Economy February 13, 2026

Market Overview

Global risk assets showed bifurcated momentum as AI enthusiasm buoyed tech-related names while structural and geopolitical risks weighed on supply chains, credit and property sectors. Tech-driven rallies at major conglomerates and chip-related listings lifted sentiment across equities, even as safe-haven flows and caution over credit remained evident in fixed income markets [2][19][18][24]. Japan's political outcome amplified moves in FX and equities, adding a policy-driven layer to market positioning [5][12][13]. Simultaneously, ongoing China property weakness and semiconductor geopolitics continue to pose medium-term growth and trade risks for regional economies [8][3].

Key Developments

1) Tech & AI momentum: SoftBank's shares surged after its telecom unit raised guidance and optimism around Arm revived an AI investment narrative, reinforcing investor preference for AI-capex beneficiaries [2]. Large-cap tech moves (Oracle, Microsoft) and substantial private funding rounds (Databricks) underscore continued capital flows into AI and cloud infrastructure, supporting broader tech sector valuations despite recent volatility [19][18]. Alphabet's own disclosure of AI-related business risks and concurrent debt-market activity highlights both the scale and strategic cost of AI deployment for major platforms [7].

2) Japan policy shock and market reaction: Prime Minister Sanae Takaichi's decisive electoral outcome has intensified expectations for looser monetary settings and pro-growth fiscal stances that weaken the yen and lift Japan equities—driving the Nikkei toward record levels as investors trade the so-called "Takaichi trade" [5][12][13][26]. This politico-monetary shift is reshaping global carry flows and regional asset allocation.

3) China property slump: S&P's downward revision of expected primary home sales (a 10–14% drop) signals a deeper correction in China's real estate sector than earlier anticipated, with direct implications for growth, local government finances, and commodity demand across Asia [8]. This remains a major drag on regional demand and financial-sector risk.

4) Semiconductor geopolitics and supply-chain constraints: Taiwan pushed back on U.S. goals to relocate 40% of its chip supply chain, calling the target impractical—highlighting the friction between U.S. industrial-policy ambitions and on-the-ground constraints in East Asia that could complicate near-term reshoring plans and capital allocation decisions in the sector [3].

5) Credit & sector-specific strains: Private credit markets face renewed scrutiny as AI-related disruption elevates uncertainty for software firms and their lenders; separately, corporate earnings misses (e.g., Hanwha Aerospace) reflect uneven industrial demand and margin pressures in parts of Asia [14][4]. Treasury yields remained relatively stable as markets awaited fresh macro releases, reflecting a wait-and-see posture among fixed income investors [24].

Financial Impact

- Equity flows favor AI-capex and semiconductors where credible revenue paths exist, benefiting listed accelerators and private-round winners; this rotation can widen valuation dispersion between AI beneficiaries and cyclical or credit-sensitive sectors [2][18][19]. - China’s deeper property downturn raises downside GDP and commodity demand risks, pressuring regional exporters and financial institutions with property exposure [8]. - Japan’s policy shift is likely to depress the yen further, boosting exporters in JPY terms and lifting domestic equity indices while amplifying FX-driven returns for foreign investors [5][12][13]. - Credit markets may tighten selectively: private credit lenders to high-valuation software firms face higher default risk amid AI-driven disruption, potentially increasing borrowing costs for middle-market businesses [14]. Geopolitical shipping advisories in the Strait of Hormuz also add a marginal premium to energy and shipping costs, which can feed through to inflation and trade margins [6].

Market Outlook

Near term, expect continued volatility as investors reconcile strong tech funding and earnings beats with structural headwinds from China property, chip-supply geopolitics, and private credit uncertainty. Key watch points: upcoming macro prints that will clarify global demand and inflation paths, corporate guidance on AI capex and margins, and any concrete policy steps on semiconductor reshoring. Portfolio tilts toward high-quality AI beneficiaries, selective Japan exposure, and cautious positioning in China-property-exposed sectors are defensible given current cross-currents. Maintain active monitoring of credit spreads and regional trade chokepoints that could rapidly reprice risk premia [2][3][5][8][14][18][19][24][6][4].