Morning Bid: Changing of Lagarde

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By Mike Dolan

Feb 18 -

What matters successful U.S. and planetary markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

Wall Street returned from its three-day play connected Tuesday to different time of AI-related angst and marketplace churn that concisely saw the VIX volatility gauge ‌stalk immoderate of its highest levels of the year.

Even though the S&P 500 ended small changed connected the surface, that masked different large downdraft successful the ‌software sector, ongoing jitters astir hyperscalers' spending connected AI, and adjacent a large driblet successful high-flying Walmart banal up of its results this week.

I’ll get into that and much below.

But first, cheque retired my ​latest file connected wherefore AI‑linked productivity bets mightiness beryllium moving Treasuries.

And perceive to the latest occurrence of the Morning Bid regular podcast. Subscribe to perceive Reuters journalists sermon the biggest quality successful markets and concern 7 days a week.

CHANGING OF LAGARDE

Six weeks in, it's worthy noting that the S&P 500 is inactive successful the reddish for the twelvemonth to date, the Nasdaq is down implicit 2%, and funds tracking the 'Magnificent Seven' mega-cap tech stocks are down astir 8% for 2026 truthful far. U.S. banal scale futures were firmer ‌ahead of Wednesday's bell, however.

In Europe, each the chatter ⁠centred connected caller reports that European Central Bank President Christine Lagarde plans to measurement down earlier her word ends successful October 2027. The ECB said nary determination had yet been made, but the archetypal FT study said Lagarde was mulling the determination to let ⁠Emmanuel Macron and Friedrich Merz to power the enactment of her successor.

European markets were calm connected the quality arsenic these reports person been doing the rounds for immoderate time. In immoderate case, dependable ECB argumentation looks baked-in for the foreseeable.

But determination volition inevitably beryllium absorption connected the governmental determination implicit Lagarde's successor - whether Germany whitethorn interruption with normal and assertion its ​right ​to person a Bundesbanker caput the ECB for the archetypal time, oregon whether a compromise campaigner ​like BIS brag and erstwhile Bank of Spain main Pablo ‌Hernández de Cos is much likely.

If a German ECB president emerged, markets may, astatine the margin, stake connected a much hawkish trajectory implicit the horizon.

Elsewhere, UK ostentation fell to 3%, arsenic expected, keeping speculation astir different Bank of England complaint chopped adjacent period connected the boil. Sterling was unmoved.

The main absorption of the macro satellite aboriginal volition beryllium the FOMC's merchandise of minutes for its January gathering - usually a comparatively anodyne readout, but 1 that could instrumentality connected much value amid debates astir AI's impacts connected productivity and ostentation going forward.