Closing post
Time to wrap up…
Amazon’s shares have slumped after it announced plans to spend $200bn on capital expenditures in 2026 to expand its AI infrastructure.
Analysts said markets were spooked by the $600bn+ of AI investment recently announced by major tech companies, fearing the money may be wasted.
Software and data/analytic company stocks have dropped again today, on concerns that AI services may eat into their business models.
Deutsche Bank warned that the rotation out of software stocks into other sectors was reminiscent of the dot-com crash over 25 years ago.
But stock markets are recovering from their losses earlier this week; the UK’s FTSE 100 is up 64 points, or 0.6%, in late trading at 10,373 points, while the S&P 500 index is 1.2% higher in New York.
Bitcoin is also strengthening, up 9% today, after hitting its lowest level in over a year last night.
The average cost of a UK home passed £300,000 for the first time in January, as house prices increased at the fastest rate since November 2024.
The carmaker Stellantis has said it will take a €22bn (£19.1bn) charge and sell a stake in its battery joint venture after admitting that it “overestimated” the pace of the shift to electric vehicles.
And TikTok could be forced into changes to make the app less addictive to users after the EU indicated the platform had breached the bloc’s digital safety rules.
Here’s a neat chart from Bank of America, showing how small-cap US stocks have been outperforming tech giants:
BofA: LONG Main Street, SHORT Wall Street
— Alexandra Semenova (@alexandraandnyc) February 6, 2026
"Bro Billionaires" (an equal-weight index of hot stocks like Nvidia, Palantir, Tesla, Oracle, etc.) are underperforming the little-guy Russell 2000 since Pres. Trump's inauguration pic.twitter.com/qkzisx2bKv
A miserable week for tech is “mercifully” approaching the finish line today, reports Joe Mazzola, head trading & derivatives strategist at Charles Schwab:
“Major indexes posted early gains despite Amazon’s (AMZN) plunge after it spooked investors with heavy spending plans.
The tech-packed Nasdaq-100® (NDX) is down 4% from last Friday’s close as software and AI shares weakened, and bitcoin is in even worse shape, down 50% from October’s all-time high and trading at levels last seen before the November 2024 election. The S&P 500 Index is now red for 2026, wiping out roughly $1 trillion in market capitalization.”
Although stock markets are higher in the US and across Europe, investors “remain on edge”. flags Kathleen Brooks, research director at XTB:
After Thursday’s rout, another recovery is on the cards for markets today. We mentioned earlier that the mini recovery in Bitcoin was likely to boost overall sentiment, as the link between crypto and AI stocks and the tech sector remains strong. Bitcoin is now higher by $5000 on the day, although it remains below the $70,000 level, silver and gold are recovering, and the S&P 500 is higher by more than 1%, led by the tech sector.
There are still pockets of weakness, Amazon is lower by 9% on the back of its earnings report on Thursday night, and its massive capex pledge. Also, if the repricing of crypto is the key support for AI-linked stocks, then the foundations of the recovery remain weak.
US consumer sentiment rises as wealthier Americans feel cheerier
US consumer sentiment has improved this month, new data shows, driven by wealthier Americans who have benefited from stock market gains.
The University of Michigan’s consumer sentiment index, just released, has risen to 57.3 points this month, up from 56.4 in january, lifted by a more optimistic view of current economic conditions.
But it’s the rich what get the pleasure…. as Surveys of Consumers director Joanne Hsu explains:
Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings.
On net, modest increases in current personal finances and buying conditions for durables were offset by a small decline in long-run business conditions.
Today’s 9% tumble in Amazon’s share price has knocked almost $220bn off the company’s market capitalisation.
Equity markets are facing threats on two fronts, explains Raffi Boyadjian, Lead Market Analyst at Trading Point:
Fears that all the spending on AI will not generate substantially higher revenue to justify the bloated valuations, and more recently, the disruption that AI could cause in certain industries such as software and data services, are no longer being seen as remote risks.
