Another One Bites the Dust

After software, it is now the turn of financial services to be hurled into the AI washing machine. The sector tumbled on Wall Street yesterday, dragging the broader indices into the red. Volatility remains elevated, with pronounced swings across a wide range of listed stocks. Investors are marking time until this afternoon's release of the monthly US employment figures, digesting a smattering of results from major European companies in the meantime.

The bazooka of disruption claimed a fresh casualty on Wall Street yesterday: financial services bit the dust. Raymond James fell 9%, Charles Schwab 7%, Ameriprise 6% and Stifel 4%. Their common denominator? Traditional investment firms advising Americans on portfolio allocation and tax strategies. Their weakness? Finding themselves in the column of businesses potentially supplanted by simpler, more efficient AI-driven solutions.

It was the start-up Altruist that lit the fuse, unveiling a new AI tool capable of building automated, personalised tax strategies by instantly analysing clients' documents. It is not the first company to trumpet such an innovation, but the announcement comes at a time when markets have embarked on something of a witch-hunt, scouring for fresh sectors likely to be shaken by artificial intelligence. In recent weeks, enterprise software had served as investors' punchbag, before staging a modest recovery over the past three sessions. The pattern is the same each time: a high-margin, generously valued sector, hitherto relatively insulated from the AI tremors, is suddenly thrust into turmoil as though on the brink of extinction. The market relishes the scent of blood.

All the more so as another corner of financial services also took a hit yesterday: data providers. I touched on the subject a few days ago. Here too, the market senses AI's disruptive potential, not least because data theft has become an institutionalised trade practised with relative impunity. Results published yesterday by S&P Global amplified anxiety surrounding the sector and its relationship with AI. The shares sank 9.7%, dragging down peers such as MSCI (-7.8%), Moody's (-6.8%), Verisk (-5%) and Broadridge (-5%). These spectacular declines, coupled with a modest pullback in mega-caps and semiconductor stocks, produced a curious close in the United States: +0.1% for the Dow Jones, buoyed by consumer names, -0.3% for the S&P 500 and -0.56% for the Nasdaq 100.

Europe had ended slightly lower, with the Stoxx Europe 600 off 0.07%, although a handful of markets fared better. Paris edged up 0.06% at the close, supported by luxury stocks and a surge of more than 10% in Kering. The Pinault family group offers a textbook illustration of narrative trumping numbers. The company saw profits collapse in 2025, while revenues continue to decline in a testing environment for the entire sector. Yet its new chief executive, the charismatic Luca de Meo, commands considerable goodwill within the financial community, and his incantations of a turnaround have struck a chord on the back of a few tentative signals. He has set April as the date for unveiling his new strategy, affording himself several weeks' breathing space to hone the message.

Wednesday's session will be dominated by the delayed release of January's US employment data. Yesterday's figures from across the Atlantic cast a chill over the economic backdrop, with retail sales disappointing. The data pushed Treasury yields lower and increased the probability of rate cuts later in the year, a prospect equity markets are unlikely to resist. Recent labour market readings have been on the soft side. If that trend is confirmed, the case for monetary easing will strengthen. Overnight, China reported slightly weaker-than-expected inflation for January, with no visible market fallout. On the political front, US Commerce Secretary Howard Lutnick confirmed that he visited Jeffrey Epstein's island in 2012, but brushed aside calls to resign. It would probably be quicker to draw up a list of those who had no contact with Epstein than to identify those who did. On Ukraine, Volodymyr Zelensky is reportedly planning spring elections alongside a referendum on a peace agreement, following pressure from the United States, according to the Financial Times.

On the corporate front, a heavy earnings day lies ahead. After some memorable post-close moves in the United States, Mattel down 31% being the most striking, attention this morning turns in Europe to TotalEnergies, Dassault Systèmes, Siemens Energy, Heineken and Commerzbank, before Cisco Systems, McDonald's, T-Mobile US, AppLovin and Shopify take centre stage in the US.

Asian markets are in buoyant mood this morning. They have helped lift the MSCI Emerging Markets index to gains of more than 10% in 2026, marking a fresh record in the process. The MSCI Asia Pacific index tells a similar story, up 12.6% since 1 January and venturing into uncharted territory. Hong Kong is up 0.4%, South Korea 0.8%, while Taiwan and Australia advance 1.7%. India is flat. Japan is closed for a public holiday. Western futures are pointing higher, with the usual caveat for this reporting season: some indices can be heavily swayed by the results of their largest constituents.

