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Global Market Overview
Markets worldwide are experiencing significant volatility driven by a mix of economic data releases, geopolitical developments, and corporate earnings reports. The overall sentiment is cautious with pockets of optimism, especially in technology and consumer sectors, while commodities and energy markets face pressure.
Asian markets showed mixed performance with Japan's Nikkei down 1.2% for the week amid fading optimism after a weak yen and political news. South Korea’s Kospi dropped 4% following reports of Nvidia potentially canceling a $100 billion investment in OpenAI. Indonesia's market is in crisis, losing over $80 billion in value due to concerns over economic plans and potential index downgrades.
European markets rebounded after initial declines, with major indices like IBEX, SMI, DAX, CAC 40, and FTSE 100 posting gains. Manufacturing PMIs showed mixed results across countries, with some growth in Greece and France but continued contraction in Germany, Italy, and Spain. Mining and precious metals stocks faced pressure due to a sharp sell-off in metals.
US equity markets responded positively to better-than-expected ISM Manufacturing PMI data despite a partial government shutdown. The S&P 500, Nasdaq, and Dow Jones all posted gains, supported by strong earnings and economic data.
Fixed Income and Currency Markets
U.S. Treasury yields saw mixed movements with the 10-year yield rising to 4.28%, reflecting inflation concerns and economic data. The U.S. dollar strengthened notably, especially after the nomination of Kevin Warsh as the next Federal Reserve chair, which markets interpret as a more hawkish stance.
The Japanese yen weakened amid rising 10-year JGB yields and hawkish signals from the Bank of Japan, raising concerns about the unwinding of yen carry trades. The Australian dollar weakened following corrections in metal prices but recovered somewhat after the Reserve Bank of Australia (RBA) raised its cash rate to 3.85%, signaling resilience in the Australian economy.
Other currencies like the Swiss franc and Canadian dollar weakened against the U.S. dollar, while the euro showed slight declines against both the dollar and yen.
Commodities and Energy
Precious metals experienced dramatic corrections, with silver posting its worst day on record, dropping over 30% in recent sessions, and gold falling about 7%. Despite this, gold remains supported by structural demand as a strategic hedge amid global instability. Silver's fair value is suggested to be near $60 per ounce, indicating potential for further downside.
Energy markets are soft, with Brent crude below $66 per barrel and WTI crude around $62. The lack of escalation in Iran tensions and OPEC+ maintaining production levels without future guidance contributed to price declines. Natural gas prices also fell due to warmer weather forecasts.
Cryptocurrency Market
Cryptocurrencies showed a limited rebound with Bitcoin trading above $78,000, up 5% from recent lows, and Ethereum rising above $2,300. However, the market remains bearish with significant outflows from crypto funds totaling nearly $1.7 billion last week. Institutional investors are reducing exposure, with some corporate holders reporting large unrealized losses. Analysts remain divided on outlooks, with some predicting stabilization near $60,000 for Bitcoin, while others warn of potential crashes to $10,000.
Corporate Earnings and Sector Highlights
- Technology: Palantir reported a 70% year-on-year revenue increase, beating expectations and boosting shares. Nvidia shares declined nearly 3% after comments about exploring alternative chip architectures. Adobe was downgraded due to market pressures, while Google plans significant investments in electricity for data centers.
- Consumer: PepsiCo beat Q4 EPS estimates and announced a $10 billion share buyback plan through 2030. Walt Disney shares fell over 7% after disappointing revenue results despite beating EPS estimates.
- Healthcare: Davita Inc. exceeded EPS estimates and provided positive guidance for the fiscal year.
- Financials: Mizuho Financial Group in Japan rallied 5% after positive earnings and a share buyback program. Evertec announced an acquisition in Brazil.
- Energy and Materials: Mining companies like Fresnillo, KGHM, and Rio Tinto faced declines amid the precious metals sell-off. AES Corp. is in talks for acquisition by Blackrock’s GIP.
- Other: Perspective Therapeutics shares surged after announcing a $175 million public offering to fund clinical development.
Monetary Policy and Economic Data
The Federal Reserve maintained interest rates, with Jerome Powell indicating current policy is appropriate but future adjustments may be needed. Kevin Warsh's nomination as Fed chair is seen as a more conservative choice, initially calming markets but triggering repositioning in gold and silver.
The Bank of Japan signaled hawkish intentions with potential further rate hikes, impacting yen carry trades and global liquidity. The Reserve Bank of Australia raised rates to 3.85%, citing inflation concerns and economic resilience.
Key upcoming economic data includes the US ISM Manufacturing PMI, Non-Farm Payrolls (now expected to be postponed), Australian PMIs, and RBA rate decisions. Earnings season continues with over 100 S&P 500 companies reporting this week.