Amazon is the latest to spark concerns about its capex plans after it yesterday announced that it wants to up its AI investment to $200 billion this year. The stronger-than-expected revenue growth it reported for Q4 was not enough to stave off a 10% plunge in its stock in after-hours trading.
Or indeed a 9% tumble when trading began….
Amazon shares tumble on $200bn AI spending plans
Amazon’s shares are tumbling in early trading, though, as investors balk at its plans for an artificial intelligence spending blitz.
Amazon’s shares have dropped by over 9%, a day after it announced plans to spend $200bn on artificial intelligence and robotics this year.
Amazon’s CEO Andy Jassy sounded bullish last night, declaring:
“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital.”
But as flagged earlier (9.59am), investors fear companies are wasting their money, given the hundreds of billions of dollars being committed to AI rollout this year.
Analysts at Saxo says Amazon’s spending plans equal “materially higher capital expenditure than markets had expected”, and are reigniting concerns around cash flow discipline.
Updated
Wall Street opens higher after volatile week
Ding Ding rings the opening bell on Wall Street, and stocks are moving up.
After a volatile week, the main indices are all higher in early trading.
The Dow Jones Industrial Average rose 307.20 points, or 0.62%, to 49,212.
The S&P 500 gained 32.23 points, or 0.50%, to 6,832.
The Nasdaq Composite is up 78.17 points, or 0.35%, to 22,618.
India’s IT sector has also been hurt by AI-driven losses; the NIFTY IT index has shed around 7% this week.
More than £7bn wiped off RELX this week
It’s been a far-from-relaxing week for RELX, the information and analytics company formerly known as Reed Elsevier.
RELX owns the LexisNexis data analysts company – just the sort of firm which might be disrupted by high-powered AI agents.
RELX’s shares are down 4,4% today, and have dropped by around 16.5% this week – mainly during their Tuesday plunge, when fears about artificial intelligence startup Anthropic’s new plug-in tools for companies hit markets.
That’s wiped around £7.6bn off RELX’s market capitalisation, I calculate.
We’re hearing a lot about ‘moats’ at the moment, as analysts try to work out which companies might be protected from the march of AI.
Niall Gallagher, European equities investment manager at Jupiter Asset Management, reckons the London Stock Exchange Group and SAP both boast ‘strong moats’:
We are focused very much on defendable business models with strong moats that are likely to be either required or will benefit from the application of AI. To that extent, much of the data that resides inside of Refinitiv inside of LSEG is likely unreplicable from the public internet by AI and will likely be required to apply AI; the fact the LSEG is in partnership with Microsoft provides is instructive. This does not mean that every single data set, or data process inside of LSEG could not be replicated more cheaply by AI but we do think there is a strong moat. The harsh sell off in the share price has left the shares looking very attractively valued for long- term shareholders; its currently trading on about 15x this year’s earnings and it generates a lot of cash flow.
Another stock we feel very confident in, with a strong moat, is SAP. SAP has also been heavily sold- down based on AI fears but we think high quality enterprise data and process structuring is a pre-requisite for apply in AI so we feel similarly confident with this stock. Like LSEG, it is very cheap after the recent sell off and excellent value for long- term shareholders.
Another factor worrying markets is that four of the biggest US technology companies have collectively announced capital expenditures that will reach about $650bn this year, as they continue to roll out AI services.
These intense spending plans, outlined by Alphabet, Amazon.com, Meta and Microsoft are causing investors to fret about the cost of rapidly deploying AI data centres in the race to dominate the sector, at a time when fears are mounting that AI will crush the business models of the data/analytics sector.
As Bloomberg explains:
The search for a comparison to the spending projections — which came as the four reported earnings in the past two weeks — requires going back at least as far as the telecommunications bubble of the 1990s, and perhaps to the build-out of the US railroad networks in the 19th century, the postwar federal investments in interstate highways or New Deal-era relief programs.
🇺🇸 Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 — a staggering and historic total.https://t.co/zLtbtaBGXE pic.twitter.com/R0TccAIw3A
— Jack Hoogland (@jack_hoogland) February 6, 2026
A week after its biggest daily plunge in decades, gold is having a better Friday today.
