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Global Equity Markets
Global equities have reached record highs, driven by a rebound in precious metals and strong performances in technology and semiconductor sectors. The Stoxx 600 and Nikkei 225 indices surged, with Japan's Nikkei up nearly 4% in a strong daily gain. South Korean semiconductor stocks, including Samsung and SK Hynix, contributed to the rally. European shares hit all-time highs, led by basic resources and technology stocks, reflecting improved investor risk appetite. In the US, technology stocks, especially AI-related companies, supported gains despite some volatility.
However, recent days have seen some pullbacks, particularly in tech stocks, due to AI spending concerns and geopolitical tensions, with the Nasdaq and S&P 500 indices down by 1.7% and 1.1% respectively on February 3. The tech sector is under pressure despite strong earnings reports, with some companies like Palantir showing notable exceptions with strong revenue growth.
Asian markets showed mixed performance: Japan's Nikkei futures rose over 1%, but the cash market saw volatility with a 1.2% weekly loss. South Korea's Kospi declined following concerns about Nvidia's AI investment plans. Indonesia's market is in crisis due to political and economic uncertainties.
Hong Kong equities are on track to meet 2026 targets, with the Hang Seng Index up 4.4% YTD, supported by sector rotation favoring real estate, materials, and industrials, and strong IPO activity.
Precious Metals and Commodities
Precious metals experienced significant volatility. Gold rebounded by nearly 5% after a steep 9% sell-off, trading near $4,870 to $5,000 resistance levels. Silver saw a historic drop of up to 30% from its peak, with prices stabilizing around $84-$90 after a record one-day decline. The sell-off in silver is attributed to a crowded trade unwinding and liquidity issues, with analysts suggesting fair value near $60. Both metals are supported by structural demand as strategic hedges for institutions and central banks.
Copper prices rose over 4%, nearing $13,500 per tonne, driven by demand linked to electrification and AI infrastructure, benefiting mining companies like Glencore and Rio Tinto. However, energy commodities softened, with Brent crude below $66 and WTI under $62 per barrel, influenced by easing geopolitical tensions with Iran and increased US and Kazakhstan production. Natural gas prices declined due to warmer weather forecasts.
Trading margins on precious metals were raised by CME Group, forcing liquidations and contributing to volatility. The precious metals sector faces challenges from increased spreads and risk aversion ahead of the Chinese Lunar New Year.
Foreign Exchange and Interest Rates
The US dollar showed signs of recovery, supported by the nomination of a new Federal Reserve chair perceived as less dovish. The dollar index trades above 97, with major pairs like USDJPY above 155 and USDCAD reclaiming key support. The ISM Manufacturing PMI rose to 52.6, its highest in three years, bolstering dollar strength. However, uncertainty remains due to a partial US government shutdown potentially delaying economic reports.
The Bank of Japan signaled hawkish intentions with potential further rate hikes, causing 10-year Japanese Government Bond yields to rise and raising concerns about yen carry trade unwinding. This dynamic affects US-Japan interest rate differentials and could influence Japanese investors' holdings of US assets, totaling over $2 trillion.
The Reserve Bank of Australia raised its cash rate to 3.85%, with expectations of further hikes due to inflation concerns, supporting the AUD/USD exchange rate.
Eurozone inflation remains below the ECB's 2% target, with services PMI slowing, suggesting the ECB may hold rates steady or consider cuts later in the year. The euro faces downward pressure against the dollar and yen.
Corporate Earnings and Sector Highlights
- Oracle Corporation: Announced plans to raise up to $50 billion in 2026 to expand its cloud infrastructure and AI projects, including issuing up to $20 billion in new shares and bonds. While EBITDA is growing, the company faces a "financial trap" balancing investment needs against rising debt servicing costs, with credit ratings at BBB/Baa2 and a 37% 20-year default probability.
- Palantir: Reported a 70% year-on-year revenue increase to $1.4 billion, exceeding expectations, with shares rising over 5% after hours.
- Walt Disney: Shares fell over 7% after a disappointing quarterly report, with revenue shortfalls in traditional TV segments despite beating EPS estimates. The new CEO appointment failed to boost share price.
- Perspective Therapeutics: Shares surged over 10% following a public offering to raise approximately $175 million for clinical development.
- PepsiCo: Reported Q4 core EPS of $2.26, slightly above estimates, and announced plans to buy back up to $10 billion in shares through 2030.
- Adobe: Downgraded due to market pressures, while Google plans significant investments in electricity for data centers.
