Alphabet shares in focus as euro strength pressures ECB

Alphabet shares were in focus as markets awaited clarity on the company’s AI strategy and spending outlook, while broader US futures steadied after recent tech-sector volatility. The euro remained firm against the dollar, keeping pressure on the European Central Bank amid concerns that currency strength could weigh on inflation. European equities opened cautiously, with selling in data analytics and software names easing after last week’s AI-driven disruption fears.

Equities

The FTSE 100 pulled back from a record high on Tuesday, closing 0.26% lower after earlier touching an all-time peak above 10,370 points. Losses were concentrated in technology and data-related stocks, offsetting gains among miners as investors reassessed the outlook for companies exposed to artificial intelligence competition ahead of the Bank of England policy decision later this week. The FTSE 250 also closed lower, ending the session down 0.6%.

Among individual UK stocks, business information group RELX closed 15% lower on Tuesday after heavy selling across European software and analytics firms. Investors reacted to concerns that new AI tools could erode pricing power in established data businesses. London Stock Exchange Group fell 12.7% by the close, with its data and analytics division in focus as the sell-off spread across the sector. In contrast, mining stocks provided support. Rio Tinto ended the session 3.4% higher and Anglo American rose 7.2%, helped by higher copper prices and renewed interest in precious metals following a sharp rebound in gold late on Monday. The FTSE precious metals miners index rose 5% by the close, snapping a three-day losing streak.

In the United States, Wall Street closed sharply lower on Tuesday, led by technology stocks. The S&P 500 fell 0.84%, the Nasdaq dropped 1.43% and the Dow Jones Industrial Average ended 0.34% lower. Selling intensified in software and AI-linked names amid concerns that new tools could disrupt established business models. Nvidia and Microsoft both closed almost 3% lower, while Alphabet fell 1.2% ahead of its quarterly results and Amazon dropped 1.8% before reporting later this week.

Some of the sharpest moves came outside the megacap names. Intuit closed 11% lower, while Salesforce, Datadog and Adobe all fell by around 7% by the end of trading. In contrast, Palantir rallied nearly 7% after strong quarterly results released late on Monday.

Elsewhere, healthcare stocks came under pressure after Novo Nordisk warned of a sharp slowdown in annual sales growth, dragging down peers including Eli Lilly, which closed lower. Walmart rose about 3% on Tuesday, becoming the first traditional bricks-and-mortar retailer to reach a market value of $1 trillion. Meanwhile, PayPal slumped 20% after forecasting 2026 profit below market expectations, marking one of the steepest declines on the S&P 500 during the session.

Forex & Commodities

Currency markets were steadier, with the US dollar holding firm after recent gains following the nomination of Kevin Warsh as the next chair of the Federal Reserve. Investors continued to assess the implications of his likely policy stance, which is seen as less supportive of rapid interest rate cuts. The dollar index remained elevated, while the euro edged up to around 1.183 against the greenback ahead of this week’s policy decision from the European Central Bank. Sterling was little changed at roughly 1.372 against the dollar, with markets awaiting guidance from the Bank of England later this week.

The Japanese yen weakened to about 156.3 per dollar in Asian trading, slipping ahead of a closely watched national election in Japan. Concerns that a strong showing for Prime Minister Sanae Takaichi could pave the way for increased fiscal spending and tolerance for a weaker currency weighed on sentiment. Government bond markets in Japan were also in focus amid expectations of higher issuance if stimulus plans advance.

Spot gold rebounded sharply and was trading near 5,083 per ounce early this morning, recovering from a steep sell-off at the start of the week. Demand for defensive assets picked up after reports that the US military shot down an Iranian drone near a US aircraft carrier in the Arabian Sea. Silver rose alongside gold, while platinum and palladium also moved higher.

Oil prices extended gains after closing higher on Tuesday, supported by renewed tensions in the Middle East and signs of tighter US supply. Brent crude was trading near 67.48 a barrel this morning, while US crude stood around 63.49. Traders also monitored reports of a sharp fall in US crude inventories ahead of official data later today.