Geopolitical and Political Developments
A partial US government shutdown began due to funding bill delays, affecting six federal agencies. Despite this, markets remain resilient, and essential government functions like debt servicing and Social Security payments continue. The shutdown may delay tax processing during the critical tax season.
Iran has expressed willingness to engage in nuclear talks with the US, potentially reducing geopolitical risk premiums on oil prices. The US-India trade agreement will lower tariffs on Indian goods and increase US oil exports to India, boosting Indian equities.
Former President Donald Trump urged the House to expedite the budget bill to end the shutdown. The evolving US-Iran situation and geopolitical tensions remain key risks for market sentiment.
Technical Market Insights
Major US indices show mixed technical signals. The S&P 500 is approaching key resistance levels near 7,000, with support around 6,800. The Nasdaq 100 faces technical resistance despite strong earnings momentum. Gold remains in a bullish pattern since 2024, with a healthy correction seen as a reset rather than a trend change.
USD/JPY broke below its rising trend channel, suggesting potential weakening momentum and increased volatility. AUD/USD shows signs of a potential pullback amid mixed economic signals and RBA policy expectations.
Investment Outlook and Strategies
Investor sentiment is cautiously optimistic with record low cash levels and expectations of an economic boom in the next year. Fund managers show bullishness on equities but recommend hedging due to low equity protection levels. A contrarian approach is suggested by some strategists, favoring long positions in cash and bonds while shorting commodities and stocks.
Defense spending is expected to increase substantially, benefiting companies integrating AI technologies. The evolving geopolitical landscape and climate events like Winter Storm Fern are important factors to monitor for economic impact.
Investors are advised to stay informed on upcoming earnings, economic data, and geopolitical developments, maintaining cautious trading strategies amid ongoing volatility.
Macroeconomic Environment
The global market environment in early 2026 is marked by cautious optimism amid ongoing geopolitical tensions and central bank policy shifts. The nomination of Kevin Warsh as the new Federal Reserve Chair has reinforced expectations of a "higher-for-longer" interest rate regime, impacting risk appetite across asset classes. Central banks such as the Reserve Bank of Australia are raising rates, while the Bank of England and European Central Bank are expected to hold steady. The US government shutdown has caused delays in key economic data releases, adding uncertainty to market forecasts.
Key upcoming economic data include the US Non-Farm Payrolls report and corporate earnings from major tech companies, which are expected to influence market direction significantly.
Equities
Global equities have shown resilience with record highs in several indices, including the Stoxx 600 and Nikkei 225, supported by strong earnings and improving manufacturing data. US indices such as the Dow Jones and S&P 500 have gained momentum, driven by optimism around AI-related profit growth and easing concerns about monetary policy.
However, the tech sector faces headwinds with notable declines in semiconductor stocks and mixed earnings results. Value stocks are currently favored over growth stocks, reflecting a shift towards stability amid volatility. Upcoming earnings from giants like Amazon, Alphabet, AMD, and Disney will be critical for sustaining the rally.
Technical levels to watch include resistance near Dow Jones 50,000 and S&P 500 around 7,000, with support at key moving averages indicating cautious bullish momentum.
Precious Metals
Precious metals have experienced significant volatility. Gold surged over 2.5% recently, reaching levels near $5,100 per ounce, marking its strongest gains since 2008. Silver also rebounded sharply, recovering above $90 per ounce after a steep sell-off. These moves are attributed more to forced positioning and technical factors than fundamental changes, with ongoing geopolitical risks and central bank policies providing structural support.
Investor demand remains strong, particularly in Asia, where physical gold buying is robust ahead of the Chinese New Year. However, analysts caution that metals may face consolidation periods amid fluctuating US dollar strength and macroeconomic stability.
Energy and Commodities
Crude oil prices have tested significant resistance levels, with WTI crude around $66 and Brent crude near $70 per barrel. Price movements are heavily influenced by geopolitical developments, especially US-Iran relations, and technical factors. Natural gas prices have declined sharply due to warmer weather forecasts.
Copper prices have risen over 4%, supported by strong demand linked to electrification and AI infrastructure investments, benefiting mining companies globally.
Cryptocurrency Market
Cryptocurrencies have faced mixed dynamics. Bitcoin and Ether experienced sharp sell-offs driven by macroeconomic uncertainty, rising bond yields, and liquidation of speculative positions. Bitcoin recently bounced off a major support zone near $74,500-$76,500, with technical indicators suggesting potential short-term rebounds, though the overall outlook remains bearish in the medium term.
Ether showed sensitivity to broader market pressures but stabilized due to protocol upgrades and increased layer-2 adoption. Institutional flows into Ether-linked products remain cautious.
In contrast, the STABLE token surged over 125% year-to-date, driven by low circulating supply and anticipation of a token unlock event, highlighting divergent performance within the crypto space.
