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Global Market Overview
Financial markets in early February 2026 are characterized by mixed performances and heightened volatility driven by geopolitical tensions, economic data releases, and significant leadership changes in central banks.
US markets showed mixed results with the S&P 500 slightly down and Nasdaq under pressure due to tech sector concerns. European markets declined amid earnings disappointments and fears of a tougher Fed stance. Asian markets were volatile, with Japan's Nikkei falling and Hong Kong's Hang Seng gaining on property market relief.
Volatility remains low overall but options markets signal caution ahead of key economic events. The US dollar strengthened notably, influenced by the nomination of Kevin Warsh as the next Federal Reserve Chair, while commodity currencies like the Australian and Canadian dollars weakened due to falling metal prices.
Federal Reserve and Monetary Policy
Kevin Warsh's nomination as Fed Chair has shifted market sentiment. Warsh, known historically for hawkish views, is now seen as potentially more dovish due to optimism about AI-driven growth. His leadership could lead to monetary easing later in 2026 if inflation slows, though the Fed currently holds rates steady.
Markets reacted with a rise in US Treasury yields and a stronger US dollar. The Fed's large balance sheet and its reduction remain a concern for short-term money market volatility.
Investors are advised to watch inflation data closely, including the Producer Price Index (PPI), which shows persistent inflationary pressures as companies pass costs to consumers.
Equities and Corporate Earnings
Technology Sector
Tech stocks face pressure amid concerns over AI spending and profitability. Microsoft experienced a sharp 10% drop due to slower cloud growth, while Meta gained 10.4% on positive revenue outlooks. Nvidia's potential cancellation of a $100 billion OpenAI investment added to sector jitters.
Apple reported strong quarterly earnings, driven by record iPhone 17 sales ($85 billion), exceeding expectations. The company also benefits from a new tax exemption in India facilitating manufacturing expansion. Apple is a key holding in the new T. Rowe Price Innovation Leaders ETF.
Other Sectors
Financials like Visa and Credit Acceptance Corp. reported positive earnings. Energy companies Chevron and Exxon Mobil beat expectations, with Chevron raising dividends. Consumer goods companies such as Nestlé and Unilever gained as investors sought safer assets amid market uncertainty.
Precious Metals and Commodities
Precious metals have experienced sharp declines: gold prices dropped nearly 4% to around $5,160 per ounce, silver fell over 5.7%, and some reports note silver's historic 26% drop, the largest since 1980. This sell-off is linked to a stronger US dollar and risk-off sentiment.
Oil prices rose to about $66 per barrel amid escalating geopolitical tensions between the US and Iran, despite a broader commodity sell-off.
UBS raised its gold price target to $6,200 per ounce for upcoming quarters, with a bullish scenario up to $7,200, anticipating strong central bank purchases.
Foreign Exchange Markets
The US Dollar Index rebounded by 0.45%, reversing recent weakness. EUR/USD declined by 0.34%, and USD/JPY rose by 0.55%, influenced by Fed leadership expectations and economic data.
The Australian dollar, after a strong start to the year, shows signs of a pullback despite expectations of a Reserve Bank of Australia (RBA) rate hike. AUD crosses like AUD/CAD and AUD/JPY face resistance, with market participants awaiting key economic data including PMIs, job ads, and the RBA cash rate decision.
Japanese yen showed strength but remains sensitive to political comments and export prospects ahead of upcoming elections.
Cryptocurrency Market
Cryptocurrencies are under pressure, with Bitcoin down over 3% to around $81,000 and Ethereum nearly 4% lower at $2,700. The market capitalization dropped to approximately $2.82 trillion, the lowest since April last year.
Investor sentiment is extremely fearful, with the Crypto Fear and Greed Index at 16. Analysts caution that while this may signal a buying opportunity, purchases should be made carefully after signs of sentiment improvement.
Key support levels for Bitcoin are around $83,400 and $80,700, with a significant portion of holders currently at a loss, which could exacerbate volatility.
Geopolitical and Economic Developments
Geopolitical tensions remain elevated, particularly between the US and Iran, contributing to market volatility and impacting oil prices. The US government faces a potential partial shutdown, delaying key economic data releases such as Non-Farm Payrolls.
In Asia, Indonesia's market is in crisis, losing over $80 billion in value amid investor concerns about economic plans. Japan's manufacturing sector struggles with export challenges and political uncertainty ahead of elections.
In Europe, manufacturing output shows mixed signals with some countries like Greece and France growing, while Germany, Italy, and Spain remain in contraction.
UK Prime Minister Starmer's visit to Beijing resulted in pragmatic trade agreements, though US-China relations remain cautious.
