A look at the day ahead in European and global markets

By Wayne Cole, Chief Correspondent, Treasury

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It's been a quiet start to the week with holidays in much of Asia - welcome, almost, to the year of the Fire Horse - and the United States.

Japanese data rained on the Nikkei's parade as GDP badly missed forecasts. The economy grew just 0.2% annualised in the December quarter, when analysts had hoped for a bounce of 1.6% after a contraction in Q3.

City skyline and harbour are seen at sunrise from a bus window in Tokyo, Japan July 24, 2021. REUTERS/Maxim Shemetov/File Photo

GDP was also up just 0.1% year-on-year, a sharp slowdown from 2% in mid-2025. Nominal GDP was a bit better at 3.4% on the year, but all of that was accounted for by rising prices.

Government spending and imports were the biggest drags on growth, which should strengthen PM Takaichi's case for aggressive fiscal stimulus. Suddenly the talk is of a speedy supplementary budget as opposed to late in the year.

Anyway, the Nikkei could do with a rest having climbed 5% last week. Likewise, Taiwan had risen 5.7% and South Korea more than 8%, as chipmakers benefited from the truly mountainous amounts being splashed out by the AI hyperscalers.

Analysts are worried the tech giants are now in a desperate race to be first with AI (whatever that looks like), without regard to returns.

At least there are no tech majors reporting this week, leaving humble Walmart to steal the show. Walmart expects annual sales to rise between 4.8% and 5.1%, and they need to be at the top of that range to justify a P/E of 47.

The world's first $1 trillion retailer also has shades of AI in its pricing, particularly in logistics, robotics, digital advertising and online sales. They are hoping AI can better predict what shoppers will want to buy, and not buy, which would be a bonanza for efficient inventory management.

Graphics are produced by Reuters.