Bullion is up 3.5% at $4,934 an ounce, after a week of choppy trading.
Kelvin Wong, a senior market analyst at OANDA, explains:
“I do see a bit of a safe-haven investment coming in, but bear in mind that there is still some caution after last Friday’s selloff... we still have this fear about Iran-U.S. tension that is still intact.”
Here’s an example of the severity of the software sell-off:
Selloff in software not just the large caps ... S&P 1500 Software Index has gotten chopped by -29.9% from its high.
— Kevin Gordon (@KevRGordon) February 6, 2026
Going back to 2010, the only selloff that was worse was the bear market in 2022. pic.twitter.com/kynJxRQdZD
Bank of England chief economist Huw Pill has warned there is a risk that the central bank draws too much comfort from an expected fall in inflation in April, a day after the Bank left interest rates on hold.
Pill, one of five policymakers who voted to maintain Bank rate at 3.75%, told businesses:
“There is ... a risk that we draw too much comfort from the ditch in short term inflation dynamics that (was) created by the downside fiscal measures announced last November, and we lose a little bit of a track of where the inflation that is going to be the lasting dynamic in price developments that will still be there once all these one off effects fade out.”
We learned yesterday that four of the nine policymakers on the Bank’s Monetary Policy Committee voted to cut interest rates, but were narrowly outvoted, and that the Bank expects inflation to fall near to its 2% target in the second quarter of this year.
Tata Steel’s UK operations have continued to make a loss.
The metals company, which owns the Port Talbot steelworks in Wales, reported a UK loss of 741 crore (£60m) for the last quarter of 2025, on an EBITDA basis, and a 1,977 crore loss for the last nine months of the year.
Revenues for March-December 2025 fell to 17,558 crore, down from 18.,989 a year earlier.
The wider company beat forecasts, though, with consolidated net profit of 26.89 billion rupees in Q4 2025, up from 3.27 billion rupees a year earlier.
Emily Sawicz, director and industrials senior analyst at RSM UK, says:
“Tata Steel’s Q3 results show a solid group performance driven by India, but continued pressure across its European operations. While Europe has slipped into an EBITDA loss for the quarter, the more important shift is what this signals for the rest of this year.
“In the EU, protectionist measures are expected to feed through from next quarter, with carbon border mechanisms (CBAM) potentially triggering a restocking. Combined with an increase in infrastructure and defence spending this is likely to support steel prices and improve the outlook for the Netherlands business. The UK, however, is effectively locked out of these benefits. Flat demand, import quotas that exceed domestic consumption and falling prices mean the UK market remains under the most pressure of any of Tata Steel’s divisions.
“Looking further ahead, the outlook improves for 2027. The introduction of a UK carbon border mechanism, alongside Tata Steel’s transition to lower-carbon electric arc furnace production at Port Talbot, should materially strengthen competitiveness. The near-term challenge is managing the gap until those structural supports take effect, but the longer-term trajectory for the UK business is far more constructive.
Updated
City experts are predicting that the Bank of England will have cut interests rates to 3% by the first quarter of next year, down from 3.75% today.
The BoE’s latest Market Participants Survey results, just released, show that rates are expected to bottom out at 3% in Q1 2027, and remain there until least the third quarter of next year.
There are hopes that Wall Street may end the week with a small rally.
S&P 500 futures are up 0.32%, with the tech-focused Nasdaq 100 futures up 0.4%, and the Dow Jones industrial average called up 0.15%.
Markets are trying to stabilise into the weekend, reports Daniela Hathorn, senior market analyst at Capital.com.
Sentiment has recovered into the end of the week with the major US indices trading with a positive bias after the sell offs seen earlier this week. The tech sector has been a major underperformer in the past few days with concerns about overinvestment in the AI sector resurfacing after the current earnings season has revealed increased expenditures in the sector.