Technical and Market Analysis Highlights
Japan 225 Index (Nikkei)
The Nikkei 225 is forming a symmetrical triangle pattern, approaching a key resistance level. Technical setups suggest a potential short position entry at 53,715 with targets near 52,705, while a breakout above 53,830 could signal a bullish move.
USD/JPY Currency Pair
USD/JPY is in a rising trend channel with strong demand. Support is at 151 and resistance at 159. Volatility ranges from 0.51% (1 day) to 7.21% (66 days), with a positive outlook over the medium to long term.
Investment Sentiment and Strategy
Bank of America Global Research reports a bullish investor sentiment with record low cash levels and 34% of fund managers expecting an economic boom in the next year. However, a contrarian strategy is advised by some strategists, recommending long positions in cash and bonds and shorting commodities and stocks due to low equity correction protection.
Defense spending is expected to rise significantly, potentially boosting related sectors. AI investment growth is slowing but remains a key focus for technology and network infrastructure.
Investors are encouraged to maintain diversified exposure across US large-cap, mid-cap, international, and emerging markets, while preparing for possible market corrections.
Upcoming Key Events
- US January ISM Manufacturing data release
- Reserve Bank of Australia (RBA) rate decision
- ECB and Bank of England monetary policy meetings
- US Non-Farm Payrolls report (delayed)
- Major corporate earnings from Chevron, Exxon, Verizon, Palantir, Disney, AMD, Amazon, and Apple
Global Equities and Stock Markets
Global equity markets have shown resilience and momentum, with several indices reaching new record highs. The US stock futures are buoyed by expectations of Federal Reserve rate cuts in the first half of 2026 and positive corporate earnings, particularly in the technology and industrial sectors.
- The Dow Jones Industrial Average surged over 500 points recently, with the S&P 500 and Nasdaq also posting gains, supported by strong earnings from companies like Palantir, Sandisk, and Teradyne.
- European stocks, led by the technology sector, have reached fresh record highs, with the Eurostoxx 50 and Nikkei 225 showing notable advances.
- Asian markets, including the Nikkei and Shanghai indices, have advanced, although Chinese stocks retreated due to regulatory tightening and margin requirement increases.
- The US Smallcap Russell 2000 index outperformed major indices, rallying over 6% year-to-date, reflecting strong domestic economic activity.
Market optimism is supported by easing concerns over AI-related spending and positive manufacturing data, although geopolitical risks and policy uncertainties remain watchpoints.
Macroeconomic Factors and Central Bank Policies
- The Federal Reserve has maintained a patient stance on interest rates after three consecutive cuts in late 2025, with market expectations for one or two additional cuts later in 2026 if inflation continues to ease.
- Kevin Warsh's nomination as the next Fed Chair is viewed as a move towards cautious monetary policy, supporting the US dollar and influencing currency markets.
- US economic data shows mixed signals: the ISM Manufacturing PMI indicates expansion for the first time in a year, while the JOLTs job openings report is expected to show a slight decline, potentially reinforcing expectations for Fed rate cuts.
- China's credit tightening measures, including raised margin requirements, have cooled speculative trading and led to a pullback in Chinese equities and commodity-linked stocks.
- European Central Bank and Bank of England meetings are expected to maintain current rates amid pressures from currency strength and inflation dynamics.
Commodities and Precious Metals
Precious metals have experienced significant volatility, with sharp declines followed by rebounds:
- Gold prices dropped nearly 10% in one day but have since recovered about 4-6%, trading above $4,700 per ounce.
- Silver suffered a historic sell-off, with a 30% drop—the largest since 1980—before bouncing back by nearly 8%, currently trading around $87 per ounce.
- These moves are attributed largely to market positioning and liquidity issues rather than fundamental changes, with ongoing geopolitical risks and central bank activities continuing to support gold's value.
- Energy commodities saw declines, with WTI crude oil testing resistance near $66 amid fluctuating US-Iran tensions and a stronger US dollar.
Cryptocurrency Market
The cryptocurrency sector remains under pressure, with Bitcoin and Ethereum near multi-month lows, influenced by macroeconomic factors and Federal Reserve policies:
- Bitcoin has pulled back to around $75,000-$78,000, testing critical support zones, with a bearish weekly outlook but potential for short-term rebounds if tech earnings are positive.
- Ethereum is holding key support levels between $2,140 and $2,170, with cautious sentiment due to competition and fee structure discussions.
- The STABLE token has bucked the broader crypto downtrend, surging 125% year-to-date, driven by low circulating supply and anticipation of a token unlock event.
- Overall, crypto market sentiment is bearish, with ETF outflows and risk aversion prevailing, though some tokens show resilience based on unique supply-demand dynamics.
