The CIO’s view of the week ahead.
The week in review
The release of a new Artificial Intelligence (AI) tool by Anthropic fuelled a heavy sell-off in software stocks last week. The technology sector is experiencing creative destruction – with legal AI start-up Harvey AI, for example, achieving a USD 5 bn valuation. The tech slump was compounded by market concerns over the size of some companies’ AI investments. Google’s parent Alphabet and Amazon surprised investors with the scale of their AI spending. Oracle said it plans to raise up to USD 50 bn this year through a combination of debt and equity sales to build additional cloud infrastructure capacity.
The S&P 5001 ended the week 0.1% (in USD) lower despite a strong bounce on Friday.
In Japan, Prime Minister Sanae Takaichi won by a landslide in a snap general election, delivering her governing Liberal Democratic Party (LDP) a supermajority in parliament’s lower house. The more than two-thirds majority will give the LDP tight control of the lower house and the ability to override Japan’s less powerful upper chamber, where it lacks a majority. Japanese stocks jumped to record levels after the result.
The US published details of a trade deal with India that slashes US tariffs on Indian goods to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers.
Quote of the week
“We have consistently stressed the importance of responsible and proactive fiscal policy,” Japan’s Takaichi said on Sunday. “We will build a strong and resilient economy.”
Key data
China’s official purchasing managers’ indices (PMI) for both manufacturing and non-manufacturing sectors fell below 50 in January, pointing to contraction. By contrast, PMIs from the Institute for Supply Management (ISM) showed growth in January both in the US manufacturing sector – which saw its highest reading since 2022 – and the services sector.
Initial US jobless claims increased by 22,000 to 231,000 in the week ended 31 January, above expectations.
1 Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%; 2025, 17.9%.