Furthermore, the heavy selloffs in the metals market had left many investors having to liquidate positions elsewhere in search for more liquidity in their portfolios, leading to a bearish correction in equities and beyond. However, the momentum seems to have stabilised on Friday, with Gold and Silver both trading in the green, alongside global equities.
But caution remains. The markets are likely to remain choppy in the coming days as they rebalance after the heavy moves and fresh data is released next week, with focus on the latest employment data in the US after it was delayed following a 4-day partial government shutdown.
The EU’s concerns about TikTok’s “addictive design” appear to target the services’s core appeal.
TikTok though, is rejecting today’s preliminary findings.
A TikTok spokesperson says:
“The Commission’s preliminary findings present a categorically false and entirely meritless depiction of our platform, and we will take whatever steps are necessary to challenge these findings through every means available to us.”
TikTok hit with charges of breaching EU online content rules
Over in Brussels, social media app TikTok has been charged with breaching EU online content rules through its addictive features.
TikTok could be forced into changes to make the app less addictive to users after EU tech regulators found the platform has breached the bloc’s digital safety rules.
They criticised TikTok for generating new content to encourage users to keep scrolling, saying this shifts users’ brain into an autopilot mode, through features such as infinite scroll, autoplay, push notifications, and its recommender system.
It says:
The Commission’s investigation preliminarily indicates that TikTok did not adequately assess how these addictive features could harm the physical and mental wellbeing of its users, including minors and vulnerable adults.
Last month my colleague Hilary Osborne – presciently – examined whether readers should be worried about an AI bubble, and how they could protect themselves.
It’s not too late! See here for more:
Stellantis’s swerve away from electric cars (see earlier post) is particularly surprising when you look at the Norwegian auto market.
Just seven new petrol cars were sold in Norway last month, data shows, as drivers snapped up more than 2,000 battery electric vehicles (BEVs) instead.
The iShares Expanded Tech-Software Sector ETF, which tracks the sector, has tumbled by around 25% so far this year, highlighting the scale of the selloff in the last few weeks.
Bloomberg reported on Wednesday that almost $1tn had been wiped off the sector over the previous seven days.
$IGV iShares Expanded Tech-Software Sector ETF
— IB Investor (@ibinvestorX) February 5, 2026
Drawdown -32%🩸$MSFT $PLTR $ORCL $CRM $APP $INTU $ADBE $PANW $CRWD $NOW $SNPS $CDNS $ADSK $FTNT pic.twitter.com/WurEdXcuoV
Most investors 'likely nursing losses' as popular trades unwind
Data yesterday showing a surge in US company layoffs in January (see yesterday’s blog) is also being blamed for the slide in riskier assets.
Neil Wilson, investor strategist at Saxo UK, explains:
Most investors are likely nursing losses by Friday morning as we see a sharp unwind in some of the most popular trades. Hard to believe the equal weighted S&P 500 posted an all-time high on Wednesday as tech and momentum stocks faded and investors rotated into other corners of the market...yesterday the rest of the market caught up in a broad retreat from risk assets.
Crypto is looking particularly weak, gold and silver are fading again...it’s looking increasingly challenging for bulls to be constructive right now so they are circling the wagons. The US Challenger job cuts rose to more than 108,000, a sudden spike that spooked the market.
“It’s been a week from hell for tech stocks as AI spending plans caused upset across global markets and pushed investors to unplug hyperscalers from their portfolios,” says Russ Mould, investment director at AJ Bell.
Mould adds:
“Amazon has followed its peers by turning up the dial to max on AI spending, leaving investors with their jaws to the floor.
The hyperscalers are so confident that AI will change the world, they’re spending big bucks to have the foundations to serve what they predict will be sky-high demand. Investors are becoming increasingly dubious about the level of spending, fearing these companies are wasting their money.
Deutsche Bank: rotation out of software has echoes of dot-com crash
Despite today’s drop in software and data companies, the UK’s FTSE 100 share index is down just 0.07% this session as investors rotate into other sectors.