Today's economic highlights:

On the agenda today: investment lending for homes and quarterly home loans in Australia; followed by the monthly inflation rate, annual PPI, and annual inflation rate in China; RBA Hauser's speech in Australia; monthly industrial production in Italy; in the United States with the MBA 30-Year Mortgage Rate, participation rate, unemployment rate, non-farm payrolls, average hourly earnings YoY and MoM, Fed Bowman's speech, EIA gasoline and crude oil stocks change, and finally the monthly budget statement. See the full calendar here.

• GBP / USD: US$1.37
• Gold: US$5,063.77
• Crude Oil (BRENT): US$69.18
• United States 10 years: 4.14%
• BITCOIN: US$67,538.1

In corporate news:

• BP plc has suspended its share buyback program to focus on reducing debt, as noted by RBC Capital Markets, which maintained its Sector Perform rating.
• CVC Capital Group is expected to receive a 1.2 billion-pound financing package for its acquisition of Smiths Group's unit, Smiths Detection.
• Aker BP announced a 5% increase in its quarterly dividend despite a forecasted dip in 2026 output.
• Whitbread's long-term issuer default rating was affirmed at BBB by Fitch Ratings, with a negative outlook.
• AstraZeneca is optimistic about its 2026 growth, reiterating its $80 billion revenue goal for 2030.
• Bellway reported a 2.7% increase in first-half completions and is on track to meet its full-year volume output target.
• Barclays set new midterm targets, aiming for a return on tangible equity of more than 14% by 2028, alongside a quarterly profit beat.
• British American Tobacco extended Chair Luc Jobin's term by two years, until April 2028.
• Siemens Energy confirms its 2026 forecasts after a strong first fiscal quarter.
• Heineken exceeds forecasts, but the brewer anticipates slower growth for 2026 and will lay off several thousand people.
• Commerzbank targets 2026 net profit of more than €3.2 billion.
• ABN Amro posts a net profit of EUR 410 million in the fourth quarter.
• Schindler improves its EBIT margin to 12.6% in 2025.
• SGS improves its revenue and profits in 2025.
• ThyssenKrupp Nucera reports a decline in orders due to the continuing difficult hydrogen market.
• Telefónica completes the sale of Telefónica Móviles Chile for $1.2 billion.
• Accelleron changes its board of directors.
• Shares rising after trading hours following their quarterly results: Cloudflare (+16%), Lattice Semiconductor (+13%), Edwards Lifesciences (+1.5%),Welltower (+1.4%)…
• Shares down after trading hours following their quarterly results: Mattel (-31%), Astera Labs (-10%), Robinhood (-7.7%), Zillow (-5%), Gilead (-1.3%)…
• Paramount improves its bid for Warner Bros by offering to cover the break-up fees with Netflix and other costs. In addition, the Ancora fund has reportedly built up a position to push for the abandonment of the Netflix deal.
• Ford posts heavy Q4 loss and fears the impact of tariffs.
• The FDA has refused to review Moderna's application for its first messenger RNA-based flu vaccine.
• Estée Lauder is suing Walmart for selling counterfeit products.
• Blackstone is investing $200 million in Anthropic, based on a valuation of $350 billion, according to Bloomberg.

See more news from UK listed companies here

Analyst Recommendations:

• Barclays Plc: Mediobanca maintains its neutral recommendation and raises the target price from GBX 510 to GBX 520.
• Drax Group Plc: Citi downgrades to neutral from buy and raises the target price from GBP 8.50 to GBP 9.23.
• Astrazeneca Plc: Nordea Bank maintains its sell recommendation and raises the target price from SEK 1500 to SEK 1531.
• Watches Of Switzerland Group Plc: SBG Securities (Pty) Ltd maintains its buy recommendation and raises the target price from GBP 5.90 to GBP 6.
• B&M European Value Retail S.a.: Peel Hunt upgrades to buy from add with a price target raised from GBP 2 to GBP 2.50.
• Safestore Holdings Plc: Barclays downgrades to market weight from overweight and raises the target price from GBP 7.40 to GBP 8.70.
• Anglo American Plc: JP Morgan maintains its neutral recommendation and raises the target price from GBP 32.20 to GBP 37.80.
• Glencore Plc: JP Morgan maintains its neutral recommendation and raises the target price from GBP 4.90 to GBP 5.10.
• Mondi Plc: JP Morgan maintains its neutral recommendation and reduces the target price from GBP 9.70 to GBP 9.10.
• Antofagasta Plc: JP Morgan maintains its overweight recommendation and raises the target price from GBP 40 to GBP 44.
• Hapag-Lloyd Ag: Berenberg maintains its hold recommendation and reduces the target price from EUR 120 to EUR 119.
• Stmicroelectronics N.v.: BNP Paribas maintains its outperform recommendation and raises the target price from EUR 26 to EUR 30.