Global Markets Weekly: Japanese Election Surge, Tech Selloff, Fed Rate Uncertainty

The Reuters “Morning Bid” commentary by Anna Szymanski provides a comprehensive overview of global market dynamics heading into the weekend of February 13, 2026, characterized by the central metaphor of markets “dancing in the dark” amid contradictory signals [1].

Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a supermajority in Japan’s lower-house elections, triggering a notable market rally. The Nikkei index surpassed 58,000 for the first time, while the yen was on track for its largest weekly gain in over a year. Japanese government bonds (JGBs) strengthened, potentially reflecting bets that Takaichi’s mandate allows for increased fiscal responsibility. However, analysts caution that investors “should not be lulled into complacency by this post-election euphoria,” as markets could be “rattled again” as details of funding plans for spending proposals emerge [1].

The tech sector experienced significant pressure, with the Nasdaq Composite dropping 2% on Thursday. Cisco Systems reported disappointing earnings, contributing to broader sector weakness. Apple shares fell 5%—marking its biggest single-day decline since the “Liberation Day” tariff announcement last April. This tech selloff reflects ongoing concerns about AI disruption impacts on traditional sectors, with transportation stocks recently joining the list of victims [1].

Conflicting U.S. economic signals have created substantial uncertainty regarding Federal Reserve policy direction. Weaker-than-expected retail sales initially raised April rate-cut odds to nearly 50%, but stronger-than-expected January jobs data (130,000 nonfarm payrolls versus consensus) reversed that momentum. The January employment report showed strength concentrated in healthcare and social assistance, with massive downward revisions for 2025. The critical question remains: “Why is the Fed expected to continue easing, especially with inflation above the Fed’s 2.0% target?” [1]

With inflation remaining above the Federal Reserve’s 2.0% target, investors were closely monitoring the January CPI data release scheduled for later on February 13. This data will be critical in shaping expectations for Fed policy path forward.

The International Energy Agency projected slower global oil demand growth for 2026, supporting forecasts for a significant supply glut. Brent crude remained stuck near $70/barrel, with the article noting that “the oil market is increasingly being influenced by external, unpredictable forces” rather than traditional physical fundamentals [1].

The resurgent yen put downward pressure on the dollar, which also showed persistent weakness against the euro and yuan. This aligns with statements from leaders in both regions about ambitions for their currencies to play bigger global roles in the international monetary system [1].

The analysis reveals interconnected market dynamics: Japanese election results are influencing currency flows (yen strength), which in turn affects dollar valuations and potentially Fed policy considerations. Tech sector weakness contributes to broader risk-off sentiment, while commodity markets show disconnect between fundamental indicators (IEA demand projections) and price action.

The “Takaichi trade” represents a significant geopolitical development that market participants are still processing. The combination of fiscal policy uncertainty in Japan, ongoing tech sector volatility, and unclear Fed policy trajectory creates a complex environment where traditional market correlations may break down.

The article suggests that “supposedly hyper-efficient global markets may struggle to navigate the twists and turns of 2026,” indicating potential structural challenges in price discovery mechanisms amid unprecedented policy and geopolitical uncertainties.

• Tech sector volatility
  : Additional earnings disappointments could extend the selloff
• Japanese policy uncertainty
  : Fiscal plan details may reverse post-election optimism
• Fed policy confusion
  : Mixed economic signals create unpredictable rate path
• Oil price weakness
  : Supply glut projections may pressure energy sector valuations

• Japanese assets
  : Post-election momentum could continue if fiscal details are reassuring
• Currency diversification
  : Dollar weakness may create opportunities in international exposure
• Value rotation
  : Tech selloff could benefit undervalued defensive sectors

The analysis synthesizes multiple market developments as of February 13, 2026. Japanese political developments have driven significant yen strength and Nikkei gains, though sustainability remains uncertain pending fiscal policy details. Technology sector weakness persists amid earnings disappointments and broader AI disruption concerns. Federal Reserve policy expectations remain volatile given conflicting economic indicators, with CPI data release being a critical upcoming catalyst. Energy markets face bearish fundamentals from IEA demand projections, while currency dynamics reflect shifting global growth expectations. Markets continue to navigate significant uncertainty across geopolitical, monetary policy, and corporate earnings dimensions.