S&P 500 drops as EUR/GBP range trades, silver price recovers

​​​Macro update

​Wall Street selloff deepens on AI fears

United States (US) indices fell sharply, with the Dow Jones down 1.34%, the S&P 500 losing 1.57% and the Nasdaq 100 sliding 2.04% as investors accelerated their rotation out of technology and other risk-sensitive sectors.

​Cisco triggers a fresh tech rout

Cisco plunged 12.3% after missing on adjusted gross margin, its worst one-day drop since 2022, weighing on mega caps including Apple, NVIDIA, Broadcom and Amazon and reigniting concerns over the returns on heavy AI-driven spending.

​Transport and PC stocks hit by disruption worries

The Dow transports index slid 4% on fears around artificial intelligence (AI)-led automation, while HP and Dell fell after Lenovo warned of shipment pressure linked to memory-chip shortages.

​Defensive rotation and bond rally

Investors shifted into utilities, consumer staples and real estate, while US Treasury yields dropped sharply, with the 10-year yield down 7bp as strong demand at a 30-year auction supported bonds.

​Asia pulls back from record levels

MSCI’s Asia-Pacific index fell 1.1%, Japan’s Nikkei 225 dropped 1.3% and Hong Kong’s Hang Seng slid 2.1%, tracking Wall Street’s tech-led declines, while US futures edged lower ahead of the European open.

​Attention turns to US inflation data

Weekly jobless claims fell by less than expected and markets now await January consumer price index (CPI), with core prices forecast to rise 0.3% month-on-month (MoM) and annual core inflation seen easing to 2.5%, as traders price around 60bp of Federal Reserve (Fed) cuts this year.

​S&P 500 once again under pressure

​The recent S&P 500 rally ran out of steam marginally below its 7002 late January record high and rapidly slid back towards support at the early January 6824 low.

​A fall through this level seems to be on the cards now with the November to February support line and 20 January-to-early February lows at 6807 - 6780 being on the cards.

​Were this support zone to give way, the December trough at 6720 would be in sight.

​Resistance may now be spotted around the 29 January low at 6871.

• ​Short-term outlook: Bearish while below the late December peak at 6946.
• ​Medium-term outlook: Neutral with a bullish stance while above the 6721 mid-December low.

S&P 500 daily candlestick chart

​EUR/GBP stays sidelined

EUR/GBP continues to range trade around its 55-day simple moving average (SMA) at £0.8706, having earlier in the week failed at breaking above its late December to January highs at £0.8745 - £0.8746.

​While Wednesday's low at £0.8683 holds, immediate upside pressure should remain in play.

• ​Short-term outlook: Bullish while above £0.8633, the 11 February low.
• ​Medium-term outlook: Neutral with a bearish slant while below the £0.8746 late December high but above the early February low at £0.8613.

EUR/GBP daily candlestick chart

​Silver regains some losses

​The silver price is seen bouncing back from Friday's $73.9892 low and tries to heave itself back up over the $80 mark.

​A fall through $73.9892 would put the 2 February low at $71.3157 on the cards.

• ​Short-term outlook: Bearish while below the 11 February $86.3218 high.
• ​Medium-term outlook: Neutral while above the 6 February low at $64.0626 but below the 4 February high at $92.2049.

Silver daily candlestick chart