Worryingly, that pattern “echoes what we saw in 2000 as the dot-com bubble started to burst”, analysts at Deutsche Bank warn.
They reminded clients this morning:
Equities started to fall from the March 2000 as tech stocks saw significant declines. However, consumer staples, utilities and healthcare rallied significantly over the months ahead, and in September the S&P 500 actually came within a percentage point of its record high from six months earlier.
So it shows that a market can absorb a prolonged rotation without obvious index-level stress for some time. But the longer and deeper the sell-off in a dominant sector becomes, the harder it is for the broader index to withstand the drag, and the continued losses for tech in 2000 ultimately meant the S&P 500 ended that year over -10% lower.
The current drawdown in software is worse than COVID era meltdown $IGV pic.twitter.com/bb6rilGLnk
— The_Real_Fly (@The_Real_Fly) February 6, 2026
Deutsche Bank also report that “risk assets came under mounting pressure over the last 24 hours”, as concerns around AI and a weak batch of US data led to growing questions about the near-term outlook.
Updated
Wild swings in the silver price
Silver is also looking very volatile.
The spot price of silver tumbled by 19% yesterday, hot on the heels of its 27% plunge on 30 January.
That wiped out all silver’s remarkable gains in January, as it hit its lowest level since mid-December this morning, at $64 an ounce.
It’s now risen back to $73/oz, up 3.8% today.
Bitcoin loses half its value in three months amid crypto crunch
Overnight, Bitcoin fell to just half its record high set just three months ago.
Bitcoin’s price sank to $63,000 on Thursday, its lowest level in more than a year, and half its all-time peak of $126,000, reached in October 2025.
A months-long dip in cryptocurrency prices has tanked shares of companies that have increasingly invested in bitcoin, exacerbating broader stock market jitters.
It’s now struggled back to $64,700.
Chris Beauchamp, chief market analyst at IG, says:
“An uneasy calm prevails in cryptocurrencies this morning. Beleaguered investors will be asking if that was it, after a plunge that has seen the price of bitcoin halve since the October highs.
There were growing signs yesterday that the selloff had dragged indices lower as well, but with some stabilisation there too. Risk appetite generally still feels skittish given the risk of US-Iran talks going nowhere, and the ongoing carnage in software stocks.”
Updated
Data and analystics company shares falling again
Elsewhere in the markets, shares in data and analytics companies are falling again, after almost a week of AI-driven losses.
RELX (-4%), the information and analytics company behind Elsevier and LexisNexis, are the top faller on the FTSE 100.
The London Stock Exchange Group (-1.5%) and accountancy firm Sage (-3.9%) are also under more pressure.
They all tumbled earlier this week after artificial intelligence startup Anthropic launched a plug-in for its Claude service for use by companies’ legal departments.
Now overnight, Anthropic has announced a new model – Claude Opus 4.6 – which it says has improved coding skills, and can operate more reliably in larger codebases, and is better at catching and fixing its own mistakes….
Updated
Stellantis’s shares aren’t stopping either!
Reuters is reporting that Milan-listed shares in Stellantis have been automatically halted from trading after falling 18.65%, and hitting their lowest since June 2020.
Ce n'est pas la grande forme chez Stellantis... pic.twitter.com/LiluBNovWv
— Christophe Demoulin (@christophedemo1) February 6, 2026
Stellantis shares fall 12%
After that stalled start, Stellantis shares have tumbled 12% at the start of trading in Milan after announcing a €22bn charge as it scales back its electric car ambitions.
Stellantis taking €22bn charge as it scales back electric car push
European carmaker Stellantis is taking a €22bn charge, and admitted it overestimated the speed of the transition to electric cars.
Stellantis, whose brands include Vauxhall, Opel, Citroën, Chrysler and Fiat, is scaling back its push into electric vehicles as it aligns with “the real-world preferences of its customers”.
The huge charge reflects the heavy costs for writing off electric car projects. And investors aren’t impressed – Stellantis’s shares failed to start trading in Milan a moment ago, but are expected to fall 15% once trading begins….
