Market navigator:
week of 9 February 2026

What happened last week

• RBA back to tightening: The Reserve Bank of Australia (RBA) raised the cash rate by 25 basis points to 3.85%, marking its first increase since 2023. Policymakers expressed concern over inflation's resurgence, which appears set to remain elevated whilst labour market conditions are slightly tight. Market pricing implies two additional 25 basis point increases by year-end.
• ECB and BOE on hold: The European Central Bank(ECB) held its deposit rate at 2.00%, characterising the eurozone economy as resilient despite headline inflation declining to 1.7% in January, undershooting the 2% target. The Bank of England (BoE) voted 5-4 to maintain rates at 3.75% following downward growth and inflation revisions. EUR/USD and GBP/USD declined 0.2% and 0.9% respectively on Thursday.
• Mixed signals in US: Manufacturing activity demonstrated unexpected strength as January's ISM purchasing managers' index (PMI) registered 52.6, returning to expansion after 12 consecutive months of contraction. However, job openings plunged to 6.5 million in December, the lowest since September 2020, whilst initial jobless claims reached 231,000 in late January.
• Japan ruling coalition's victory: Prime Minister Takaichi's Liberal Democratic Party (LDP) is projected to secure two-thirds of lower house seats following Sunday's snap election. Combined with coalition partner Ishin, the ruling alliance commands sufficient support to advance its legislative agenda, including aggressive fiscal spending. Japanese equities are positioned for gains whilst the yen and bonds face downward pressure when markets reopen Monday.

Markets in focus

Software companies decline on AI disruption concerns

US equity markets delivered divergent performance as technology sector sell-offs attracted dip-buying interest. The Dow Jones advanced 2.5%, breaching 50,000 for the first time, whilst the S&P 500 closed marginally lower at -0.1% and the Nasdaq 100 declined 1.9%.

The S&P 500 Software & Services Index experienced significant repricing, declining 7.5% over the week and extending year-to-date losses to 18.6%. The selloff accelerated following Anthropic's release of enhanced plugins for its Claude Cowork artificial intelligence (AI) platform, which automate functions across legal, finance, sales, marketing and data analysis workflows. Market participants intensified concerns that AI agents may fundamentally displace traditional enterprise software solutions.

The decline affected companies throughout the software value chain, from financial data providers such as FactSet Research (-18.5%) to private equity firms with substantial software portfolios including KKR (-9.7%). Whilst AI-related disruption risks have circulated for some time, last week's sharp market reaction indicates heightened investor sensitivity to negative developments, particularly among positions established at elevated valuations during the latter stages of the rally.

Separately, concerns regarding AI monetisation have intensified following aggressive capital expenditure guidance from major technology platforms. The leading hyperscalers (Amazon, Microsoft, Alphabet and Meta) collectively project approximately $600 billion in AI infrastructure spending for 2026 based on latest official guidance, representing roughly 75-80% growth from 2025 levels and placing considerable pressure on free cash flow generation.

From a technical perspective, the US Tech 100 exhibits a double-top formation following rejection at 26,218. The relative strength index (RSI) continues displaying bearish divergence, whilst the recent breach below the 50-day moving average (MA) adds another negative signal, potentially targeting support near 23,800. Until the index reclaims the 25,850 pivot on a closing basis, establishing new historical highs appears unlikely in the near term.

Figure 1: US Tech 100 index (daily) price chart

Hang Seng Index retreats on risk-off sentiments

Asian markets declined this week as precious metals volatility prompted investors to reassess stretched valuations, compounded by spillover effects from US technology sector weakness. Whilst Asia Pacific's decline proved more moderate than global benchmarks, Hong Kong equities experienced the steepest losses, with the Hang Seng Index reversing prior week gains to close down 3.0%.

Technology sector losses proved most pronounced. Video platform Kuaishou plunged 11% following regulatory fines for inappropriate content, whilst richly valued chipmaker SMIC (trading at a forward price-to-earnings ratio of 67 times versus TSMC's 23 times) declined 10% as investors reassessed AI beneficiary valuations. Other technology giants including Tencent, Alibaba and Baidu also declined amid broader sector weakness.

Last week's pullback likely represents a temporary setback within an established uptrend. Buy-the-dip interest remains evident, particularly from southbound investors, with net inflows reaching HK$25 billion on Thursday, the highest level since mid-August. From a technical analysis perspective, the Hang Seng Index tests critical support at the 50-day MA near 26,300. A confirmed breach below this level would likely direct the index towards the 200-day MA near 25,200. Should the index rebound from current levels, it remains vulnerable to forming a head and shoulders pattern if it fails to reclaim 27,400.