BNB is projected to decline further amid negative sentiment linked to regulatory concerns and market pressures.
Market Sentiment and Outlook
- Investor sentiment is currently cautious, with a preference for value and hard assets amid tech sector volatility and geopolitical risks.
- Expectations of Fed rate cuts later in 2026 support a cautiously bullish stance on equities, but hawkish signals from the Bank of Japan and geopolitical tensions pose risks.
- Upcoming earnings reports, especially from major tech companies, and key economic data releases will be pivotal in shaping near-term market direction.
- Precious metals may consolidate after recent rebounds, while cryptocurrencies remain volatile, influenced heavily by macroeconomic factors and investor positioning.
Overall, markets are navigating a complex landscape where macroeconomic fundamentals, central bank policies, and geopolitical developments interplay to create volatility and selective opportunities across asset classes.
Market Summary
On February 4, 2026, the US stock market experienced a notable downturn, primarily driven by concerns over the impact of artificial intelligence on software companies. The Nasdaq Composite fell 1.43%, the S&P 500 declined 0.84%, and the Dow Jones Industrial Average dropped 0.34%. Key tech giants such as Nvidia and Microsoft saw declines exceeding 3%, while software companies like ServiceNow and Salesforce dropped nearly 7%. Despite this, sectors like Consumer Staples, Energy, Materials, and Industrials reached record highs as investors rotated their focus.
The US dollar weakened against most major currencies except the Japanese yen, as traders took profits following recent gains fueled by strong economic data and reduced expectations of dovish Federal Reserve policies. Additionally, fears of a potential US government shutdown added to market uncertainty.
Sector and Corporate Highlights
- Technology Sector: The software sector faced significant pressure due to fears of AI disruption, with major declines in companies like Intuit, Salesforce, and ServiceNow. Hardware suppliers Broadcom and Micron also saw share price drops.
- Positive Movers: Palantir's stock rose 6%, Walmart achieved a $1 trillion market cap with a 2.5% gain, and PepsiCo shares increased over 3% following strong earnings.
- Corporate Earnings: Advanced Micro Devices (AMD) reported better-than-expected Q4 results but gave a cautious outlook, leading to after-hours sell-offs. UBS Group AG announced strong Q4 profits and a £3 billion share buyback plan for 2026.
Economic and Policy Developments
The Reserve Bank of Australia raised its cash rate by 25 basis points to 3.85%, signaling ongoing inflation concerns and a tight labor market. The US Bureau of Labor Statistics postponed the January employment report due to a partial government shutdown, increasing market uncertainty ahead of the upcoming Non-Farm Payrolls report scheduled for February 6, which is expected to show moderate job growth and stable unemployment at 4.4%.
US President Trump announced a trade deal with India, reducing reciprocal tariffs from 25% to 18%, with commitments from India to increase purchases of American products and cease oil imports from Russia, boosting market sentiment.
Kevin Warsh's nomination as the new Federal Reserve Chair has introduced uncertainty, given his hawkish history but recent dovish signals. The US rates market currently prices in about 50 basis points of Fed rate cuts in 2026, with the first expected in July.
Technical Market Analysis
Major Indices
| Index | Last Value | Change | % Change | Key Technical Levels |
|---|---|---|---|---|
| Dow Jones Industrial Average | 49,495 | +145.00 | +0.29% | Resistance: 49,901 / 50,000 Support: 49,000 / 48,668 (50-day EMA) |
| S&P 500 | 6,959 | +17.25 | +0.25% | Resistance: 7,036 / 7,500 Support: 6,909 (50-day EMA) / 6,500 |
| Nasdaq 100 | 25,469 | +17.50 | +0.07% | Resistance: 26,000 / 26,399 Support: 25,585 (50-day EMA) / 25,000 |
| Russell 2000 | 2,640 | +26.43 | +1.01% | Resistance: 2,700 Support: 2,550 |
Bond Market Instruments
| Instrument | Last Price | Technical Signals | Support & Resistance (Daily) |
|---|---|---|---|
| US Bond 5-Year (USB05Y_USD) | 108.659 |
EMA(10): Short SMA(10): Long EMA(20): Short SMA(20): Short RSI(14): Neutral Ichimoku: Neutral |
R3: 109.411 R2: 109.229 R1: 108.975 S1: 108.103 S2: 108.000 (approx.) |
| US Bond 2-Year (USB02Y_USD) | Not specified |
EMA(10): Long SMA(10): Long EMA(20): Short SMA(20): Long RSI(14): Neutral Ichimoku: Neutral |
Not specified |
| US Bond 30-Year (USB30Y_USD) | 114.71 |
EMA(10): Short SMA(10): Short EMA(20): Short SMA(20): Short RSI(14): Neutral Ichimoku: Neutral |
R1: 121.532 S1: 110.045 S2: 104.443 S3: 98.558 |
Currency and Commodities
- US Dollar Index (DXY): After a two-day rally, the dollar index showed modest losses with resistance near 97.87. A bearish bias remains on the weekly chart, with potential for a near-term bounce before a downward move.
