Economy February 11, 2026

Market Overview

Global markets are being driven by a mix of technology-led capital flows, policy-driven currency and equity moves in Japan, and structural concerns in China’s property sector. Equity momentum around AI and semiconductor-related names is lifting valuations in parts of the market even as macro data and credit risks keep investors cautious. Near-term risk vectors include geopolitical shipping tensions, the calendar of US economic releases, and tightening credit conditions in private markets [2][5][8][14][24][6].

Key Developments

1) Technology and AI remain primary demand drivers. SoftBank’s shares jumped after stronger guidance from its telecom arm and renewed optimism around Arm, reinforcing the narrative that AI-related franchises attract outsized capital and corporate revaluations [2]. Major private and public AI funding events (for example Databricks’ large financing) underpin expectations of continued investment into the sector and potential near-term M&A and hiring pressure [18]. Alphabet’s own filings flag AI as a new business risk for advertising and operations, highlighting how AI deployment can reshuffle revenue pools and margin structure across tech platforms [7].

2) Japan’s political outcome is reshaping local asset prices and FX. Prime Minister Takaichi’s decisive victory has amplified the ‘‘Takaichi trade’’, pushing the Nikkei toward record levels and weakening the yen amid market expectations of looser policy and equity-friendly reforms—this dynamic is front-and-center in Asian market moves and cross-border portfolio allocation [5][12][13][26].

3) China’s property slump is a mounting macro drag. S&P’s updated forecast points to a deeper contraction in primary property sales than previously expected, implying negative spillovers to growth, banking sector health, and related commodity demand domestically and in trading partners [8]. The property correction remains a core downside risk to China’s near-term GDP growth and global demand for industrial inputs.

4) Semiconductor supply-chain policy frictions. Taiwan’s rejection of a US push to relocate 40% of chip supply underscores the complexity of onshoring strategic industries and foreshadows prolonged policy negotiations; this matters for capex planning, regional trade, and Taiwan’s export trajectory [3]. Recent strong IPOs and listing activity in Chinese chip design show investor appetite for this segment but also heighten sensitivity to policy shifts [28].

5) Credit and macro uncertainty. Private credit markets are showing renewed stress as AI-driven software pressures and sectoral shifts raise default risks for certain borrowers; this could tighten financing for mid-market firms and affect credit spreads if stresses materialize [14]. Meanwhile, traditional indicators—Treasury yields and upcoming US jobs and inflation data—are keeping headline rates volatile and guiding cross-asset positioning [24]. Geopolitical advisories around the Strait of Hormuz add an oil/insurance risk premium for shipping and energy markets [6].

Financial Impact

- Equities: AI and semiconductor exposures are outperforming, lifting select indices and driving concentration in mega-cap tech and specialized chip names; Japanese equities are benefiting from expected policy-easing and a weaker yen, altering global portfolio flows [2][5][12][13].

- Growth and trade: A deeper-than-expected Chinese property contraction will subtract from domestic demand and industrial commodity imports, weighing on regional growth and exporters to China [8]. Chip supply-chain relocation ambitions face execution risk and could raise costs if firms diversify manufacturing footprints faster than demand justifies [3].

- Credit and banks: Private credit stress could raise cost of capital for leveraged borrowers and force repricing in syndicated and direct lending markets; large banking and wealth transactions (e.g., NatWest’s acquisition) will be scrutinized against tighter funding and regulatory backdrops [14][23].

- Rates and FX: Anticipation of US data and shifting risk premiums are likely to keep Treasury yields sensitive to incoming macro prints; Japan-specific policy expectations are driving JPY depreciation and higher local equity valuations [24][13].

Market Outlook

Near term, investors should position for continued dispersion: AI and semiconductor beneficiaries may outperform, but macro downside from China’s property sector and credit pressures could trigger periodic risk-off episodes. Watch key data releases (US jobs/inflation) for yield and equity volatility, monitor policy signals from Japan for FX-driven reallocations, and track developments in chip reshoring discussions for capex and trade implications. From a risk-management perspective, emphasize balance between growth-exposed tech positions and defensive exposure to cyclical risks arising from China and private credit channels [2][3][8][14][24].