GS Kepekci IR Kick Start 14Aug2026

IR Kick-Start: Europe flat, Software back in vogue? European flows Ece Kepekci · Goldman Sachs · Vice President, FICC & Equities Fri 14 Aug 2026, 3:46am ET

Global — key morning news. European markets are trading flat this morning (STOXX 600 −0.01%), though on course for a modest weekly decline, as investors weigh stalled efforts to end the US-Iran conflict and await key eurozone employment data due later today.

Yesterday: European shares were largely muted, trading flat for most of the day (SX5E −0.05%, SXXP +0.20%), with weakness concentrated in commodities and materials (SXPP −3.0%, SXEP −0.90%) while a solid earnings backdrop helped keep the broader index afloat. US CPI reinforced the soft-landing narrative, with markets now pricing less than a 40% chance of a September Fed hike, providing a tailwind for European rate-sensitive sectors into the close. Chemicals were weighed down by the broader Materials weakness, while Gold Miners finished at the bottom of the table as the risk-on tone took some shine off the safe-haven trade. Oil futures climbed 1% to $87.93 a barrel after the United States threatened an indefinite naval blockade of Iran, reviving concerns about disruptions to crude supplies. Talks between Washington and Tehran remained deadlocked.

Across the US, equities finished higher, closing just off the highs, with both the S&P 500 and Russell 2000 setting fresh record closes. Breadth was strong, with 7 of 11 sectors and 319 S&P names ending in the green. Communication Services (+1.56%), Real Estate (+1.34%) and Info Tech (+0.96%) led, while Materials (−0.74%) lagged. Alternative Asset Managers and Memory also finished firmly higher, while Software (IGV +3.1%) continued to recover, moving back into positive territory. On PCE, updated estimates following the latest PPI data now point to a 0.20% increase in July core PCE, down from the prior 0.23% estimate, implying a YoY rate of +3.24%.

Software back in vogue? Silver Lake is reportedly exploring a potential take-private of Workday, which drove a sharp bounce in the software ETF IGV overnight (+3%) and should support a stronger open for European software names. GS TMT spec sales notes the move is notable because software, particularly SaaS, has been treated as one of the main AI “loser” areas this year, with investors concerned that AI agents could pressure seat-based pricing models and weaken the durability of recurring revenue. However, private equity interest in a mission-critical enterprise software asset with sticky customers, high switching costs and strong cash flow may prompt investors to reassess whether the sector’s AI-related de-rating has gone too far, even if the longer-term SaaS disruption debate remains unresolved.

Reuters suggests the talks have been ongoing for several months, so the key question is whether this is an opportunistic move after the sector’s sharp de-rating, or whether a deal can still stack up after Workday’s share price has already rebounded strongly from its April-to-June lows. The initial reaction is likely to be

that this puts a near-term floor under the broader software and SaaS sector. That said, AI pressure has not disappeared: headcount-based software models and point solutions remain vulnerable, and private equity interest in one asset does not by itself prove that sector valuations have found a permanent floor. The broader software space has bounced from its April lows, making the group more tradable and reopening the debate around whether the “SaaS apocalypse” narrative has been overdone, while leaving room for further volatility if talks stall or deal terms disappoint.

European flow themes. According to the GS baskets team, investor interest is returning to the defence sector as the macro backdrop improves and momentum strengthens. Positioning has become significantly less crowded, creating room for investors to re-engage. The key focus remains whether defence spending commitments convert into signed contracts and sustained earnings growth. Supply continues to outweigh demand in luxury — though performance has improved recently, European luxury stocks are still materially lagging the broader market year to date. Recent company…