What’s going on here?

Baidu – China's answer to Google – announced mixed quarterly results on Tuesday, serving as a cautionary tale for the rest of the country's tech stocks.

What does this mean?

Baidu’s revenue was 2% lower last quarter than at the same time the year before, but investors were expecting worse. And even though online advertising – the company’s biggest segment – reported a 7% fall in revenue, cloud computing helped make up the difference. That business pulled in 26% more cash than the year before. Together with a one-off windfall, that meant the internet search giant managed to double its quarterly profit from the year before – above and beyond what analysts expected.

Why should I care?

For markets: Talk about a backhanded compliment.

Investors still let Baidu’s stock fall 5% after the results. See, being called “the Google of China” is hardly flattery right now. Investors are erring on the side of caution with Google-owner Alphabet’s stock, worried about regulatory action and fierce competition from all-singing, all-internet-searching AI chatbots.

The bigger picture: See, zodiac signs do matter.

The Year of the Snake represents a period of transformation, renewal, and growth. And Baidu aside, China’s tech stocks seem to have received the memo. They’ve stuttered for years, depressed by a crumbling real estate market, the government’s drawn-out tech industry crackdown, and global trade tensions. But Alibaba and Tencent are leading a rally this year, with share prices up 55% and 21% respectively. That’s perhaps because Tencent’s working with DeepSeek: the AI lab that recently undermined America’s best. And Alibaba has said its own model is an even smarter version of the tech. No wonder the KraneShares CSI China Internet ETF – which many retail investors use to buy into Chinese tech stocks – is up over 20% this year.

What’s going on here?

Investors bolstered European defense stocks on Monday, after NATO hinted that the region may need to spend a lot more on its front line – weekly martial arts classes simply won’t cut it.

What does this mean?

The US and Europe tend to approach defense measures together, with the States providing the bulk of the military sway. But now that a new president is occupying the White House, America has been leaving Europe on the sidelines – not least when it comes to holding discussions with Russia. So, concerned that the region can no longer rely on the red, white, and blue to foot the security bill, NATO leaders have suggested that Europe’s defense budget should be increased to over 3% of the size of its economy – up from the old target of 2%.

Why should I care?

For markets: The great European delicacies… cheese, wine, and ammunition.

Anticipating that Europe will extend its shopping list, investors sent shares in defense companies to record highs. While the industry’s stocks have been on the up ever since Russia invaded Ukraine in 2022, it’s European ones receiving the most attention right now. See, the region’s governments are – understandably – eager to buy local, rather than importing from the US. Major firms like Rheinmetall are prepared: they’re already planning to scale up production to match their stateside counterparts.

The bigger picture: Bonds are stirred, not shaken.

To fund this amped-up arsenal, European governments could flood the market with new bonds. That increased supply would weigh down bond prices, so their yields – the return you can expect for holding them – would be nudged up to offset worries about rising debt levels. Plus, because more governmental shopping sprees could aggravate inflation, central banks may be forced to raise interest rates. That, too, would move bond prices down and yields up. You can already see the pattern playing out: German and British bond yields have moved higher thanks to projections of flashier spending.