Market Update - February 25, 2026
By Kathleen Brooks, Research Director UK
Key Takeaways
- Are AI fears overdone?
- Nvidia: Can a monster set of results boost the market mood?
- UK inflation receives a boost from energy price cap
- The key question for the BOE: A March or an April cut?
- UK earnings round up
Market Sentiment
On February 25, 2026, market sentiment improved as fears surrounding artificial intelligence (AI) eased. Additionally, news that UK household energy bills would decrease by 7% contributed positively to the market mood ahead of the European market opening. The US dollar weakened, and commodities saw a general uptick, influenced by President Trump's optimistic State of the Union Address.
AI Fears Easing
European stock futures showed strength, following a positive day for US stocks. The uplift in sentiment was partly due to Anthropic's announcement of a new AI plugin designed to automate tasks in HR and investment banking, which alleviated some investor concerns about AI's potential to disrupt industries. Tech and consumer discretionary stocks saw gains, with notable increases in shares of Applovin, Oracle, Adobe, and IBM, each rising over 2%. This news may signal a shift in perception, suggesting that AI could complement rather than replace existing software providers.
Nvidia's Earnings Report
Attention is focused on Nvidia, which is expected to report impressive earnings later today, with projected revenues of $65.9 billion for the last quarter. The company has remained resilient amid a broader tech sell-off, and a strong earnings report could further boost market sentiment towards technology stocks. Historically, Nvidia's stock price has moved an average of 4% following earnings announcements, making this a key event for investors.
Bank of England Rate Cuts
The recent reduction in the UK energy price cap may increase the likelihood of a rate cut by the Bank of England (BOE) in March, although there are still uncertainties regarding the timing of subsequent cuts. The BOE's recent testimony indicated concerns about service price inflation, which could influence their decision-making process. Current expectations suggest a potential second cut may not occur until November, highlighting the importance of inflation trends in the coming months.
UK Earnings Roundup
Futures indicate that the FTSE 100 may lead European indices higher today, with HSBC expected to perform well after exceeding profit expectations, resulting in a 4% increase in its Hong Kong shares. Conversely, Diageo faces challenges, as it announced that US spirits sales would impact its earnings, leading to a dividend cut to conserve cash. Despite a 17% year-to-date increase, today's report may dampen investor enthusiasm for the company.