FTSE 100 stays close to record high as USD/JPY retraces and silver price rallies

​​​Macro update

​Asia leads the rebound:

​Asian equities surged, led by Japan’s Nikkei 225 jumping just over 4% to fresh highs as investors welcomed a decisive election result that clears the way for debt-funded fiscal stimulus and reflationary policies.

​Chips lift risk appetite:

​A late rebound in United States (US) semiconductor stocks underpinned global sentiment, with NVIDIA, Advanced Micro Devices (AMD) and Broadcom climbing 7-8% on Friday, easing concerns over artificial intelligence (AI) spending and pushing Wall Street futures higher.

​Japan bonds reflect stimulus risks:

​Expectations of increased government borrowing lifted Japanese two-year yields to around 1.3%, their highest level since the mid-1990s, highlighting the tension between growth optimism and fiscal sustainability.

​Fed cut expectations return to focus:

​Markets are increasingly confident of a US rate cut by June, with upcoming jobs, inflation and retail sales data expected to support easing without signalling a sharp slowdown.

​Commodities stay volatile:

Silver steadied after extreme swings and remained up more than 4%, while oil slipped around 1% as traders awaited clarity on US-Iran talks.

​Rotation narrative gains traction:

​Investors continue to rotate away from high-multiple US tech and heavy AI spenders towards global markets and AI beneficiaries, reinforcing the theme of fading US exceptionalism and renewed interest in Asia and Europe.

​FTSE 100 trades near record highs

​The FTSE 100 continues to trade close to last week's record high, still targeting the 10,500 region while remaining above Friday's 10,211 low.

​Minor support may be spotted between the 2 and 3 February highs at 10,373 - 10,365 ahead of the late January high at 10,278 and the mid-January peak at 10,256.

​Short-term outlook:

Bullish while above the 6 February low at 10,211.

​Medium-term outlook:

Bullish while above the 20 January low at 10,049.

FTSE 100 daily candlestick chart

​USD/JPY encounters resistance

USD/JPY has come off its ¥157.72 intraday high following Japan prime minister Takaichi's LDP historic election win. This high was made close to the 19 December high at ¥157.76, a rise above which would open the way for the 20 January high at ¥158.60 to be reached.

​While the ¥157.72 - ¥157.76 resistance zone caps, though, a retracement towards the early January low at ¥156.12 and the early February high at ¥155.78 may ensue.

​Short-term outlook:

Bullish while above the 4 February low at ¥155.70.

​Medium-term outlook:

Bullish while above the January low at ¥152.10.

USD/JPY daily candlestick chart

​Silver price recovers

​The silver price is seen rapidly heading back up again, having bounced off Friday's $64.0626 low. The next upside target sits at last week's $92.2049 high, a rise above which may put the psychological $100 region back on the cards.

​Short-term outlook:

Bullish while above the 6 February low at $64.0626.

​Medium-term outlook:

Neutral with a bullish bias while above the 6 February low at $64.0626.

Silver daily candlestick chart