Fin-X Weekly 16th February 2026

AI-disruption concerns continued to affect global stock markets but centred on the US. Australian equities outperformed as reporting season began, and Japan’s market strengthened after a decisive election result that reinforced support for fiscal stimulus.

US macro signals diverged, with a drop in US unemployment contrasting with softer inflation, weaker consumption indicators and large negative annual payroll revisions.

Along with ongoing corporate reporting, this week ahead brings Australian employment data, global production updates, US Q4 GDP and the flash PMI surveys. US markets are closed for Presidents’ Day today, and China will celebrate the Lunar New Year all week.

US equities continued to see a violent rotation triggered by AI-disruption fears — the so-called “SaaSpocalypse” — which broadened from software into real estate, insurance, and logistics, resulting in weekly losses for stock indices, despite an encouraging inflation read on Friday.

Australian equities outperformed global peers as reporting season gathered pace. The banks led gains as cost control and benign bad-debt provisions offset margin pressure, driving sector outperformance.

Commonwealth Bank posted statutory NPAT of about A$5.4bn and cash NPAT of around A$5.5bn, up roughly +6% on the prior period. It briefly reclaimed the mantle of Australia's largest company by market capitalisation, with the share price up +10.9% over the week.

Westpac (+2.8%) also reported profits of A$1.9bn, up +5% on the same period last year. ANZ Group’s (+10.5%) Q1 update showed cash profit near A$1.9–2.0bn, up sharply versus the 2H25 quarterly average, driven by lower costs, loan growth and a small NIM improvement.

Dividend announcements were varied. Some cyclicals, including gold miners, raised payouts aggressively amid strong commodity prices, while several financials and cyclicals kept dividends conservative relative to history.

Investors drew a clear line between results that beat expectations and those that merely met them. Companies beating on both earnings and outlook were rewarded, while any hint of disappointment or weaker guidance led to heavy de-rating, regardless of solid current-period numbers.

CSL fell -16.9% after reporting an -81% drop in first half profits compared to a year ago, due to a combination of asset write-downs, weaker vaccine markets and restructuring costs. In contrast, Pro Medicus delivered strong top-line growth, with revenue up by roughly +28% and EBIT margins rising to roughly 73%. Even so, the share price was punished, falling by -25.0% over the week and more than -50% over 12 months, as investors questioned the valuation and forward growth implied.

With 64 of 281 S&P/ASX 300 companies having reported, earnings are up +9.4% so far, according to Bloomberg. This compares to +12.2% annual profit growth generated by the S&P 500, with 369 of 500 members also having reported.

The Japanese TOPIX index (+5.3% in Australian dollars) also outpaced peers after Prime Minister Sanae Takaichi won a landmark election victory. The ruling Liberal Democratic Party captured a two-thirds supermajority in the lower house, indicating strong support for her reforms. The “growth first, consolidation later” fiscal plans include large near-term stimulus and tax cuts, backed by public-private investment in strategic sectors and measures to enhance economic security. A signature pledge is a two-year suspension of the 8% consumption tax on food aimed at easing cost-of-living pressures but widening the deficit. At the same time, the government is committed to lifting defence outlays to about 2% of GDP, consolidating the recent doubling of security spending.

Despite the likely rise in the deficit, the Japanese 10-year government yield fell by -0.1% to 2.2% over the week, as global bonds followed US Treasury yields lower.

On Friday, US CPI undershot expectations, slowing from +2.7% year-on-year in December to +2.4% year-on-year. Core CPI ex-food and energy also slowed by -0.1% to +2.5% year-on-year, in line with consensus forecasts. Even the Federal Reserve’s “Supercore” measure of core services less housing showed signs of continued deceleration at +2.7% year-on-year.

Earlier in the week, the delayed labour report revealed a much stronger-than-expected +130k increase in January non-farm payrolls, as the unemployment rate slipped to 4.3%. However, that number seems highly likely to be revised. The BLS also published the annual benchmark revisions, resulting in -898k jobs being removed from the March 2025 figures. For calendar 2025, previously reported payroll gains were reduced by over -400k jobs, implying only about +181k net jobs added over the year instead of roughly +584k, making 2025 an exceptionally weak year for job growth. Moreover, the 2024 revisions indicate that the US labour market cooled earlier and more sharply than the original figures suggested.

At the same time, flat January retail sales fell short of the +0.4% forecast and weekly jobless claims edged above estimates. Investors shifted market pricing of the end-2026 Fed Funds rate about -0.1% lower to 3.0%.

Kevin Warsh, the president’s nominee to take over as Chair of the Federal Reserve in May, is believed to favour a lower interest rate and is expected to push for a gradual shrinking of the balance sheet. Last week, he urged greater cooperation between the Fed and Treasury on progress towards an appropriate size.

China’s January consumer inflation rose but fell short of expectations at +0.2% year-on-year. Producer prices (-1.4% year-on-year) stayed in deflation despite signs of easing, and policymakers signalled looser monetary policy ahead.

Against this backdrop, Alphabet completed a roughly $32 billion, multi-currency, long-dated bond raise to help fund a massive step-up in AI and data centre investment. The deal included a rare 100-year sterling bond and very tight spreads, underscoring extraordinary investor demand.

In Australia, household spending fell -0.4% in December following strong gains in October and November, resulting in an annual increase of +5.0%. The December outcome was weaker than the consensus forecast of a +0.1% increase, and non-discretionary spending fell by -0.5%. The weakness in household spending suggests consumers may not have finished 2025 as strongly as expected, which could reduce the likelihood of a follow-on rate hike in the coming months.

NAB business conditions were also slightly weaker, and Westpac consumer confidence appeared to drop out of the recent uptrend. Cash rate expectations remained steady, with the market pricing 4.2% for December this year.

The Treasurer has indicated the May federal budget could be punctuated by spending restraint but will focus on productivity and tax reform, leaving the door open to changes to the capital gains tax. Dr Jim Chalmers said the objective of the budget would be to “lift the speed limit” on the economy, enabling higher growth with lower inflation. “We’re working up a productivity package, [and] there will be a savings package that we’re working on,” he told ABC’s Insiders. He also left open the possibility of changes to the capital gains tax and said intergenerational equity in housing was “front and centre” as the government prepared the budget.

He will also face a new opposition front bench after Friday’s Liberal leadership spill that saw Angus Taylor succeed Sussan Ley. Mr Taylor has named the cost of living, the economy, energy, immigration and housing as his core focus areas in presenting an alternative plan to voters.

Australia is expected to see unemployment tick higher to 4.2% on Thursday. US, European, and Japanese production figures will also be updated before American Q4 GDP figures, and the latest global flash PMI surveys will be published on Friday. Reporting season continues in Australia and overseas.

The American markets will be closed for President’s Day today, while China celebrates the lunar new year all of this week and the start of next.

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