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[MARKET ANALYSIS] European bourses slip as AI concerns hit European Banks; US equity futures rebound slightly

European markets are experiencing weakness, particularly in the banking sector, which is dragging down indices like the IBEX 35.

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  • European bourses (STOXX 600 U/C) are broadly weaker, with the IBEX 35 (-0.7%) the clear laggard as Banks weigh on the index. On the other hand, the SMI (+0.4%) is printing modest gains.
  • Sectors, on the contrary, show a positive bias, with Utilities (+1.5%) and Materials (+0.7%) outperforming, helped by the likes of Sika (+2.8%), Givaudan (+2.1%) and Croda (+4.7%). Sika shares are rising this morning as the Board proposes to lift the gross dividend per share by 2.8%. Croda announced its FY25 earnings, with its revenue and EBITDA metrics rising Y/Y and FY26 guidance in line with forecasts. This is helping the broader Chemicals sector rise. On the other hand, Banks (-1.3%) have been hit this morning following weak Q4 earnings by Standard Chartered (-1.3%) and the effects of Anthropic's Claude on jobs as the code can now automate COBOL modernisation efforts.
  • Other key movers include Novo Nordisk (-2.7%), Fresenius Medical Care (-6.5%) and Telefonica (-0.2%). The Danish pharma giant has seen its shares continue to slip as brokers including Kepler Cheuvreux and JPM downgrade the Co. while the former also cuts its PT to DKK 280/shr from DKK 400/shr. Over in Germany, despite positive Q4 earnings, 2026 guidance has sent shares of Fresenius Medical Care lower as the Co. sees flat profit growth. For Spain's Telefonica, the Co. missed analyst's Q4 revenue estimates but growth in Brazil and Spain helped offset losses in other European markets.
  • US equity futures (NQ +0.3%, ES/RTY +0.2%) are modestly rebounding following Monday's selloff, aided by another AI scare. Citrini released a report over the weekend stating that AI may significantly displace workers, with unemployment possibly rising to 10% within 18 months and causing a recession.
Context

Concerns around AI's potential impact on jobs, particularly highlighted by a recent report, are weighing on sentiment, although US equity futures show signs of a mild rebound. The mixed performance suggests sector-specific dynamics are at play, with utilities and materials outperforming amid broader unease.

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