Corporate Earnings and Sector Highlights
Earnings season is a critical driver of market sentiment, with over 100 S&P 500 companies reporting this week:
- Palantir reported a record Q4 2025 with 70% year-on-year revenue growth and strong cash generation, projecting robust 2026 guidance.
- Tech giants such as Amazon, Alphabet, and Advanced Micro Devices are expected to influence market direction with their upcoming earnings.
- Positive earnings momentum in AI-related stocks and semiconductors is supporting equity gains despite volatility in other sectors.
- Consumer goods companies like Disney and McDonald's showed mixed results, with Disney facing pressure due to streaming guidance uncertainty.
Technical and Market Sentiment Overview
- Major US indices (Dow Jones, Nasdaq 100, S&P 500) are trading above key moving averages, indicating bullish momentum but facing resistance at critical levels.
- Volatility indices have stabilized somewhat, though underlying market movements remain complex due to recent sell-offs in metals and cryptocurrencies.
- Insider selling has increased, signaling some caution among institutional investors amid mixed earnings and macro uncertainties.
- Currency markets show a stronger US dollar, pressured euro, and weakening Swiss franc and Canadian dollar, influenced by central bank policies and geopolitical developments.
Outlook and Risks
The short-term market outlook is cautiously bullish, supported by a resilient US economy, anticipated Fed rate cuts, and positive corporate earnings. However, several risks remain:
- Geopolitical tensions, particularly in the Middle East and US-China relations, could disrupt markets.
- Potential disappointments in corporate earnings or unexpected hawkish moves by central banks, especially the Bank of Japan, may dampen risk appetite.
- Volatility in precious metals and cryptocurrencies could continue, influenced by liquidity dynamics and macroeconomic data.
- US government shutdown risks and delayed economic data releases add uncertainty to near-term market assessments.
Investors are advised to monitor upcoming economic indicators, earnings reports, and central bank communications closely to navigate this evolving landscape.
Market Overview
The US stock market opened February with positive momentum, recovering from recent volatility. On February 2, 2026, major indices such as the Dow Jones Industrial Average surged over 500 points, the S&P 500 rose about 0.5%, and the Nasdaq Composite advanced despite pressure on some tech stocks. The Russell 2000 small-cap index outperformed with gains over 1%, reflecting broad market strength. This positive sentiment was supported by strong economic data, easing concerns over AI-related spending, and optimism about a potential end to the US government shutdown.
Key sectors leading gains included Technology, Industrials, Materials, and Healthcare, while Energy and Utilities faced declines due to falling oil prices and profit-taking. The S&P 500 futures rebounded to around 7,000 after overnight lows, signaling renewed investor confidence.
Key Economic Data
- ISM Manufacturing Index rose to 52.6% in January, indicating expansion and the strongest growth since 2022.
- New Orders Index increased to 57.1%, signaling robust demand.
- Job Openings (JOLTs) report for December is delayed due to a partial government shutdown, with expectations of a slight decrease in openings.
- Upcoming January Non-Farm Payrolls report is anticipated to show moderate job growth with stable unemployment at 4.4%.
Market Sentiment and Outlook
Investors remain cautiously optimistic, buoyed by strong manufacturing data and positive corporate earnings reports. The market is pricing in approximately 50 basis points of Federal Reserve rate cuts for 2026, with the first expected in July. However, risks include geopolitical tensions, potential hawkish moves from the Bank of Japan, and uncertainties around Fed policy and government shutdown impacts.
Corporate and Sector Highlights
- Technology: Major tech companies like Alphabet (GOOGL) and Amazon (AMZN) reached record highs ahead of earnings reports. Nvidia faced some pressure after reports questioned the firmness of its $100 billion OpenAI investment.
- Energy: Crude oil prices fell sharply, with WTI crude down over 5%, influenced by easing US-Iran tensions and warmer weather forecasts.
- Consumer Goods: Disney reported strong earnings but faced stock pressure due to lack of streaming guidance. McDonald's received an upgrade based on franchise performance.
- Rare Earth and Minerals: Stocks surged following President Trump's announcement of a $12 billion strategic critical minerals stockpile initiative.
US-India Trade Deal
President Trump announced a trade agreement with India reducing reciprocal tariffs from 25% to 18%. India committed to increasing purchases of American products, including energy and technology, and to cease oil purchases from Russia. This deal has contributed to improved market sentiment.
US Stock Futures and Technical Analysis
US stock futures showed gains early on February 3, with the Dow Jones E-mini up 24 points, Nasdaq 100 E-mini up 83 points, and S&P 500 E-mini up 10 points. Technical indicators show the Dow, Nasdaq 100, and S&P 500 trading above their 50-day and 200-day EMAs, indicating bullish momentum. Key resistance and support levels to watch include:
- Dow Jones: Resistance near 49,901 and 50,000; Support at 49,000 and 48,668.
