t align perfectly with their forecasts, sometimes even aggressively. Several companies experienced declines of over 15% yesterday following their earnings releases, including Unity, Lyft, Mattel, Astera Labs, Zillow, and Dassault Systèmes. Some analysts view these drops as a correction of previously inflated valuations. Generous valuations often require extraordinary growth trajectories, and adjustments are inevitable when those trajectories falter.
Turning to the “AI lottery,” investor nervousness has increased in recent weeks as they grapple with two key questions: are the hundreds of billions of dollars being invested in AI being deployed effectively, and which companies will ultimately emerge as winners? This assessment is focused solely on the economic implications, as the broader societal impact is a separate consideration. The prevailing belief is that today’s investments will drive future prosperity, and investors are eager to participate. After focusing on AI tool providers and large platforms with soaring valuations, investors have begun targeting companies that indirectly benefit, such as energy firms and raw material suppliers. Now, the focus is shifting to potential losers. Will AI disrupt the insurance industry, software developers, the video game industry, or wealth management firms? Or will it simply reshape these established ecosystems? The market is closely watching for any groundbreaking AI application that could trigger a sell-off in related sectors. While some observers caution that change is happening more slowly than it appears, these periods of technological and societal upheaval inevitably create both winners and losers, and the financial world is eager to notice those outcomes unfold.
Finally, interest rate levels continue to provide a stable backdrop for the markets, particularly in the United States. Yesterday, the U.S. Bureau of Labor Statistics released a surprising employment report, having delayed its announcement by a few days. January saw job creation exceed expectations at 130,000, compared to an anticipated 65,000, while the unemployment rate fell to 4.3% and wages showed positive momentum. This data initially suggested a reduced probability of interest rate cuts and a potential rise in bond yields, as it challenged the narrative of a weakening economy that would force the Federal Reserve to ease its monetary policy. That’s largely what happened, with yields increasing slightly and expectations for rate cuts being pushed further into the year. However, equity markets did not react negatively. The discrepancy lies in the details of the employment report. Annual revisions largely erased gains from the past three years in sectors outside of public administration, leisure/hospitality, and private health/education, according to ING. This indicates job losses in industries like manufacturing, finance, technology, and retail. Leading indicators, such as declining job postings and hiring intentions, also point to a cooling labor market. The conclusion is that the labor market isn’t as robust as the headline job creation number suggests. Investors can continue to hope for multiple rate cuts this year, a belief that is supporting the stock market rally. The January inflation figure, to be released tomorrow, will provide further insight into the future of monetary policy.
These three forces – earnings, AI speculation, and interest rate expectations – resulted in modest overall changes for Western indices yesterday, despite the significant individual stock movements. In the U.S., the S&P 500 finished unchanged. The Stoxx Europe 600 briefly hit a record high of 623.49 points (+0.4%) during the session, but closed up only 0.1%. In Paris, the CAC 40 lost 0.18%, weighed down by a 21% drop in shares of Dassault Systèmes following another disappointing earnings report. The decline also impacted SAP SE (-5.2%), dragging down the DAX by 0.5%. Dassault Systèmes’ prolonged struggles are increasingly being linked to the potential for AI to disrupt the software industry, a narrative that some specialists dispute but which currently exerts significant downward pressure.
Today’s session will be dominated by a flurry of corporate earnings reports. Geopolitically, the U.S. House of Representatives dealt a blow to Donald Trump by voting to repeal tariffs imposed on Canada, though the President is likely to veto the measure. Earlier, rumors circulated that he was considering withdrawing the U.S. From the USMCA trade agreement. Meanwhile, the oil market remains tense after the Wall Street Journal reported that the Pentagon is preparing to send a second aircraft carrier group to the Middle East. Cryptocurrency markets are also under pressure after BlockFills, a U.S. Platform, suspended deposits and withdrawals following price declines, though Bitcoin has stabilized around $67,000.
In Asia-Pacific, Hong Kong and India are experiencing slight declines, while other markets continue their upward trend, with modest gains in Tokyo (+0.09%), strong growth in South Korea (+3%), and moderate increases in Australia (+0.3%).
