AI threat, shutdown averted, central banks in focus

• Software stocks hit my AI threat
• Alphabet and Amazon earnings in focus
• Partial government shutdown comes to end
• BoE and ECB expected to leave rates unchanged
•  Gold moves back above $5000

Market fears that rapid advancements in AI may undermine traditional business models hit software stocks on Tuesday.

Anthropic announced that it was adding new legal tools to its Cowork assistant to automate tasks across legal, sales, and data analysis. Concerns over an impending AI-fueled disruption in such industries may remain a theme that weighs on sentiment.

Elsewhere, European markets opened flat ahead of the ECB rate decision on Thursday, while US futures are flashing green as the spotlight shines on big tech earnings.

Alphabet publishes its latest results on Wednesday after US markets close, with revenue expected to grow by more than 15% for the second consecutive quarter. Amazon publishes its results on Thursday, with analysts expecting sales to rise by 13% in Q4.

Considering how Alphabet and Amazon account for almost 20% of the Nasdaq 100, a solid set of earnings could spark a rally back toward 26,000.

A super central combo featuring the ECB and BoE could rock FX markets on Thursday.

Both central banks are expected to leave rates unchanged, but any clues on future policy moves may spark volatility.

Traders are currently pricing a 75% chance that the BoE cuts rates by April 2026, while the ECB is expected to hold rates steady throughout this year. 

In the United States, the partial government shutdown ended late Tuesday after Trump signed into law a funding deal. However, the effects of the shutdown had already begun with the key US jobs report due Friday delayed.

Looking at commodities, gold rose for the second day, rebounding above $5000 while silver prices punched above $90. Despite the monstrous selloff last Friday that wiped more than $15 trillion from their value, bulls seem to be making a move.

Considering how the fundamentals that propelled precious metals to such lofty levels remain intact, it may be a question of when, not if prices will retest all-time highs. Looking at the technical picture, bulls have a very steep hill to climb with a key checkpoint at $5100.

Regarding Bitcoin, it continues to linger below the $77,500 level amid the general caution. Sustained weakness under this point may open a path toward $70,000. A move back above $80,000 could open a path toward the 50-day SMA at $88,200.