Kospi and Nikkei soar to new records

US stock indices staged an impressive recovery yesterday following a rocky start to the new week and month. All the US majors fell sharply early on Monday, extending their losses from Friday’s negative session.

Investors went into ‘risk-off’ mode as they surveyed the wreckage as the parabolic rally across precious metals, which suffered a catastrophic reversal. This followed a bounce in the US dollar after the Dollar Index fell to a four-year low earlier last week.

Overall, 2026 began with some significant financial milestones being reached, only for these to be kicked over in rapid succession. But, as has been witnessed so many times since October 2022, it didn’t take long for dip buyers to emerge and take advantage of ‘knock-down’ equity prices. That's not to say stocks were particularly cheap, just that they were less expensive than they were last Wednesday.

This led to a steady uptick throughout Monday’s European session, which took the S&P off the lows last seen ten days ago. The buying accelerated as the US exchanges opened. The Dow added around 1.1% for the session, while the S&P 500 rose 0.5%. The Nasdaq Composite gained close to 0.6%, and the Russell 2000 jumped 1.0%.

Source: TN Trader

US stock index futures were firmer again this morning. After last night’s close, Palantir surged around 6% following strong fourth-quarter results and upbeat guidance. Robotics-focused Teradyne jumped 20% on a robust first-quarter outlook. But Nvidia dropped around 3%.

This followed reports suggesting that its proposed $100 billion investment in OpenAI had stalled. The stock has subsequently steadied. Elon Musk’s SpaceX has bought Elon Musk’s xAI in a deal which values the joint (private) entity at $1.25 billion.

This may help Mr Musk raise the funding he needs for future expansion and development. But it may annoy some of his more speculative backers who are looking for a bigger bang for their bucks, particularly should he then merge the new entity with Tesla at some stage.

Attention now turns squarely to earnings. AMD, PepsiCo, Merck and Pfizer are due to report today, while Alphabet and Amazon release earnings on Wednesday and Thursday, respectively. This will keep tech firmly in focus after the sharply negative reaction to Microsoft’s results last week.

JOLTS Job Openings are released this afternoon, with ADP Payrolls tomorrow. Please note, however, that the January Non-Farm Payroll update will not be released on Friday as previously scheduled due to the partial government shutdown back in October.

European stock indices were firmer across the board in early trade this morning. Traders reacted positively to yesterday’s rebound across US equities, and on signs of stabilisation following the dramatic selloffs in precious metals and cryptos.

Miners were much in demand, and gains across the sector helped to lift the UK’s FTSE 100 to a fresh all-time intra-day high. With US earnings dominating attention, European equities appear content to follow Wall Street’s lead for now.

Source: TN Trader

That may change on Thursday when both the Bank of England and European Central Bank conclude their respective monetary policy meetings. But with both central banks expected to keep interest rates unchanged, these meetings are unlikely to be significant market-moving events.

The main story across Forex continues to be the recent recovery in the US dollar. It was generally firmer again this morning, posting early gains versus most other currencies. The cash Dollar Index pushed up towards 97.50, which means that it has rallied around 2% from the four-year low of 95.25 hit last Tuesday. This also means that it has made back around 50% of the losses from its mid-January high above 99.00 to its recent low.

Source: TN Trader

That’s quite an achievement given the extent of the negative sentiment towards the greenback. Some credit for the improvement has been given to President Trump for picking Kevin Warsh as his preferred candidate to replace Jerome Powell as Fed Chair. Many observers consider Mr Warsh to be quite hawkish. But he wouldn’t have been picked by Mr Trump unless he agreed with the President that interest rates should be lower.

Anyway, it sounds as if Mr Warsh wants to make some significant changes at the central bank. These include greater transparency over the Fed’s decision-making processes and a less interventionist approach, particularly when it comes to quantitative easing. So, mildly hawkish maybe.

At least compared to the academics who have held sway for decades. In other news, the Australian dollar outperformed, rallying more than 1% after the Reserve Bank of Australia (RBA) delivered its expected rate hike and struck a cautious tone. Governor Michele Bullock emphasised that inflation pressures remain to the upside and that policy will stay data-dependent.

A mix of hawkishness from the Bank of Japan and political uncertainty continues to weigh on the Japanese yen. Ahead of this Sunday’s snap election, Prime Minister Sanae Takaichi contributed to another selloff in the yen after delivering a speech in which she talked of the benefits of having a weaker currency.

Other policymakers acknowledged rising price pressures from a weak currency, as well as concerns around fiscal stimulus, of which Ms Takaichi is a big supporter, viewing it as a way to boost economic growth.

Precious metals staged a sharp rebound following the brutal sell-off, which began late last week and which continued yesterday morning. Gold crashed towards $4,400 in a move which saw it trade at its lowest level in close to a month. This meant that gold had dropped 21% from Thursday’s high.

Since then, it has bounced back sharply and was pushing back above $4,900 in early trade this morning. Could that mean the downside correction is over? Who knows. But traders should not assume that it won’t continue to be volatile. The volcano may have blown, but prepare for possible aftershocks.

Source: TN Trader

Silver saw even more dramatic moves. There was a 41% slump from Thursday’s high to yesterday’s low when prices dropped back towards $70 per ounce. Since then, silver has also staged an impressive recovery, coming back within just two cents of $88.

Source: TN Trader

Trade continues to be volatile and extremely choppy, and, like gold, it’s far too early to sound the ‘all clear’ to signal that it’s safe to go back in the water. There may certainly be opportunities for traders who are quick on their feet. But these are markets which are subject to whipsaw. And that can be very painful and expensive if one gets on the wrong side of it.

Crude oil prices were softer in early trade this morning. The move saw them pull back further from the four-month high hit on Thursday. But prices steadied as the European session progressed. Front-month WTI briefly broke below $61 per barrel. But prices picked up and were soon back above $62.

Source: TN Trader

Yesterday, President Trump said that Iran was engaging with talks in Washington. This has helped to de-escalate a situation which appeared to be heading for an outbreak of hostilities. There are also some positive noises coming out concerning US–Iran nuclear talks, which are expected to resume this Friday in Turkey.

Add in forecasts for milder US weather, and this has helped to reduce the near-term supply risk premiums. Increased supply from the resumption of Venezuelan exports have added to the supply glut story. At the same time, a firmer dollar has weighed on USD-denominated commodities. While inventories showed a notable draw, it was not enough to reverse sentiment.

Yesterday, Bitcoin dropped below $75,000 to hit its lowest level since last April. Ether fell below $2,200, which represented its weakest valuation since June. Both cryptos have come under near-constant selling pressure since mid-January, when an upside breakout attempt ran out of upside momentum.

Both have managed to recover a touch this morning. The bulls are searching out levels of significant support, calculating if they can hang in there should there be another lurch lower.

For Bitcoin and Ether, the next major support levels are $70,000 and $2,000, respectively. As far as the upside is concerned, the first major hurdle for Bitcoin is $80,000, which it needs to break above and hold to offer the longs some breathing space.

Volatility remains elevated when compared to this time last month, but is contained. While risk appetite has improved across equities, recent violent moves in metals and cryptos underline how quickly sentiment can shift. With earnings, central bank signals and delayed macro data all in play, volatility remains a key variable to watch rather than dismiss.

Earnings take centre stage this week, and tech results may help set the tone after recent mixed reactions. The absence of the January jobs report removes a major macro catalyst, but attention will remain on inflation, central bank messaging and global trade developments. Equities have started February on a strong footing, though sharp cross-asset volatility suggests positioning remains fragile beneath the surface.