- Other notable earnings: AMD, AMGN, EA, and others are reporting, with market focus on tech sector performance amid AI-related cost concerns.
Geopolitical and Macroeconomic Developments
Tensions between the US and Iran have recently escalated, causing oil prices to rise, but recent indications of willingness for nuclear talks have eased geopolitical premiums on oil. The US-India trade agreement reduces tariffs on Indian goods from 50% to 18%, with India agreeing to lower barriers for US products and shift from Russian to US crude oil imports, boosting Indian equities.
The US government faces a partial shutdown, with former President Trump urging Congress to expedite the budget bill. This shutdown may delay key economic data releases such as the non-farm payroll report, adding uncertainty to markets.
Market Sentiment and Outlook
Investor sentiment is cautious amid volatility spikes, tariff concerns, AI speculation, and labor market worries. The market is transitioning from broad enthusiasm for AI to a more discerning phase, focusing on value and bottlenecks in the AI ecosystem, especially in SaaS companies facing pricing and customer lock-in challenges. Semiconductor stocks benefit from increased demand for computing power, while SaaS stocks underperform.
Risk aversion is evident with increased insider selling and shifts in institutional asset allocations. Defensive sectors and value stocks are favored over growth stocks. The dollar's rebound challenges narratives of debasement, supported by strong economic data and hawkish central bank signals.
Technical analysis highlights key support and resistance levels for major indices like Nasdaq and S&P 500, with traders advised to monitor these closely as market dynamics evolve.
Overall, the market environment calls for cautious trading strategies, with attention to upcoming economic indicators, corporate earnings, and geopolitical developments that could influence volatility and investment opportunities.
Global Equities and Sector Rotation
Global equity markets have shown mixed dynamics with notable record highs in some regions, driven by rebounds in precious metals and tech sector resilience. The Stoxx 600 and Nikkei 225 indices have reached new peaks, supported by strong performances in technology, semiconductors, and AI-related stocks. However, the tech sector faces volatility with significant earnings-driven corrections, especially in major US tech stocks like Alphabet, Qualcomm, and Arm Holdings.
There is a clear rotation from growth and tech stocks towards value and traditional sectors, such as industrials, consumer goods, and mining. This rotation is reflected in the Dow Jones Industrial Average's gains contrasting with declines in the Nasdaq and S&P 500 indices. Investors are increasingly favoring stability and dividends over high-growth potential amid ongoing macroeconomic uncertainties.
Macroeconomic Factors Influencing Markets
Macroeconomic conditions remain a dominant influence across asset classes:
- Interest Rates and Central Banks: The European Central Bank (ECB) is expected to hold rates steady, maintaining a neutral stance after previous cuts, while the Bank of England's upcoming decision is highly anticipated. The Federal Reserve's policy direction, including potential rate cuts, continues to shape market sentiment.
- Geopolitical Developments: Easing tensions between the US and Iran have removed a significant geopolitical risk premium, particularly impacting oil prices and energy markets.
- Currency Movements: The US dollar has strengthened, affecting commodity prices and emerging market currencies. The Japanese yen is weakening ahead of elections, influencing export competitiveness and inflation dynamics in Japan.
Commodities and Energy Markets
Commodity markets are experiencing volatility with divergent trends:
- Oil: Prices have declined sharply (~6%) due to US-Iran diplomatic progress and OPEC+ maintaining production levels. The market remains range-bound between $55 and $70 per barrel, with supply concerns easing but demand outlook uncertain.
- Precious Metals: Gold and silver have seen dramatic price swings. Gold rebounded after a steep drop, supported by geopolitical risks and central bank activity, while silver experienced a sharp correction below $80 per ounce due to forced liquidations and margin hikes. Industrial metals like copper are recovering, driven by demand linked to electrification and AI infrastructure.
Cryptocurrency Market Overview
The cryptocurrency market remains under pressure with significant declines in major assets:
- Bitcoin: Entered a bear market with a 40% drop from its all-time high, currently stabilizing near key support levels around $70,000. The sell-off is driven by liquidation of leveraged positions and cautious institutional behavior, though long-term fundamentals remain intact.
- Ethereum: Facing a steeper correction (~55% from highs), with recovery prospects tied closely to Bitcoin's performance and ongoing protocol developments.
- Stable Protocol Token (STABLE): Contrasting the broader market, STABLE has surged 125% due to low circulating supply and anticipation of a token unlock, highlighting the impact of tokenomics on price dynamics.
