Global markets are reacting to a confluence of economic and political pressures, as highlighted in reports released today. Investors are closely watching potential shifts in U.S. monetary policy with the impending proclamation of a new Federal Reserve chair, while a significant earnings miss from software giant SAP sent ripples through European markets, particularly in Germany. These developments come amid ongoing concerns about corporate earnings, AI investments, and geopolitical instability.
Trump to announce new Fed chair in days. Markets rattled by SAP results, gold dips. Milan closes lower.
SAP, the European multinational software company, saw its shares plummet following earnings reports revealing cloud orders in the fourth quarter fell short of expectations and analysts deemed its 2026 outlook disappointing. The German software giant reported adjusted net profit rose 17% to nearly €1.9 billion in the quarter. Revenue increased 3% to €9.68 billion, with cloud revenue reaching €5.6 billion, a 19% increase. The company announced a €10 billion share buyback program. In Frankfurt, the stock lost 16.14%, erasing over €42 billion in market capitalization. The multinational’s results significantly impacted markets, particularly in Germany, with the Frankfurt Stock Exchange closing sharply lower (-1.99%), becoming the worst-performing major European index.
Trump to Name Powell Successor Next Week
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Meanwhile, Donald Trump is moving to fill the upcoming vacancy at the Federal Reserve. The U.S. President stated he intends to announce his nominee to succeed Jerome Powell, whom he has frequently criticized for what he considers a “timorous” monetary policy, next week. Trump continued to voice criticism of Powell even after the Federal Reserve’s decision on Wednesday to hold interest rates steady.
European Markets Close Mixed
European markets closed with a mixed performance following the SAP news and developments at the Federal Reserve. Milan’s FTSE Mib index finished down 0.14% at 45,075 points. Paris edged up a fractional 0.06% to 8,071 points, while London rose 0.17%, after reaching a new intraday record of 10,277.72 points. Frankfurt, as previously noted, closed sharply lower. Investors in the U.S. are focused on corporate earnings, while increased investment in artificial intelligence is also a key theme. Geopolitical tensions between the U.S. and Iran continue to contribute to rising commodity prices. Energy stocks gained 1.8%, with the price of oil increasing. WTI crude rose 2.5% to $64.69 a barrel and Brent to $64.68 (+2.3%). Banks and insurance companies also saw gains (+0.5%). Utilities rose 0.4%, in line with the price of gas at €39.35 per megawatt-hour (+1.2%). (See real-time market data).
U.S. Earnings and Wall Street Pressure
The New York Stock Exchange is trading lower amid concerns about corporate spending by big tech companies, with Microsoft down 11%. As of mid-session, the Dow Jones is down 0.03%. The S&P 500 is down sharply, -1.02% to 6,947 points, and the Nasdaq is down -1.46% to 23,970 points. The three major indices have fallen to their lowest levels in over a week. Weighing on market sentiment are tech giants making substantial investments in artificial intelligence, raising debt concerns among some analysts. Microsoft’s plunge, the largest since 2020, stems from a 66% jump to $37.5 billion in capital expenditures (many of which are earmarked for AI development) in its second fiscal quarter. Tesla also reversed course, down 2.3%, despite reporting earnings that exceeded expectations but also its first annual revenue decline in its history. Other AI-related stocks are also down, including Salesforce (-7.2%) and Datadog (-8.3%).
Wall Street Roundup
Meta’s stock remains sharply higher, up 8%, thanks to a strong revenue forecast. With capital expenditures and AI-related spending increasing much faster than generated revenues, markets are beginning to question whether profits will arrive quickly enough to justify current valuations. Other notable earnings include Caterpillar and Mastercard, which both exceeded expectations, with their stocks up 2.8% and 1.6%, respectively. Lockheed Martin’s stock is up 5% after an outlook for 2026 that exceeded Wall Street expectations. Currently, the Dow Jones is down 112.25 points (-0.23%), the S&P 500 is down 69.27 points (-0.99%), and the Nasdaq is down 460.61 points (-1.93%). WTI crude oil at Nymex is up 2.94% to $65.07 a barrel, amid U.S.-Iran tensions.