The CAC 40 is starting the day strongly, up 1.4% at 8,431 points. The SMI is up 0.4% at 13,599 points, and the Bel 20 is up 0.9% at 5,645 points.
Today’s Economic Highlights
The macroeconomic agenda:
- 00:00: Speech by Logan of the Fed (United States)
- 08:00: GDP (monthly) (United Kingdom)
- 14:30: Weekly Unemployment Claims (United States)
- 16:00: Existing Home Sales (monthly) (United States)
- Full economic calendar here.
Key macroeconomic indicators (quotes are as of around 7:00 AM today, links provide real-time data):
Key Recommendation Changes
- Aker BP: Arctic Securities upgraded from hold to buy with a price target increased from 290 NOK to 320 NOK.
- Amadeus It Group: Citi downgraded from buy to neutral with a price target reduced from 85 EUR to 50 EUR.
- BFF Bank: Jefferies downgraded from buy to hold with a price target reduced from 12 EUR to 4.45 EUR.
- Dassault Systèmes: Barclays remains at market weight with a price target reduced from 25 EUR to 21 EUR. JP Morgan maintains a neutral recommendation and reduces the price target from 26 EUR to 21 EUR. Jefferies maintains a underperform recommendation and reduces the price target from 21 EUR to 16 EUR.
- Dottikon: UBS initiates coverage at neutral with a price target of 365 CHF.
- Edenred: Goldman Sachs remains at accumulate with a price target reduced from 39 EUR to 23.50 EUR.
- Entra: DNB Carnegie downgraded from buy to hold with a price target reduced from 135 NOK to 125 NOK.
- Essilorluxottica: JP Morgan remains at overweight with a price target reduced from 345 EUR to 335 EUR.
- Eurobank Ergasias: Goldman Sachs upgraded from neutral to buy with a price target increased from 3.50 EUR to 5 EUR.
- Ferrari: Citi upgraded from sell to hold with a price target increased from 300 EUR to 320 EUR. Jefferies maintains a hold recommendation and increases the price target from 300 EUR to 310 EUR.
- GSK Plc: Intron Health downgraded from hold to sell with a price target increased from 18,000 GBX to 19,000 GBX.
- Logista Holdings: Bernstein downgraded from outperform to market perform with a price target increased from 33 EUR to 35 EUR.
- Michelin: Oddo BHF maintains a neutral recommendation and increases the price target from 30 EUR to 32 EUR.
- National Bank Of Greece: Goldman Sachs downgraded from buy to neutral with a price target increased from 15.10 EUR to 16.75 EUR.
- Novartis: Deutsche Bank maintains a buy recommendation and increases the price target from 125 CHF to 135 CHF. JP Morgan maintains an overweight recommendation and increases the price target from 125 CHF to 135 CHF.
- Pluxee: Goldman Sachs maintains a sell recommendation and reduces the price target from 17.50 EUR to 11 EUR.
- Recordati: Barclays downgraded from underweight to market weight with a price target of 48 EUR.
- Rexel: Goldman Sachs maintains a buy recommendation and increases the price target from 38 EUR to 40 EUR.
- Salzgitter: AlphaValue/Baader Europe upgraded from lighten to accumulate with a price target increased from 44.30 EUR to 66.20 EUR.
- Sandoz Group: Jefferies upgraded from hold to buy with a price target increased from 51.40 CHF to 75 CHF.
- Soitec: Barclays remains at market weight with a price target increased from 27 EUR to 30 EUR. HSBC remains at hold with a price target increased from 25 EUR to 31 EUR.
- Swatch Group: Octavian AG maintains a buy recommendation and increases the price target from 200 CHF to 232 CHF.
