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AI spending concerns and Fed nomination shake markets
6 February 2026
Last week’s markets were defined by fading momentum in Big Tech, as renewed scrutiny of AI-related spending triggered a decline in global markets. Sentiment weakened further after the nomination of Kevin Warsh as the next Fed Chair, prompting investors to reassess policy risks and sparking volatility in equities, currencies and precious metals.
| Global Stocks | US Stocks | UK Stocks | EU Stocks | EM Stocks | Japan Stocks | Gilts | GBP/USD |
| -0.7% | 0.0% | +0.8% | +0.4% | +0.6% | -0.2% | -0.2% | +0.3% |
Market update
US equities were volatile throughout last week and ended -0.7% lower in GBP terms as a mid‑week rotation into index heavyweights faded after renewed AI spending scrutiny in Big Tech earnings. On Thursday, a decline in markets across the world was seen as many companies' earnings were released, including Microsoft, which saw a -10% drop even as revenue growth in its cloud-computing business was slightly above expectations. Moreover, US President Trump’s nomination of Kevin Warsh as the next Fed Chair at the end of the week additionally nudged risk appetite lower. UK equities gained +0.8% helped by banks, though industrial goods and services lagged as precious metals tumbled. EU equities advanced modestly by +0.6%, supported by a busy earnings slate and resilient sentiment despite the US policy headlines. EM equities increased +1.4% in local currency, as early-week dollar softness supported risk, before week-end strength in the USD trimmed gains. Japan decreased -1.5% in local terms, with global tech weakness and softer local data weighing. In the background, the Fed left rates unchanged, but markets quickly pivoted to assessing Warsh’s policy stance and implications for growth stocks and the dollar.
In the first part of the week, the US dollar came under notable downward pressure as the Japanese yen advanced, driven by speculation that Japanese authorities might step in to curb further yen depreciation. By the end of the week, both currencies partially unwound their earlier moves with GBP/USD rate ending +0.3% higher and USD/JPY -0.6% lower.
UK 10-year yields remained unchanged week-on-week. US 10-year bond yields also increased only slightly by +1 basis point over the full week, as investors weighed an on-hold Fed against the Warsh nomination and a firmer producer-price backdrop.
It was an exceptional week for precious metals: gold plunged from record territory, falling around 11% into Friday, as USD strength and higher long rates following the Warsh announcement sparked profit‑taking and momentum selling. Silver dropped even more sharply - around 26%.
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