Global News Summary 31 Jan – 6 Feb 2026

The first full week of February was defined by a sharp divergence in global monetary policy and a growing “AI reality check” for equity markets. In the United States, equities surged to new highs — with the Dow closing above 50,000 — even as investors became more selective, punishing companies announcing massive AI investment plans that threatened near-term cash flow. In Europe, central banks held rates but signalled growing confidence that inflation is easing, while avoiding any rush to cut. Japan remained the global pressure point, with government bond yields hovering in the low-2% range as markets reacted to fiscal expansion plans and higher long-term borrowing costs. China’s data disappointed, with manufacturing activity slipping back into contraction, highlighting weak domestic demand at the start of the year. Australia shocked markets with a rate hike, Singapore lifted its medium-term inflation outlook while keeping policy steady, and Switzerland’s currency surged to levels last seen during the 2015 “franc shock”, reinforcing its safe-haven status but deepening deflationary risks.

United States

Debt Securities / Financial Conditions

Despite equity volatility, US financial conditions remained tight but stable. The 10-year Treasury yield hovered around 4.2%, signalling that markets were repricing policy expectations rather than fearing an immediate growth shock.

Jobs

Labour-market signals continued to cool. Job openings fell to roughly 6.5 million, the lowest level since 2020, while the January jobs report was delayed due to the ongoing government shutdown, creating a notable data gap at a critical point in the policy cycle. Corporate announcements pointed to over 100,000 job cuts in January, reinforcing the message of slower hiring rather than outright collapse.

AI / Equities

Equity markets rallied strongly into week-end, with the Dow closing above 50,000, supported by megacap technology and semiconductor stocks. However, sentiment around AI shifted materially. Amazon’s roughly $200 billion AI-linked investment plan intensified debate around whether AI spending will generate sustainable returns or compress margins in the near term. The theme moved decisively from enthusiasm to scrutiny.

Inflation / Recession

No new CPI release drove the week. The macro focus remained on whether labour-market cooling stays orderly, allowing inflation to drift lower without tipping the economy into recession.

United Kingdom

Debt Securities / Policy

The Bank of England held Bank Rate at 3.75%, with a narrow 5–4 vote split, one of the tightest decisions in recent years. The outcome reinforced a message of policy optionality rather than a clear easing bias.

Inflation / Growth

Policymakers reiterated confidence that inflation is moving towards target, but highlighted ongoing uncertainty, particularly around wages. The week’s tone suggested stabilisation rather than renewed growth momentum.

Eurozone

Inflation

Euro-area inflation fell further below target, reaching around 1.7% in January, with both core and services inflation easing. This reinforced the view that disinflation is well entrenched.

Debt Securities / Policy

The ECB held its key policy rate at 2%, stressing that one month of data does not make a trend. Bond markets remained more sensitive to global rate developments — particularly Japan — than to domestic ECB signals.

Economic Growth

Recent data continued to support a “slow growth, not recession” narrative, with late-2025 GDP expanding modestly.

China

Economic Growth

China’s start to 2026 was weak. Manufacturing PMI slipped to 49.3, back into contraction territory, with services and construction activity also softening. The data reinforced concerns about fragile domestic demand.

Recession / Inflation

The dominant concern remained under-utilisation and weak confidence rather than overheating inflation. Policymakers maintained a cautious, stabilisation-focused stance.

Japan

Debt Securities / Global Spillover

Japan continued to act as the global source of rate volatility. 10-year government bond yields hovered around 2.2%–2.3%, levels not seen in decades, fuelled by expectations of increased fiscal spending under Prime Minister Takaichi and higher long-term debt issuance.

Policy Context

While policy rates were unchanged, markets focused on the interaction between fiscal expansion, rising yields, and currency stability, rather than near-term central-bank action.

Australia

Debt Securities / Policy

Australia delivered the week’s biggest surprise. The Reserve Bank raised the cash rate by 25 basis points to 3.85%, reversing expectations of prolonged stability.

Inflation

The decision was driven by renewed inflation pressure, with price growth cited around 3.8%, keeping inflation outside the RBA’s comfort zone and forcing a more hawkish stance.

New Zealand

No major economic release during the week materially altered the outlook. The prevailing narrative remained soft growth and cautious policy, with attention turning to upcoming inflation and employment data.

Singapore

Policy / Inflation

The Monetary Authority of Singapore held policy steady, but raised its 2026 inflation forecast range to 1.0%–2.0%, reflecting expectations of firmer price pressures ahead.

Economic Growth

Singapore entered 2026 with strong momentum following robust 2025 growth, reinforcing its position as one of the most resilient economies globally.

Switzerland

Inflation / Currency

The Swiss franc surged to its strongest level since the 2015 “franc shock”, driven by renewed safe-haven demand. Inflation remained extremely low, around 0.1%, raising the risk of undershooting the price-stability range.

Policy Implications

Authorities signalled that brief negative inflation would not automatically trigger emergency action, keeping foreign-exchange intervention firmly in the policy toolkit.

What This Week Meant for Investors

• AI remains the growth engine, but capital discipline and cash-flow delivery now matter as much as innovation.

• Global monetary policy is diverging: Australia tightened, the US debated direction amid data gaps, Europe held steady, and Japan remained the global volatility node.

• China’s weak start to 2026 keeps global growth risks skewed to the downside.

• Safe havens are a double-edged sword: Switzerland’s currency strength reinforces stability but deepens disinflation risks.