- Gold: Gold prices surged 6% on February 4, marking the biggest daily gain since 2008, reaching around $4,938.5 per ounce. Technical analysis shows overbought RSI levels and signs of exhaustion, with a likely corrective phase ahead.
- Oil: Oil prices rose about 2% following geopolitical tensions after the US military downed an Iranian drone near a US aircraft carrier.
- Cryptocurrency: Bitcoin remains weak, trading near levels last seen during the 2016 US election, with altcoins following a similar pattern but showing slight recovery by session end.
Upcoming Events and Outlook
- Economic Data: Key releases include the US ADP Private Payrolls for January (expected 48,000), ISM Non-Manufacturing PMI (expected 53.5), and the January Non-Farm Payrolls report on February 6.
- Earnings Reports: Major companies reporting this week include Alphabet, Amazon, Disney, Palantir, AMD, Uber, Qualcomm, and Merck.
- Federal Reserve: Market expectations are for approximately 50 basis points of rate cuts in 2026, with the first cut anticipated in July.
- Geopolitical Risks: Potential US government shutdown and ongoing US-Iran tensions remain key risks to market stability.
The short-term market outlook is cautiously bullish, supported by a strong US economy, positive earnings, and anticipated Fed rate cuts. However, investors should remain vigilant for geopolitical developments, Fed communications, and corporate earnings surprises that could alter market dynamics.
AMD
AMD is up 56% ahead of its upcoming earnings report this week, which is highly anticipated to provide insight into the tech sector's recovery and AI demand.
Alphabet (GOOGL)
Alphabet reached a record high with a 1.9% increase ahead of its earnings report scheduled for Wednesday after the close. The tech sector rally is partly driven by strong earnings momentum from major tech companies including Alphabet.
Amazon (AMZN)
Amazon rose 1.5% ahead of its earnings report scheduled for Thursday after the close, contributing to positive market sentiment.
Palantir (PLTR)
Palantir reported strong Q4 earnings with a 70% year-on-year revenue increase to $1.4 billion, beating EPS and sales estimates. The company raised its Q1 and full-year revenue guidance significantly. Shares surged 6% after hours and are up nearly 500% year-to-date.
Disney (DIS)
Disney posted a positive EPS surprise of 3.82% but a slight sales miss. Despite this, shares fell 7.4% due to rising costs and leadership transition uncertainty.
NVIDIA (NVDA)
NVIDIA shares fell nearly 3% after the CEO confirmed a large but not $100 billion investment in OpenAI. The company remains committed to AI but with moderated investment expectations.
SpaceX / xAI
Elon Musk announced the merger of xAI with SpaceX ahead of SpaceX's planned IPO, creating a new entity valued at approximately $1.25 trillion, boosting investor sentiment in AI and space sectors.
BYD
BYD reported a 30.1% decline in vehicle sales in January, marking the fifth consecutive month of decline in the Chinese EV market.
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.
Davita Inc. (DVA)
Davita exceeded EPS estimates and provided positive full-year guidance.
Financial Markets Overview
- S&P 500 futures are up 19 points; Nasdaq futures up 136 points, indicating a higher open.
- U.S. manufacturing expanded strongly in January with ISM Manufacturing Index at 52.6%, the first expansion since early 2025.
- Job Openings and Labor Turnover Survey (JOLTS) report delayed due to partial government shutdown.
- European stocks hit new record highs, led by tech sector gains; Eurostoxx 50 and Nikkei also strong.
- FTSE 100 lags behind other European indices due to limited tech exposure.
- Reserve Bank of Australia raised cash rate by 25 basis points to 3.85%, signaling potential further hikes.
Precious Metals
Gold surged over 5%, silver increased by 10%, rebounding sharply after recent steep declines. Silver is trading near $87 per ounce, with resistance at $90 closely watched.
Cryptocurrency
Bitcoin is trading above $78,000 after a 5% rebound from recent lows but faces resistance at early February levels. Crypto funds saw significant outflows last week, with Bitcoin losing $1.3 billion in investments. Market sentiment remains bearish with some corporate holders facing large paper losses.
US Dollar and Bonds
The U.S. dollar strengthened following the nomination of Kevin Warsh as Fed chair. U.S. Treasuries found support amid risk-off sentiment, with the 2-year yield dropping to 3.50%.
Upcoming Earnings
Major companies reporting earnings this week include PayPal, Pfizer, Advanced Micro Devices, Take-Two Interactive, Mondelez, Alphabet, and Amazon.