AI disruption fears and weak U.S. housing data set a cautious tone for Monday’s markets

Global markets on Monday are likely to be driven by three main forces: renewed fears about AI disruption in the technology sector, ongoing signs of weakness in the U.S. housing market, and a backdrop of elevated volatility and geopolitical uncertainty. 1) AI disruption fears hit global tech and growth stocks (Impact: 4, Sources: [1][2][3]) A sharp selloff in major technology and software names on Friday is poised to set the tone for Monday’s trading. Investors reacted to Anthropic’s launch of an advanced AI tool that is seen as a potential replacement for a range of existing software products, intensifying concerns that many current business models could be disrupted. This “AI disruption” narrative pushed the Nasdaq Composite down about 2.0%, with software and other growth-oriented tech shares under particular pressure. Because large U.S. tech companies are a major driver of global equity indices and sentiment, any continued weakness or stabilization in this sector on Monday is likely to heavily influence global risk appetite, especially for growth and momentum stocks worldwide. 2) Weak U.S. housing data reinforces economic slowdown concerns (Impact: 3, Sources: [1]) Fresh U.S. housing data showed existing home sales falling 8.4% in January to 3.91 million, well below expectations and the lowest level since late 2024. Housing is a key part of the real economy, and persistent weakness raises concerns about consumer confidence, construction activity, and broader growth. For global investors, softer U.S. housing data feeds into worries that the U.S. economy may be slowing more than anticipated, which can pressure cyclical sectors and global exporters while also influencing expectations for central bank policy paths. 3) Elevated volatility and geopolitical tensions keep risk sentiment fragile (Impact: 3, Sources: [1][2]) Measures of market risk, such as the VIX and the Cboe SKEW index, remain elevated, signaling that investors are paying up for downside protection and maintaining defensive positioning. At the same time, multiple geopolitical flashpoints—including negotiations over Greenland, political shifts in Venezuela, and ongoing tensions involving Russia-Ukraine and the U.S.-Iran relationship—are adding to uncertainty. While none of these issues alone is currently dictating market direction, together they contribute to a cautious tone. On Monday, this backdrop of higher volatility and geopolitical risk means markets may react more sharply to any new headlines or follow-through from Friday’s moves. Overall, Monday’s global market direction will likely hinge on whether the tech-led selloff stabilizes or deepens, how investors interpret the weak U.S. housing data for growth and interest-rate expectations, and whether elevated volatility and geopolitical risks keep traders in a risk-off stance.