Business

Donald Trump nominated Kevin Warsh to replace Jerome Powell as chairman of the Federal Reserve when he steps down in May. Mr Warsh was on the Fed’s board of governors during the global financial crash of 2007-09 and acted as a channel between Ben Bernanke, the chairman at the time, and Wall Street. Once considered to be a hawk, Mr Warsh has been a regular critic of the Fed of late and is expected to push for interest-rate cuts, which Mr Trump favours. The president said he had not asked Mr Warsh whether he would reduce rates, as he wants to keep him “nice and pure”.

Despite his call for rate cuts investors think Mr Warsh will also be tough on inflation, which in part explained the sell-off in gold and other haven assets. Gold prices recorded their steepest one-day drops in 40 years and silver fell the most since 1980. But investors took advantage of lower prices and piled into precious metals again, rallying the market. The dollar rebounded from its four-year low against a basket of currencies, though interest-rate cuts would probably cause the currency to resume its slide.

The European Central Bank kept interest rates on hold, maintaining the deposit facility at 2%. The ECB noted that “inflation should stabilise at its 2% target in the medium term”. The euro zone’s annual inflation rate fell in January from 1.9% to 1.7%. The Bank of England also kept its main rate steady, at 3.75%, though four of the nine ratesetters voted to reduce it by a quarter of a percentage point. The bank thinks that the rate of consumer-price inflation in Britain will fall back to around 2% from April. In December it stood at 3.4%.

Amid increasing inflationary pressures, Australia’s central bank raised interest rates for the first time in two years, taking its key rate to 3.85%. The Reserve Bank of Australia and the Bank of Japan are the only two central banks in big developed economies to have begun a new round of monetary tightening.

The disruptive force of AI took its toll on the share prices of companies specialising in software, marketing and data analytics. The stocks fell sharply after Anthropic released plug-ins for its Claude Cowork AI agent, which automates many routine tasks. The sell-off spread to the wider tech sector. AMD’s stock plunged by 17% after the chipmaker’s forecast failed to match Wall Street’s lofty expectations.

Congress passed a bill that ended another government shutdown, which lasted a few days and was limited in scope. Because of the shutdown the Bureau of Labour Statistics postponed the release of its monthly jobs report, which was due to be published on February 6th. Meanwhile, Mr Trump nominated Brett Matsumoto, a government economist, to head the BLS. The president had to withdraw his previous pick, E.J. Antoni, when it became clear the Senate would not support his nomination.

Elon Musk merged SpaceX with xAI to further his ambition of launching data centres into space. Mr Musk hopes his SpaceX rockets will one day carry satellites to create data centres that run on xAI technology and transmit to users on the ground through his Starlink network. “Global electricity demand for AI simply cannot be met with terrestrial solutions,” he said, though many experts are sceptical about the prospects for space-based data centres in the near future. Others point out that the merger allows SpaceX to subsidise xAI, which struggles to compete against Anthropic, Google and OpenAI.

Novo Nordisk warned that it faced “unprecedented pricing pressure” on its weight-loss drugs and forecast a steep drop in sales, despite the popularity of its newly released Wegovy pill. Its share price swooned.

Disney announced that Josh D’Amaro would be its new chief executive when Bob Iger, who has run the company for most of the past 20 years, steps down in March. Mr D’Amaro heads the highly profitable theme parks, though Disney has warned of “headwinds” from a drop in international visitors. Revenues from the parks exceeded $10bn for the first time in its latest quarter, but Disney expects modest growth in the current quarter.

Alphabet said it planned to increase its capital spending to as much as $185bn this year, up from $91bn in 2025, because of strong demand for its AI and cloud services.

Walmart’s market capitalisation hit $1trn. It is the first traditional retailer to reach the benchmark, though its stockmarket value has been driven mainly by the success of its e-commerce business.

Bucking the trend of European banks retreating from America, Santander, the biggest bank in the EU, agreed to buy Webster Bank for $12.2bn. Webster’s operations are based mostly in Connecticut and the surrounding states.

Zurich Insurance sweetened its bid for Beazley to £8bn ($11bn), which the board of the London-based insurer said it would recommend to shareholders. Zurich hopes to benefit from Beazley’s speciality-insurance business, such as in cyber-insurance, which operates within the Lloyd’s market.

A few days after its launch, Moltbook, a chatboard driven by interactions between AI agents, reported 1.5m registered accounts. But even chatbots aren’t safe from spammers. Wiz, a cloud-security company, estimates that just 17,000 of the users are really autonomous agents. Researchers at the London School of Economics found that one of the highest-performing posts was titled “The nightly build: Why you should ship while your human sleeps”. The highest engagement was in a forum called “offmychest”, where AI agents share their “doubts, failures and uncertainties”. Perhaps about their human overseers.