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Market navigator:
week of 2 February 2026
New Fed chair nomination triggered precious metals’ steepest decline since 1980. Central bank decisions and US employment data dominate the week ahead.
Summary
What happened last week
- New Fed chair: The Federal Reserve (Fed) held policy rates unchanged for the first time since July with two dissenting votes for a 25-basis point cut. Chair Powell said the economic outlook has improved and labour demand has steadied. The focus now shifts to the stance of Kevin Warsh who will assume the Fed chair role in June pending Senate confirmation.
- Escalating US-Iran tensions: President Trump warned Tehran that time is running out for nuclear negotiations as the US expands its military presence in the Gulf. Markets focused on potential supply disruptions given Iran's position as OPEC's third-largest producer and risks to the Strait of Hormuz. Oil prices surged over 6% last week, with Brent crude oil reaching $71.89 per barrel—the highest level since 31 July.
- USD sell-off: Trump's comments expressing indifference to dollar weakness pushed the dollar index to 95.6, its lowest level since February 2022. Treasury Secretary Bessent's subsequent reinforcement of a strong-dollar policy helped stabilise markets. A weaker dollar supports Trump's agenda of boosting exports, though rapid depreciation could undermine the dollar's credibility as a reserve currency.
- Hong Kong stocks set new high: The Hang Seng Index advanced 2.4% to 27,387 last week—a level last seen in July 2021. Trading activity intensified, with Wednesday's turnover reaching HK$361.5 billion, the highest since 14 October. Energy stocks led on higher oil prices, while property companies rallied as multiple developers confirmed they no longer must report 'three red lines' indicators, signalling policy easing.
Markets in focus
Tech companies diverge on earnings
The US equity market retreated towards the end of last week after establishing new highs. The S&P 500 gained 0.3% whilst the Nasdaq 100 and Dow Jones declined 0.2% and 0.4% respectively. Smaller companies represented by the Russell 2000 index retreated the most (–2.0%) following outperformance earlier in the month.
Healthcare insurers suffered the steepest declines after the US government proposed only a 0.09% increase in reimbursement rates for private insurance plans in 2027, compared to a 5.06% increase for 2026. If confirmed, this policy shift would significantly pressure health insurers' profitability. Humana emerged as the worst-performing S&P 500 constituent, plunging 26.8% last week, whilst UnitedHealth declined 19.5%.
Corporate earnings drove performance divergence amongst technology companies. SanDisk soared 21.6% as fourth-quarter revenue surged 61% year-on-year (YoY), driven by artificial intelligence (AI) data centre demand for NAND flash memory. Microsoft shed 7.7% on increasing capital expenditure and marginally disappointing Azure cloud growth. Meta, another Magnificent 7 company, rallied 8.8% after revising its 2026 sales projection upwards, alleviating concerns surrounding its ambitious AI spending plans.
The technical chart exhibits a double-top formation after the US Tech 100 was rejected at 26,218. The relative strength index (RSI) continues to display bearish divergence. Both indicators point towards a subdued near-term outlook. Should the index fail to hold above the 50-day moving average (MA) and close inside or below the Ichimoku cloud, it would constitute a bearish signal, potentially targeting the cloud's lower boundary near 24,800. Until the index reclaims the 25,850 pivot on a closing basis, establishing new historical highs appears unlikely in the near term.
Figure 1: US Tech 100 index (daily) price chart
Whipsawed precious metals market
Gold and silver both established record highs at $5,596 and $122 last week before experiencing their steepest declines since 1980 following Trump's nomination of the new Fed chair. Gold witnessed a peak-to-trough drawdown of 17%, whilst the higher-beta silver plunged 36%.
These violent price movements were triggered by a confluence of factors. Whilst fundamental drivers including central bank buying and safe-haven demand remained robust, these factors proved insufficient to justify the recent parabolic rally. Speculative flows played a significant role. Before the correction, warning signs emerged on Tuesday as Chinese investors faced difficulties withdrawing funds from leveraged gold-trading accounts, and several Chinese funds halted subscriptions to manage overheating sentiment.
Trading platforms globally increased margin requirements in response to market volatility. CME Group raised basic margins on Comex silver futures from 9% to 11% of notional value. When Kevin Warsh was nominated as the new chair, expectations of a potentially more hawkish Fed boosted the US dollar and triggered a reversal in the metals uptrend. Price action was magnified by margin calls on leveraged positions, which further intensified selling pressure amongst other traders.
The bearish candlestick formation on Friday drove gold prices towards the former upward channel, supported by technical factors. We view the sell-off as a healthy correction eliminating excessive speculation. The 20-day MA should provide support near $4,825. Provided prices remain above the 50-day MA, the uptrend remains largely intact. Buy-on-dip interest may drive gold prices back above $5,000.
Figure 2: Gold (daily) price chart
Central bank policy will determine the path of AUD/USD
AUD/USD rose above 0.70 for the first time in three years, bolstered by US dollar weakness following Trump's currency comments and increasing expectations for a rate hike at this week's Reserve Bank of Australia (RBA) meeting.