- Institutional and Retail Trends: Mixed flows into crypto products, with retail access expanding in Europe through ETNs, but overall cautious sentiment prevails amid regulatory uncertainty.
Equity Market Technical and Sentiment Insights
Technical analysis indicates cautious near-term outlooks:
- Major US indices show resistance and support levels that suggest potential for further volatility, with the S&P 500 trading sideways and Nasdaq facing bearish signals after breaking key moving averages.
- Tech sector earnings remain pivotal, with upcoming reports from Amazon, Alphabet, AMD, and others expected to influence market direction.
- Value stocks and sectors like telecoms, utilities, and precious metals are favored amid tech sector stress.
Investor sentiment is influenced by geopolitical risks, earnings surprises, and macroeconomic data releases, with a cautious but optimistic tone prevailing in anticipation of Fed rate cuts and AI-driven profit growth.
Outlook and Strategic Considerations
Investors should remain vigilant given the complex interplay of factors shaping markets:
- Monitor geopolitical developments, especially US-Iran relations, which could rapidly shift risk sentiment.
- Watch central bank communications and interest rate decisions for clues on monetary policy trajectory.
- Follow earnings reports closely, particularly in technology and industrial sectors, to gauge economic resilience and growth prospects.
- Consider diversification across asset classes, balancing exposure to equities, commodities, and cryptocurrencies in line with risk tolerance and market conditions.
Overall, the market environment is characterized by cautious optimism, with opportunities emerging amid volatility and sector rotations.
Market Summary
The US stock market opened February 2026 with mixed dynamics. Technology, Materials, Healthcare, and Industrials sectors showed gains, while Energy and Utilities declined. The S&P 500 futures rebounded to 7,000 after overnight lows. The Dow Jones Industrial Average (DJIA) gained +0.5% to 49,500.09, while Nasdaq fell 1.5% to 22,904.60, pressured by tech stock sell-offs. The S&P 500 closed slightly down by 0.5% at 6,882.71.
Market sentiment is cautious amid concerns over AI spending, disappointing earnings forecasts, and geopolitical tensions, especially involving Iran. The US dollar showed resilience, rebounding above 97.00 after prior declines.
Key Market Movers
Technology Sector
- Alphabet Inc. (GOOGL): Reported strong earnings with $113.8 billion revenue driven by AI monetization and Google Cloud growth. However, its large 2026 capital expenditure plan ($175-$185 billion) caused a 1.9% pre-market drop.
- Advanced Micro Devices (AMD): Shares dropped 17% due to disappointing AI revenue forecasts despite beating earnings.
- Qualcomm: Fell 9% after a weaker forecast linked to global memory shortages.
- Palantir Technologies and Teradyne: Saw gains following positive earnings reports.
Energy Sector
Energy stocks declined for the first time in seven days, with oil prices falling about 2% due to easing geopolitical tensions after Iran indicated willingness for nuclear talks with the US. WTI crude oil prices dropped over 5% recently but remain volatile due to ongoing diplomatic developments.
Other Notable Stocks
- AMD: +56% ahead of earnings (prior to recent drop)
- CRML: +9% on rare earth sector gains
- HAIN: +16% after selling North American Snacks business
- PKST: +31% due to acquisition news
- DIS: -6% despite beating earnings
- ORCL: -4% after announcing plans to raise up to $50 billion for cloud and AI projects
Economic Data and Political Developments
- ISM Manufacturing Index: Rose to 52.6 in January, signaling expansion and strongest growth since 2022.
- ADP Private Payrolls: January estimate at 48,000, with weaker-than-expected job growth reported recently.
- US Non-Farm Payrolls Report: Delayed due to partial government shutdown.
- US-India Trade Agreement: Tariffs on Indian goods reduced from 50% to 18%, India to increase US oil imports and reduce Russian crude purchases, boosting market sentiment.
- Federal Reserve: Uncertainty remains after resignation of Fed Governor Stephen Miran; market awaits clarity on future monetary policy.
Fixed Income and Technical Analysis
US Treasuries sold off as risk sentiment improved, with the 2-year yield rising to 3.57%. Technical indicators for major indices show mixed signals:
- Russell 2000 (US2000/USD): Mixed technicals with short-term moving averages signaling sell, but longer-term averages indicating buy; Elliott Wave analysis suggests the index is in the final stages of a major impulse wave with a corrective phase expected soon.
- Dow Jones (US30/USD): Completing Wave 5 of a 5-wave impulse; technical resistance near 49,900-50,000 with expected correction to 44,000-46,000 zone.
