Published by Global Banking & Finance Review®
Posted on February 4, 2026
3 min readLast updated: February 4, 2026
Add as preferred source on GoogleEuro zone inflation data will guide ECB rate decisions. Market focus includes euro strength, AI sector impact, and Alphabet earnings.
A look at the day ahead in European and global markets from Rae Wee
A look at the day ahead in European and global markets from Rae Wee
Euro zone preliminary inflation data on Wednesday will set the tone for markets ahead of the European Central Bank's rate decision a day later, as policymakers keep close tabs on the euro's strength.
Expectations are for consumer prices in the bloc to have eased slightly to an annual 1.7% last month. That remains comfortably below the ECB's 2% target as price pressures dissipate and give the central bank reason to stay on hold.
Recent data showed German inflation unexpectedly rose slightly in January, though France's came in less than expected.
A significant miss could raise alarm bells for ECB policymakers, who last month flagged growing concerns over the euro's quick appreciation against the dollar and its potential to push inflation even lower if it continues strengthening.
The common currency, while retreating from its highs above $1.20 hit in January, remains sensitive to uncertainties from U.S. President Donald Trump's chaotic policies. That risk continues to keep the dollar under pressure, meaning more upward potential for the euro.
The focus will also be on whether a rout in data analytics, professional services and software companies continues. On Friday, Anthropic's launch of plug-ins for its Claude Cowork agent sparked worries of an AI-fuelled disruption to those industries.
Selling pressure abated in Asia given the region's historical dominance in hardware manufacturing, while European and U.S. stock futures pointed to a steadier open.
The latest development highlights the disruptive threat to sectors once seen as AI winners, which analysts note is drawing a clearer line between the true winners and losers of a rally that has so far been fairly broad-based.
Results from Google parent Alphabet are also due later on Wednesday, where it is expected to report a 15.5% jump in revenue to $111.37 billion.
Investors will be focused on the company's spending plans for 2026, its outlook for cloud services demand and an update on AI capacity constraints.
Key developments that could influence markets on Wednesday:
- Flash euro zone inflation (January)
- Euro zone producer prices (December)
- Alphabet earnings
- U.S. ISM services PMI (January)
- U.S. ADP private payrolls report (January)
(Editing by Jacqueline Wong)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
The European Central Bank (ECB) is the central bank for the euro and administers monetary policy within the Eurozone.
Consumer prices refer to the prices that consumers pay for goods and services, which can be measured to assess inflation.
Economic growth is an increase in the production of goods and services in an economy over a period of time.
Monetary policy is the process by which a central bank manages the supply of money and interest rates to achieve specific economic objectives.
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