Australia's headline inflation re-accelerated to 3.8% YoY after November's retreat, exceeding expectations. Housing costs continued as the primary contributor to price increases, followed by education and alcohol & tobacco. Trimmed mean inflation also advanced from 3.2% to 3.3% YoY. Both measurements exceeded the RBA's peak inflation forecast and remain substantially above the 2–3% target range.
Combined with November employment data revealing 65,200 jobs added and a declining unemployment rate, the RBA faces compelling grounds to raise interest rates. However, if recent data points prove merely short-term noise during the festive season, a rate hike could prove detrimental to consumer spending, posing risks to the moderate 1.9% growth rate outlook for 2026.
The daily chart of AUD/USD displays a clear breakout from the gradual uptrend established since May 2025, suggesting strengthening upward momentum. However, the sharp spike drove the RSI a significantly overbought territory of 85. This has catalysed a pullback towards 0.6960, positioned just above support from the October 2024 high. Should the RBA adopt a surprisingly hawkish stance at this week's meeting, AUD/USD could test the February 2023 high near 0.7157. Conversely, if the RBA maintains rates unchanged, the pair may test the next support level near 0.6795.
Figure 3: AUD/USD (daily) price chart
The week ahead
The forthcoming week centres on critical central bank decisions and US employment data. The RBA, European Central Bank (ECB) and Bank of England (BoE) all convene policy meetings this week. Markets anticipate over 70% probability the RBA will raise policy rates to 3.85% following surprisingly robust employment data and persistent inflation challenges, whilst the ECB is likely to maintain rates unchanged as inflation stabilises near its 2% target. The BoE is expected to hold rates at 3.75% following a hawkish reduction in December as policymakers assess the delayed impact of recent cuts on inflation and economic growth.
US labour market dynamics assume prominence with Friday's non-farm payrolls report following December's soft 50,000 additions. However, the unemployment rate moderating to 4.4% has complicated the assessment of employment trends. ISM manufacturing and services purchasing managers' index (PMI) readings will provide additional economic insights, with the manufacturing PMI having remained in contractionary territory since March 2025.
Japan's snap general election on Sunday could reshape the country's policy direction. Markets are pricing in gains for the LDP-Ishin coalition, which currently falls short of a majority in the lower house. Should the opposition alliance outperform and the coalition fail to secure a majority, political instability may pressure Japanese assets.
Corporate earnings season continues at full intensity with two Magnificent 7 companies—Alphabet and Amazon—reporting. Cloud business growth and AI infrastructure deployment remain under scrutiny. Major pharmaceutical companies including Eli Lilly, AbbVie, Novartis and Novo Nordisk also report, offering perspectives on healthcare sector performance and obesity drug demand dynamics.
Figure 4: Australia's persistent inflation and robust labour market may prompt rate hike
Key macro events this week
Monday 2 February 2026
- 9.45am (HK time) — China RatingDog Manufacturing PMI (January): previous 50.1, consensus 50.3
- 11.00pm (HK time) — US ISM Manufacturing PMI (January): previous 47.9, consensus 48.3
Tuesday 3 February 2026
- 11.30am (HK time) — Australia RBA Interest Rate Decision: previous 3.6%, consensus 3.85%
- 11.00pm (HK time) — US JOLTs Job Openings (December): previous 7.146 million, consensus 7.1 million
Wednesday 4 February 2026
- 9.45am (HK time) — China RatingDog Services PMI (January): previous 52.0, consensus 51.8
- 6.00pm (HK time) — Euro Area Inflation Rate YoY Flash (January): previous 1.9%, consensus 1.7%
- 9.15pm (HK time) — US ADP Employment Change (January): previous 41,000, consensus 40,000
- 11.00pm (HK time) — US ISM Services PMI (January): previous 54.4, consensus 53.8
Thursday 5 February 2026
- 8.30am (HK time) — Australia Trade Balance (December): previous A$2.936 billion, consensus A$3.4 billion
- 8.00pm (HK time) — UK BoE Interest Rate Decision: previous 3.75%, consensus 3.75%
- 9.15pm (HK time) — Euro Area ECB Deposit Facility Interest Rate Decision: previous 2%, consensus 2%
Friday 6 February 2026
- 9.30pm (HK time) — US Non-Farm Payrolls (January): previous 50,000, consensus 70,000
- 9.30pm (HK time) — US Unemployment Rate (January): previous 4.4%, consensus 4.4%
- 11.00pm (HK time) — US Michigan Consumer Sentiment Prel (February): previous 56.4, consensus 55.8
Sunday 8 February 2026
- Japan Snap General Election
Key corporate earnings
(in local exchange time)
Monday 2 February 2026
Tuesday 3 February 2026
Wednesday 4 February 2026
Thursday 5 February 2026
Source: Trading Economics, Nasdaq, LSEG (as of 31 January 2026)
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