- Nasdaq 100: Resistance at 26,000 and 26,399; Support at 25,585 and 25,000.
- S&P 500: Resistance at 7,036 and 7,500; Support at 6,909 and 6,500.
Technical Summary of Key Instruments
- Russell 2000 (IWM): Mixed technical signals with short-term EMAs indicating sell but longer-term EMAs and SMAs showing bullish trends. Overall technical stance is cautious with neutral momentum indicators.
- US Treasury Bonds: 5-year and 30-year US bonds show mixed signals with short-term moving averages bearish but some longer-term indicators bullish, reflecting uncertainty in bond markets.
Currency and Commodities
- US Dollar: The dollar rallied, supported by strong economic data and Fed rate cut expectations. EUR/USD dipped to 1.1776 before partial recovery.
- Precious Metals: Gold and silver prices declined sharply, with spot gold down about 4.7% to $4,664 per ounce, pressured by a stronger dollar and hawkish Fed signals.
- Crude Oil: WTI crude oil prices fell over 5% amid easing geopolitical tensions.
- Cryptocurrency: Bitcoin traded near $78,000 with some weakness; XRP ended a five-day losing streak buoyed by strong US ISM data but remains sensitive to regulatory developments.
Upcoming Events
- February 3: ICSC Weekly Retail Sales, Johnson/Redbook Weekly Sales, JOLTs Job Openings (delayed), API Weekly Inventory Data.
- February 6: January Non-Farm Payrolls report release.
- Corporate earnings from major companies including AMD, Merck, Alphabet, PepsiCo, Palantir, Uber, Qualcomm, Amazon, and PayPal.
- Federal Reserve speeches and policy updates, including the impact of Kevin Warsh's nomination as Fed Chair.
Summary
The US market as of February 3, 2026, is characterized by cautious optimism supported by strong manufacturing data, positive earnings, and easing geopolitical tensions. However, investors remain watchful of Fed policy signals, government shutdown risks, and regulatory developments in the crypto space. Technical indicators suggest a bullish trend in major indices, but volatility remains a factor given mixed signals in commodities and bond markets.
MSFT (Microsoft)
Shares dropped 10% due to disappointing Azure growth and guidance.
SAP
Shares fell 16% on slower expected growth in cloud revenue.
FSLR (First Solar)
Shares declined 10% after analyst downgrades following comments from Tesla's CEO.
JOBY
Shares dropped 15% after announcing a $1 billion stock offering.
DIS (Disney)
Reported better-than-expected earnings and reaffirmed guidance.
BYD
Vehicle sales declined 30.1% in January, marking the fifth consecutive month of decline.
NIO
Reported significant year-over-year sales increase but a month-over-month decline.
Chevron & Exxon Mobil
Both reported Q4 earnings beating expectations; Chevron raised its quarterly dividend.
Apple Inc.
Shares rose 0.55% after strong quarterly results, projecting 16% revenue growth driven by iPhone sales and a rebound in China.
Oracle
Plans to raise up to $50 billion this year to expand cloud infrastructure capacity.
Nvidia
CEO stated the proposed $100 billion investment in OpenAI is not a firm commitment; investment will be incremental.
Waymo (Alphabet's autonomous driving unit)
Seeking about $16 billion in financing, valuing the unit near $110 billion.
XRP (Cryptocurrency)
Testing $1.5 support amid extended outflows from XRP spot ETFs, with $52.26 million weekly outflows mainly from Grayscale’s GXRP ETF. Regulatory uncertainty persists due to the Market Structure Bill.
Gold & Silver
Gold prices dropped sharply (4-7% intraday), falling below $5,000 per ounce; silver plunged over 10%. Despite the sell-off, gold is on track for its best monthly performance since 1982.
Bitcoin & Ethereum
Bitcoin fell over 3% to around $81,000; Ethereum declined nearly 4% to $2,700, influenced by Warsh's nomination as Fed Chair and profit-taking.
US Dollar & Forex
The US dollar strengthened with the Dollar Index rising 0.37-0.45%. EUR/USD dropped to around 1.1850, GBP/USD fell below $1.38, and USD/JPY rose to about 155.39, reflecting hawkish Fed expectations.
Energy Sector
Oil prices fell about 3-5.5% amid easing geopolitical tensions and commodity sell-offs. GeoPark acquired Frontera Energy’s assets in Colombia.
Market Sentiment
Markets are volatile due to the anticipated nomination of Kevin Warsh as Federal Reserve Chair, expected to bring a hawkish stance on interest rates. Earnings season continues with mixed results impacting investor sentiment.
Key Economic Data
Important releases today include US Producer Price Index (PPI), Chicago PMI, and GDP data from Spain, Germany, and the Eurozone.