Markets Today: Markets digest Chinese inflation, AI fears continue, Gold holds high ground as NFP looms

Driven by gains in South Korea and Taiwan, emerging Asian equities climbed on Wednesday, while Thai markets continued to trend upward following an election that promised political stability and new economic initiatives.

The MSCI index for the region reached a record peak after rising nearly 1%, bolstered by a 1.2% increase in the KOSPI and a 1.8% jump in Taiwan’s primary index.

Because these two technology-centric markets represent roughly 40% of the MSCI index, their performance was pivotal; specifically, a 2.4% surge in Taiwan Semiconductor Manufacturing Company propelled Taipei’s benchmark to an all-time high.

Meanwhile, South Korean shares maintained their momentum for a third straight day, supported largely by strong performances from major automakers Hyundai and Kia.

In Japan, the Nikkei is up around 2.2% on the day, extending its impressive performance this week.

Most Read: Chart alert: Nikkei 225 bullish acceleration intact towards 60,000 in the first step

In January China’s annual inflation rate dropped significantly to 0.2%, down from 0.8% the previous month. This figure represented the lowest level since October and fell short of the 0.4% forecasted by analysts.

A primary driver of this slowdown was the first decline in food prices in three months, with costs for pork, eggs, and cooking oils pulling the category down to a 0.7% contraction. While clothing prices saw a slight uptick, non-food inflation overall cooled to 0.4%, even as government-backed consumer trade-in programs remained active.

Additional sector data revealed a mixed economic landscape, as healthcare inflation eased and education costs remained stagnant. Notably, housing and transport experienced sharper price drops than in December, with transport costs falling 3.4%.

National Bureau of Statistics official Dong Lijuan attributed this cooling to a high comparative base from the prior year and a steep decline in energy prices. Furthermore, core inflation which strips out volatile food and energy costs hit a six-month low at 0.8%, while the month-on-month CPI increase of 0.2% also trailed market expectations.

European markets trended lower on Wednesday as a disappointing earnings report from Dassault Systèmes fueled anxieties about artificial intelligence disrupting traditional business models.

The STOXX 600 index dipped 0.2%, with France’s CAC 40 bearing the brunt of the losses. Dassault's stock plunged nearly 20% after the software manufacturer reported quarterly revenue growth of just 1%, missing investor expectations and highlighting vulnerabilities in the software sector. This selloff extended to the broader technology and insurance sectors, the latter of which was rattled by a Barclays downgrade following the release of a new ChatGPT-integrated insurance tool.

Despite the general downturn, certain companies managed to buck the trend through strategic gains or strong financial performance. Hardware providers like Siemens Energy saw shares climb 5.2% after reporting that net profits nearly tripled, driven by the massive infrastructure demands of the AI boom.

Additionally, the London Stock Exchange Group rose 2.7% amid reports that activist hedge fund Elliott Management has acquired a notable stake in the firm.

Meanwhile, beverage giant Heineken saw a 4.4% increase in its share price after announcing plans to reduce its global workforce by 6,000 positions to streamline operations.

On the FX front, the Japanese yen climbed sharply on Wednesday as market participants reacted to Prime Minister Sanae Takaichi's decisive election win, which is expected to grant her significant control over the country's upcoming fiscal policies.

This yen strength, combined with disappointing US economic data released on Tuesday, pressured the dollar ahead of the crucial non-farm payrolls report.

As a result, the dollar index fell 0.33% to 96.60, while the Australian dollar managed to break past the $0.71 mark for the first time in three years.

In Asian trading, the yen rose nearly 1% against the greenback to reach 152.94, extending a rally that began the previous day.

This momentum also saw the Japanese currency gain ground against other major peers; the euro dropped 0.7% to 182.27 yen following a sharp decline on Tuesday, and the British pound slid 0.73% to 209.04 yen, continuing its recent downward trend.

Currency Power Balance

Precious metals gained momentum as both the US dollar and Treasury bond yields retreated following reports that December retail sales had flatlined.

This lack of growth in consumer spending suggests a cooling economy, which increased the appeal of gold and silver ahead of highly anticipated employment data. Because lower yields reduce the opportunity cost of holding non-yielding assets, market participants shifted back into bullion to hedge against potential economic softening.

Spot gold rose 0.7% to reach $5,056.82 per ounce, while US gold futures for April delivery climbed 1% to $5,080.90.

Silver experienced an even more robust recovery, jumping 2.2% to $82.44 per ounce after enduring a significant sell-off of more than 3% during the previous session.

While metals had recently decoupled from traditional interest rate signals, the current dip in yields provided a necessary pillar of support as traders await further cues from the January jobs report.

Read More:

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The day ahead is a quiet one in terms of EU and UK data with an OPEC monthly report the highlight.

The US session is shaping up to be a busy one, with the NFP release dominating the agenda.

While the dollar's recent downturn wasn't solely triggered by weak US economic data, this week’s reports have certainly intensified the bearish sentiment surrounding the currency.December’s retail sales stalled, failing to meet the expected 0.4% growth and leading to a decline in real sales volumes.

Furthermore, the control group a key indicator for GDP dipped by 0.1% following a downward revision for November, signaling a broad cooling in consumer spending that likely necessitates lower growth forecasts for the turn of the year.

A significantly weak payroll print could prompt markets to anticipate a potential interest rate cut as early as April, possibly pushing the Dollar Index (DXY) down toward the 96.0 level.

While my forecast of 75k new jobs is more optimistic than the 70k consensus and the even lower "whisper" numbers circulating after recent White House commentary, we anticipate the unemployment rate will remain stable at 4.4%.

If a more positive employment outlook comes to fruition, some of the dollar's recent macro-driven losses may reverse; however, I believe any such recovery would be temporary, as the conditions for a sustained dollar rally do not yet appear to be in place.

From a technical perspective, the FTSE 100 index continues to hold comfortably above the 100-day MA.

However, bulls have failed to push on this week with the 10430 handle proving a tough nut to crack.

Market participants may be waiting on more clarity from US data and the Federal Reserve's path moving forward before committing. Another factor could be the excellent performance of emerging markets this week which may be drawing flows away from the FTSE and other indexes.

Immediate support rests at 10352 before the 100-day MA at 10258 comes into focus.

Resistance to the upside at 10430 needs to be cleared if bulls are to make a run for the coveted 10500 handle.

FTSE 100 Index Daily Chart, February 11, 2026

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