- US Bonds (2-year and 5-year): Technicals mostly short-term bearish but longer-term bullish; yields rising amid improving risk appetite.
Commodities and Currencies
- Precious Metals: Silver dropped 13.74% to $77.34/oz, gold down 0.7% to $4,926/oz, platinum down 6%. Volatility remains high after recent sharp declines.
- Oil: WTI and Brent prices down about 2%, pressured by easing geopolitical risks but supported by tightening US crude inventories.
- Natural Gas: Trading around $3.53 with a positive short-term outlook; technical support at $3.20 and resistance near $3.75.
- US Dollar: Strengthened above 97.00 after prior drop; EUR/USD trading near 1.1776 with resistance at 1.1830-1.1890.
- Cryptocurrencies: Bitcoin fell below $75,000 before modest rebound to $70,900; Ethereum down 1.3% to $2,090, facing critical support levels.
Outlook and Conclusion
The US market is navigating a complex environment of mixed earnings results, geopolitical developments, and economic data delays. The tech sector remains volatile due to AI investment concerns and earnings uncertainty, while defensive sectors and energy show relative strength. The US economy's resilience, dovish Fed expectations, and trade agreements support cautious optimism, but risks from geopolitical tensions and political gridlock persist.
Investors should monitor upcoming earnings from major companies like Amazon and AMD, as well as key economic releases once government operations normalize. Technical signals suggest potential corrections in major indices after recent rallies, emphasizing the need for careful risk management.
AMD
AMD reported a positive EPS surprise of 15.91% and sales surprise of 6.24%, with quarterly EPS growth of 40.4% and sales growth of 34.1%. Despite this, the stock fell 1.69% in regular trading and dropped another 7% in after-hours due to a cautious future outlook.
Palantir (PLTR)
Palantir shares rose 5-6% after reporting a 70% year-on-year revenue increase to $1.4 billion, surpassing expectations. The company also saw a significant increase in U.S. commercial revenue and received an upgrade from William Blair.
Disney (DIS)
Disney reported better-than-expected earnings and reaffirmed guidance, but shares declined 6% despite the positive results.
PepsiCo (PEP)
PepsiCo reported Q4 core EPS of $2.26, slightly above estimates, and announced plans to buy back up to $10 billion of shares through 2030. Shares rose over 3% following the earnings report.
UBS Group AG
UBS announced a pre-tax profit of $1.70 billion and net profit of $1.20 billion, both exceeding forecasts. The bank plans a $3 billion share buyback in 2026 and expects $2.8 billion in cost savings.
Crédit Agricole
Reported revenue of EUR 6.97 billion, slightly above forecasts, but net income of EUR 1.03 billion was below expectations. Operating expenses were higher than forecasted.
Novartis AG
Reported revenue of $13.34 billion, slightly below forecasts, with basic EPS of $2.03 beating estimates. The company announced a dividend of CHF 3.70 and expects low single-digit net sales growth in 2026.
Technology Sector
The technology sector faced pressure, especially software stocks, due to concerns over AI competition and new disruptive technologies. Nvidia and Microsoft shares fell over 3%, while Broadcom and Micron also declined significantly. However, Palantir was an exception with gains.
Energy and Commodities
Energy markets softened with oil prices dropping nearly 5.5%. Precious metals rebounded strongly, with gold rising about 5% to near $4,900 per ounce and silver surging over 8% to $85 per ounce.
Cryptocurrency
Bitcoin prices fell below $75,000 before a modest rebound, continuing a downtrend. The cryptocurrency mining sector remains weak, and XRP experienced losses due to hawkish Fed signals and ETF outflows.
Market Indices
- S&P 500: Closed near 6,900 points, down about 0.9%
- Nasdaq 100: Dropped 2%, closing 1.43% lower
- Dow Jones Industrial Average: Slight gains with resistance near 49,900
- Russell 2000: Up over 5% year-to-date
Economic Data
ISM Manufacturing PMI rose to 52.6%, indicating expansion. The January employment report was postponed due to a government shutdown. ADP Private Payrolls for January are estimated at 48K. Euro Area inflation eased to 1.7% year-on-year.
Geopolitical and Other News
The Reserve Bank of Australia raised its cash rate to 3.85%, signaling potential further hikes. The US military shot down an Iranian drone, increasing geopolitical tensions. The US-India trade agreement reduces tariffs and boosts Indian equities. The EU plans to stockpile critical materials to reduce reliance on China.