It includes a €14.7bn charge for “re-aligning product plans with customer preferences and new emission regulations in the US”, where Donald Trump has been rolling back Biden-era emission regulations and incentives to encourage electric vehicle take-up.
Stellantis insists it will be at “the forefront” of elecric car development, but argues that it must be “governed by demand rather than command”.
Stellantis CEO Antonio Filosa says:
“The reset we have announced today is part of the decisive process we started in 2025, to once again make our customers and their preferences our guiding star.
The charges announced today largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires. They also reflect the impact of previous poor operational execution, the effects of which are being progressively addressed by our new Team.”
There’s little reason to expect either a renewed house price boom or a sharp correction in 2026, argues Martin Beck, chief economist at WPI Strategy, said:
Beck says the housing market is finely balanced, adding:
“Mortgage rates should continue to edge lower as the impact of past Bank of England rate cuts feeds through, with further reductions increasingly likely.
After a notably dovish February statement from the BoE [yesterday], the next cut could come as soon as next month. At the same time, easing inflation is supporting real wage growth, even as pay rises cool in cash terms.
Updated
That widening gap between regions of the UK is likely to continue, predicts Emeritus Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA.
London and much of the South East continue to underperform, with price growth constrained by stretched affordability and a larger exposure to higher-value transactions.
In contrast, several parts of the Midlands, the North of England, Scotland and Northern Ireland are showing greater growth. Lower average prices, stronger rental demand and relative affordability are supporting firmer price growth in these areas, a trend that is likely to persist in the months ahead.
Prices falling in southern England
Halifax also report that the regional differences in house price changes have become more pronounced, with prices falling in the south of England.
There is “a clear divide” between the northern and southern parts of the UK, they report, with positive momentum carrying over in the North.
Today’s house price data shows:
Northern Ireland continues to lead the UK, with average prices rising +5.9% annually to £217,206.
Scotland follows closely, recording annual growth of +5.4%, taking the average property price to £221,711.
Wales saw a modest rise of +0.5% over the year, with the average home now costing £228,415.
Within England, the strongest growth remains concentrated in the north, with prices softening in the south.
The North West saw prices increase +2.1% to £244,328, while the North East recorded +1.2% annual growth.
The South East, South West, London and Eastern England all saw annual declines of more than 1%.
Introduction: Fastest jump in UK house prices in over a year
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK house prices have risen at their fastest monthly pace in over a year in January as the housing market steadied, lender Halifax has reported.
Halifax’s latest house price index shows that the average UK house price increased by 0.7% in January, more than wiping out December’s 0.5% fall.
That’s the fastest monthly increase since November 2024, and this lifts the average property price, on Halifax’s index, to a new all-time high of £300,077.
[that’s higher than the Office for National Statistics’ data, which pegs the average home at £271,000].
On an annual basis, prices were 1% higher than in January 2025.
Although the Bank of England left interest rates on hold yesterday, it is expected to cut borrowing costs perhaps twice this year, which could help borrowers.
Amanda Bryden, head of mortgages at Halifax, said:
“The housing market entered 2026 on a steady footing, with average prices rising by +0.7% in January, more than reversing the -0.5% fall seen December. Annual growth also edged higher to +1.0%, pushing the cost of the typical UK home above £300,000 for the first time. “While that’s undoubtedly a milestone figure, and activity levels show a resilient market, affordability remains a challenge for many would-be buyers.
“Broader economic conditions continue to provide some support. Wage growth has been outpacing property price inflation since late 2022, steadily improving underlying affordability. That’s a positive trend for buyers, and the long-term health of the market.
“And we’re now seeing more mortgage deals below 4%. If inflation continues to ease, there should be further gradual reductions as the year goes on. “All in all, we still think house prices are likely to edge up between 1% and 3% this year.”
The agenda
7am GMT: Halifax house prices index
7am GMT: German industrial production for December
1.30pm GMT: Canadian non-farm payroll report for December
3pm GMT: University of Michigan’s consumer confidence report
Updated
