Gemini said
In February 2026, the global stock market is experiencing a “regime of extreme divergence.” While major indices like the Nikkei 225 and Dow Jones have recently hit historic all-time highs, this strength masks an underlying current of volatility driven by a major shift in U.S. monetary leadership and a “rotation” out of the dominant AI-tech trade.
1. Market Snapshots (Feb 9–10, 2026)
| Index | Status | Performance Highlight |
| Nikkei 225 | ~56,363 | Record High: Surged 4–5% in early Feb following a landslide election victory for PM Sanae Takaichi. |
| Dow Jones | >50,000 | Historic Milestone: Crossed the 50,000 mark for the first time on Feb 6, 2026. |
| FTSE 100 | ~10,400 | Near Record: Trading at 10,399.61, supported by bank M&A (e.g., NatWest’s acquisition of Evelyn Partners). |
| S&P 500 | ~6,932 | Choppy Recovery: Recovering after a 2025 “topping process”; support holding at 6,552 level. |
2. Key Drivers of Volatility
The volatility index (VIX) has trended upward in February, influenced by three main “shocks”:
A. The “Warsh Shock”
The nomination of Kevin Warsh to lead the Federal Reserve (starting May 2026) has triggered a massive repricing of market liquidity.
- The Reputation: Warsh is seen as a “Balance Sheet Hawk.”
- The Impact: His preference for shrinking the Fed’s $6.6 trillion portfolio led to the “Great Metal Flush” on Jan 30, where gold and silver saw their steepest one-day crashes in decades. This deleveraging spilled into equities, causing a sharp but brief tech sell-off in early February.
B. AI “Capex Fatigue”
After two years of relentless growth, investors are showing “concentration risk” anxiety.
- The Shift: There is a visible rotation out of the “Magnificent 7” and high-multiple AI spenders toward cyclical sectors, small caps, and non-U.S. markets (particularly Japan and Europe).
- The Risk: Markets are sensitive to any sign that the trillions invested in AI infrastructure (expected to hit $500B in 2026) aren’t yielding immediate productivity ROI.
C. Geopolitical and Trade Tensions
- Tariff Uncertainty: Effective U.S. tariff rates are currently estimated at 18.5%. Renewed trade friction between the U.S. and Europe (notably over Greenland) is adding a “protectionist premium” to global shipping and manufacturing stocks.