(Feb 2): Stocks trimmed their losses at the open, and precious metals recovered from a weak start, underscoring the fragile sentiment in markets after a choppy end to the week on Wall Street.
Asian shares fell 0.2%, and Nasdaq 100 Index futures dropped 0.2%, well off their session lows. The Bloomberg Dollar Spot Index gave up initial gains to trade flat. That followed the greenback’s strongest day since May on Friday after President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve (Fed) chair. The yen fluctuated after the nation’s prime minister commented that a weak yen can be a huge opportunity for export industries.
Silver rose as much as 3.2% after slumping almost 12% at the open. Gold also recovered from its initial losses. The precious metals suffered a slide on Friday as the dollar strengthened following Warsh’s nomination as the next Fed chief.
Taken together, the moves indicated the volatility in the markets heading into a busy week that includes rate decisions by the central banks of Europe and the UK, a US jobs report and a heavy slate of corporate results. Global markets on Friday adjusted positions to pare back expectations for a policy easing under Warsh.
Friday gains for the dollar reflected not just ructions in precious metals but also the prospect Trump’s Fed chair pick may not be as dovish as many had anticipated.
If confirmed by the Senate, the former Fed governor will succeed Jerome Powell when his term ends in May. Warsh, 55, aligned himself with Trump in 2025 by arguing publicly for lower rates, going against his longstanding reputation as an inflation hawk. The US president said Friday he had not asked Warsh to commit to cuts.
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“Markets may price in a modest acceleration of rate cuts, but an aggressive easing cycle appears unlikely,” said Jason Pride at Glenmede.
The Warsh pick should help stabilise the dollar some and reduce, though not eliminate, the asymmetric risk of deep extended US currency weakness by challenging “debasement” trades — which is also why gold and silver are sharply lower, according to Krishna Guha at Evercore.
“But, we advise against overdoing the Warsh hawkish trade across asset markets — and even see some risk of a whipsaw,” Guha said. “We see Warsh as a pragmatist, not an ideological hawk in the tradition of the independent conservative central banker.”
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With the pick of Warsh — an economist known as much for his fierce criticism of the central bank as his views on monetary policy — the debate has abruptly shifted from short-term rates to the Fed’s US$6.6 trillion balance sheet and its very role in markets.
Elsewhere in commodities, Opec+ ratified plans to keep production steady in March — the last part of a three-month supply freeze, even after prices hit a four-month high on the prospect of a US strike against Iran.
Meanwhile, Indian equities slumped on Sunday after the government said it plans to raise taxes on equity derivatives trades, doubling down on efforts to curb speculative activity among retail investors.
Also, the US government stumbled into a partial shutdown Saturday while waiting for the House to approve a funding deal Trump worked out with Democrats following a national uproar over Border Patrol agents’ killing of a US citizen in Minneapolis.
Corporate news:
- Nvidia Corp chief executive officer Jensen Huang said the company’s proposed US$100 billion investment in OpenAI was “never a commitment” and that the company would consider any funding rounds “one at a time”.
- Oracle Corp said it plans to raise US$45 billion to US$50 billion in 2026 to build additional capacity for its cloud infrastructure through a combination of debt and equity sales.
- Waymo, Alphabet Inc’s autonomous driving unit, is aiming to raise about US$16 billion in a financing round that would value the unit at nearly US$110 billion, according to people familiar with the matter.
- BYD Co said sales dropped 30% in January, underscoring the challenges facing the electric vehicle maker’s efforts to boost sales just as a winding back of subsidies hurts demand in China.
Some of the main moves in markets:
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Stocks
- S&P 500 futures fell 0.2% as of 9.26am Tokyo time
- Hang Seng futures fell 0.6%
- Japan’s Topix rose 1.4%
- Australia’s S&P/ASX 200 fell 0.5%
- Euro Stoxx 50 futures fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to US$1.1871
- The Japanese yen was little changed at 154.92 per dollar
- The offshore yuan was little changed at 6.9563 per dollar
- The Australian dollar was little changed at US$0.6968
Cryptocurrencies
- Bitcoin rose 1.7% to US$77,732.13
- Ether rose 0.9% to US$2,309.83
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.25%
- Japan’s 10-year yield declined 1.5 basis points to 2.240%
- Australia’s 10-year yield was little changed at 4.81%
Commodities
- West Texas Intermediate crude fell 2.3% to US$63.68 a barrel
- Spot gold fell 0.9% to US$4,848.74 an ounce
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