Weekly house view | From AI-phoria to AI-phobia?
The week in review
The A strong US employment report surprised to the upside, with non-farm payrolls rising by 130,000 in January and the US unemployment rate falling to 4.3% from 4.4%. However, job growth for 2025 was revised lower to 15,000 new positions per month, compared with the prior estimate of 49,000. Job gains were concentrated in healthcare and government, while most other sectors saw job losses. Wage growth has stabilised and both job-finding and job-loss rates remain low. US consumer price index (CPI) slowed to its weakest growth pace in five years, with core CPI rising 2.5% year-on-year (YoY).
Artificial intelligence (AI) dominated headlines last week. New AI tools sparked sectoral declines for software, insurers, wealth managers, commercial real estate services, and logistics firms. Despite these concerns, AI investment financing remains robust. Anthropic raised USD 30 bn at a USD 380 bn valuation, and Alphabet issued 100-year sterling bonds to bolster its AI investments.
The Chinese New Year ushered in the Year of the Fire Horse. US-China trade tensions simmered after the Pentagon said Chinese companies Baidu, BYD, and Alibaba should be added to a list of companies with connections to the Chinese military. Separately, the US is considering targeted tariff reductions for steel and aluminium imports, following research showing most tariff costs are borne domestically.
Quote of the week
“Tradition is something that is a reflection of the reality of the past. Now we have a different reality.” —Joachim Nagel, President of the Bundesbank, on the need for more joint EU debt issuance.
Key data
January headline US inflation fell more than expected to 2.4% year-over-year (YoY) and core inflation fell to 2.5% YoY, its weakest growth pace in five years. Switzerland's consumer price index (CPI) remained stable at 0.1% YoY. Some 66% of S&P 500 companies beat Q4 sales expectations, with earnings per share up 12% year-on-year. The UK economy grew by just 0.1% in Q4 and by 1.3% in 2025, reflecting ongoing political uncertainty and high input costs.