- TotalEnergies: Citi maintains a buy recommendation and increases the price target from 65 EUR to 71 EUR. Goldman Sachs maintains a neutral recommendation and increases the price target from 56 EUR to 60 EUR. JP Morgan maintains a neutral recommendation and increases the price target from 55 EUR to 58 EUR. Piper Sandler & Co maintains a neutral recommendation and increases the price target from 71 USD to 74 USD. UBS maintains a buy recommendation and increases the price target from 61 EUR to 69 EUR.
- Yara International: ABG Sundal Collier downgraded from buy to hold with a price target of 485 NOK. Arctic Securities downgraded from buy to hold with a price target increased from 440 NOK to 470 NOK.
- Zalando: Morgan Stanley downgraded from underweight to market weight with a price target of 23 EUR.
In France
Important (and less important) announcements
- Company Earnings (comments are provided in real-time and do not predict stock performance)
- Essilorluxottica expects to achieve strong revenue growth over the next five years.
- Michelin limits the damage in 2025.
- Hermès improves its operating profitability in 2025.
- Legrand increases its net profit by nearly 7% in 2025.
- Rexel reports a 73.4% increase in net profit in 2025.
- Unibail reduces its debt and proposes a 30% increase in its dividend.
- Ipsen increases its annual net profit by 28%.
- Belén Garijo appointed CEO of Sanofi, replacing Paul Hudson.
- Carrefour offers 15 million euros to franchisees against abandoning lawsuits, but fails, according to La Lettre. Carrefour has concluded an agreement to sell its Romanian subsidiary for 823 million euros.
- Spie has acquired INVIZO in Slovakia.
- GL Events wins the contract for the infrastructure of COP17.
- Nuburu enters the capital of Heckler & Koch, acquiring 0.8% of the share capital for 15 MUSD, or approximately 43 EUR per share (based on my rough calculation and subject to the exchange rate).
- Key publications today: TF1, TotalEnergies EP Gabon, Ubisoft, Lectra, Neurones, Claranova, Okwind, Selectirente… Full calendar here.
Around the World
Important (and less important) announcements
From Europe
- Company Earnings (comments are provided in real-time and do not predict stock performance)
- Siemens AG raises its forecasts.
- Unilever beats expectations in Q4 but anticipates a slowdown in markets in 2026.
- Mercedes publishes cautious forecasts for 2026.
- Anheuser-Busch Inbev reports a less pronounced contraction in volumes than expected in Q4.
- Adyen reports revenue of 1.27 billion euros in H2.
- Deutsche Boerse reports a 4% decline in profits in the fourth quarter and forecasts growth for 2026. The group also signs an agreement to acquire the remaining 20% in ISS STOXX for 1.1 billion euros.
- Carl Zeiss publishes results below expectations.
- Magnum Ice Cream reports a decline in net profit and revenue for fiscal year 2025.
- Banque Cantonale Vaudoise publishes lower results.
- Montea publishes an EPRA 2025 result of 4.90 euros per share.
- Novo Nordisk plans to market its flagship weight loss drug, Wegovy, in vials, according to Bloomberg.
- BMW is recalling hundreds of thousands of vehicles worldwide due to a risk of fire.
- Salvatore Ferragamo denies rumors regarding a change in artistic direction.
- Eni wins an offshore exploration license in Libya.
- Hexagon plans an IPO of Octave in the second quarter of 2026.
- Starbucks signs with Adyen to manage its in-store payments at approximately 940 locations in Europe.
- The second shareholder of Greencore places approximately 30.3 million shares.
- Oxford BioMedica states that EQT is expected to announce its intention to bid before February 25, 2026.
- WiseSat, a subsidiary of WISeKey, plans to launch its 21st satellite into low orbit with SpaceX from California in March 2026.
- Hochtief wins a contract to build a research center in Kiel.
- Key publications today: Siemens AG, Unilever, Anheuser-Busch Inbev, British American Tobacco, Mercedes-Benz, RELX, Adyen, Deutsche Boerse, Swisscom…
From North America
- Stocks higher after-hours following their quarterly reports: Equinix (+8%), Curtiss-Wright (+6%), Motorola (+2%)…
- Stocks lower after-hours following their quarterly reports: Rollins (-13%),