Figure 2: Hang Seng Index (daily) price chart

Bitcoin extends decline below $70,000

Bitcoin extended its selloff for a third consecutive week as deteriorating sentiment pressured most risky assets. The cryptocurrency declined 7.5% over the week, briefly approaching $60,000 before recovering to current levels. Since reaching its all-time high in October, Bitcoin has declined close to 50%, erasing gains accumulated since Trump's presidential election victory in November 2024.

Bitcoin has disappointed investors anticipating it would function as 'digital gold' during periods of heightened volatility. The performance divergence between Bitcoin and gold continues widening as Bitcoin faces pressure from multiple sources. Spot Bitcoin exchange-traded funds (ETFs) recorded $387 million in net redemptions, whilst long positions totalling $6.5 billion were force-liquidated between 31 January and 6 February according to Coinglass data. Recent outperformance in precious metals has also attracted capital flows from cryptocurrencies. Whilst no imminent risk exists of crypto treasury holders such as Strategy being forced to liquidate holdings, investors monitor closely for any signs of repayment difficulties which could materially impact cryptocurrency valuations.

Bitcoin prices rebounded sharply on Friday as the RSI reflected oversold conditions, though this may represent a 'dead cat bounce' towards $72,000--$74,000 resistance. The daily trend remains firmly bearish until the $81,000 level is reclaimed. Elliott Wave analysis suggests the corrective Wave C could match Wave A's magnitude, potentially extending towards $52,000-$53,000 near support established by September 2024's low.

Figure 3: Bitcoin (daily) price chart

The week ahead

The forthcoming week centres on Chinese inflation dynamics and delayed US economic releases following the partial government shutdown, alongside critical corporate earnings from technology and consumer sectors.

China's inflation data assumes prominence Wednesday as markets assess whether the nascent recovery in the consumer price index (CPI) has solidified. Headline inflation turned positive in October following extended deflation, whilst the producer price index (PPI) has contracted for 39 consecutive months despite recent government measures to curb destructive price competition in sectors including solar energy and food delivery. Sustained CPI growth alongside PPI's move towards positive territory would signal that policy interventions are gaining traction.

The US employment report, typically released on the first Friday of each month, has been rescheduled to 11 February, whilst the inflation report has been delayed by two days due to the partial government shutdown. January's non-farm payrolls are forecast to add 70,000 positions, a modest improvement from December's soft 50,000 additions. Friday's CPI data will prove equally significant, as persistent disinflation would validate the Federal Reserve's (Fed) assessment that inflation risks are moderating and provide incoming Chair Warsh with stronger justification for accelerated rate reductions.

On the corporate front, NetEase's fourth-quarter results will provide insights into AI's transformative impact on gaming as the industry navigates evolving competitive dynamics. Cisco earnings will attract scrutiny regarding delivery of AI infrastructure projects amid recent volatility affecting technology valuations.

Figure 4: Uptick in US unemployment will pressurise Fed to cut rates as inflation stabilises

Key macro events this week

Tuesday 10 February 2026

• 9.30pm (HK time) — US Retail Sales month-on-month (MoM) (December): previous 0.6%, consensus 0.5%

Wednesday 11 February 2026

• 9.30am (HK time) — China CPI year-on-year (YoY) (January): previous 0.8%, consensus 0.3%
• 9.30am (HK time) — China PPI YoY (January): previous -1.9%, consensus -1.5%
• 9.30pm (HK time) — US Non-Farm Payrolls (January): previous 50,000, consensus 70,000
• 9.30pm (HK time) — US Unemployment Rate (January): previous 4.4%, consensus 4.4%

Thursday 12 February 2026

• 3.00pm (HK time) — UK GDP Growth Rate quarter-on-quarter (QoQ) preliminary (Q4): previous 0.1%, consensus 0.2%
• 11.00pm (HK time) — US Existing Home Sales (January): previous 4.35 million, consensus 4.25 million

Friday 13 February 2026

• 9.30am (HK time) — China House Price Index YoY (January): previous -2.7%
• 9.30pm (HK time) — US Core Inflation Rate MoM (January): previous 0.2%, consensus 0.3%
• 9.30pm (HK time) — US Core Inflation Rate YoY (January): previous 2.6%
• 9.30pm (HK time) — US Inflation Rate MoM (January): previous 0.3%, consensus 0.3%
• 9.30pm (HK time) — US Inflation Rate YoY (January): previous 2.7%, consensus 2.5%

Key corporate earnings

(in local exchange time)

Tuesday 10 February 2026

• AstraZeneca
• Coca-Cola

Wednesday 11 February 2026

• Cisco
• McDonald's
• NetEase

Thursday 12 February 2026

• Applied Materials
• Unilever

_{Source: Trading Economics, Nasdaq, LSEG (as of 8 February 2026)}