# Roundup of the week: 6 February 2026

_Difficult week, but the factors that matter for UK assets — falling inflation, lower rates ahead, better growth than expected — remain intact. The MPC is an embarrassment, but rates are coming down regardless. US tech valuations will continue to face pressure. _

Neil Woodford · 6 February 2026 · 6 min read

![Anthropic's Claude Code has been a major catalyst in the correction of software stocks since the start of the year.](https://cdn.sanity.io/images/v3acfbvo/production/56172dfdd1a9fd003d605738080777beec80ac9d-3864x2576.jpg?w=1600&fit=max&auto=format)

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This has been a tricky week for financial markets, probably the most challenging since last April and President Trump's Liberation Day tariff announcements. A severe correction in commodity markets, Bitcoin, and technology stocks — especially in the software sector — have been the notable features. Alongside these developments, the lurid revelations from the latest Epstein files released by the DOJ have also catalysed a political crisis in the UK, where the Prime Minister, Keir Starmer, is under severe pressure from all sides of the political spectrum for his appointment of Peter Mandelson as the UK's US ambassador. This saga is likely to rumble on, but has created some concern in financial markets, principally because one of Starmer's chief rivals, Angela Rayner, would be seen as a potentially less "fiscally responsible" PM. Whether Starmer can hang on is not yet clear, but the pressure on him, especially from within the Labour Party, has significantly increased. However, if he were unseated, this would be the first time that a sitting Labour PM had been removed from office.

In geopolitics, conversely, it's been an encouraging week on balance. Presidents Xi and Trump appear to have had a good chat on the phone (in itself an unusual event). The two leaders appear to have exchanged pleasantries, avoided in large part contentious issues, and prepared the ground for Trump's visit to China in April. In addition, instead of an exchange of fire, it appears that the US and Iranian leadership are still talking about a new nuclear deal, and as a result, the short-term spike in oil prices has largely unwound. As for the war in Ukraine, the tripartite meetings in Abu Dhabi have not resulted in an agreement to end the hostilities, and the five-day truce agreed with President Trump has ended.

## Politics

Perhaps the most important event this week for markets was the crisis surrounding the UK Prime Minister. The heat and light that this grubby scandal has created has been felt in both the UK equity and government bond markets. My guess is that Keir Starmer will probably hang on and survive this latest catastrophe, but he will remain weakened by it, which will not bode well for his administration despite its large majority in the House of Commons. The Manchester by-election at the end of February is another potential problem for the PM, as will be the local elections in May. Some are now saying that this ongoing political omnishambles has significantly increased the odds of a general election as soon as 2027.

The heightened political risk that impacted UK financial markets this week is likely to persist, but I don't expect it to continue to undermine growing confidence in UK financial assets. Of much greater importance to them will be falling inflation, lower interest rates, and a better growth outcome than consensus is forecasting. (More on this below.)

Finally, President Trump's announcement that Kevin Warsh was his choice to succeed Jerome Powell as Fed Chair was announced right at the end of last week. Warsh served as a Fed governor from 2006 to 2011 and is seen by markets as a much safer pair of hands than some of the other candidates President Trump was considering. Consequently, this choice has, in general, been welcomed by US financial markets. Interestingly, the announcement was followed by a rally in the dollar and falls in the price of gold, silver, and Bitcoin.

## Economics

### US

In general, it's been a reasonably quiet week in the US, other than the announcement of Kevin Warsh as Trump's choice to lead the Fed and more weak labour market data. Other than this, there hasn’t been much to report.

### UK

In the UK, the most notable event this week was the MPC's interest rate decision, which was announced on Thursday. For me, the decision — which was to hold rates at 3.75% — was one of the most profoundly stupid that I can remember. Encouragingly, four members of the committee voted for a cut (round of applause), which was more than the consensus among economists who try to predict what will happen at these meetings. The hawks on the committee (four) voted to hold rates, and the Chair, Andrew Bailey, cast his vote on the side of no change. This act of buffoonery is all the more inexplicable when you consider that at the same meeting, the MPC reduced its inflation outlook considerably but also reduced its growth outlook too. Significantly, the MPC now forecasts that inflation will be at its 2% target in April this year but will average 1.8% through 2027 (i.e., below the 2% target). Putting the tin lid on this unfathomable nonsense, the MPC reduced its growth forecast for this year to 0.9% from 1.2%. (Bear in mind that the OBR is at 1.4%.)

So, in summary, the MPC is forecasting that inflation over the next two years will fall below its 2% target, whilst growth will fall significantly from last year’s 1.4%, but neither is sufficient to justify a reduction in interest rates. One begins to wonder what would prompt this committee to vote for a cut. (Just by way of comparison: in the EU, official interest rates are at 2%, inflation is currently at 2.2% but is expected to average 2% in 2026, and growth is expected to be 1.2%; in the US, official rates are at 3.75%, inflation is expected to average 3% this year, and consensus growth forecasts sit at 2.2%.)

I also wonder, in a parallel universe, what President Trump might think of Andrew Bailey and his committee if they were overseeing monetary policy in the US. I suspect he wouldn't be that impressed. On a serious note, though, this latest MPC decision is completely baffling. If the committee were accountable to a higher authority, one wonders what twisted logic it would use to justify this ridiculous decision. Remember that the MPC’s role is to keep the CPI close to the government's 2% target and to support growth and employment. Quite how this decision can be seen to be consistent with that mandate is beyond me.

## Markets

As I noted in the introduction, this has been a challenging week for global financial markets. Indeed, the S&P 500 and the NASDAQ are now down for the year. Other major global indices, although down this week, are all up year-to-date. Some of the factors that have caused this mini-correction, I suspect, will be transitory, but others — as I have said repeatedly, and not least amongst them, valuation — will continue to be a headwind for some markets and especially for the tech-heavy indices in the US.

One of the principal features of this week has been the ever-increasing AI-related capex budgets of the US tech majors. In the last two days, Google and Amazon have together committed to investing more than $400 billion in AI infrastructure in 2026. Understandably, investors are becoming increasingly concerned about the scale of these commitments and the lack of clarity about the returns that these companies will achieve on this unprecedented investment. Having said that, the sheer scale of these investments also gives increasing confidence to the "picks and shovels" suppliers to this industrial revolution that the growth they are seeing in the demand for their goods and services will continue.

Aside from the Mag7 results this week in the US, and some large tech companies across Europe, including Infineon and STMicro, it's been relatively quiet in the UK. In general, the underlying results have been overshadowed by the broader shifts in market confidence in the AI industrial revolution. In this sense, although the bubble narrative has subsided somewhat, concerns about the returns on the massive investment in AI infrastructure have grown louder. My guess is that these concerns will continue to preoccupy investors, and at the same time, they will also look to differentiate between the winners and potential losers as the AI industrial revolution gathers pace.

## What to look out for next week

Once again, there is a busy economic calendar next week, which includes labour market and retail sales data from the US, and December and Q4 2025 GDP data from the UK on Thursday. In the equity market, my attention will be focused on several UK FTSE 100 companies reporting, including Barclays and NatWest.

As for geopolitics, the talks in Oman between Iran and the US will be watched closely by financial markets. Once again, despite the apparently "positive atmosphere," if the talks do not end well, I would expect the oil price to once again spike in anticipation of some form of military action.