Precious metals slide on changing rate outlook

General market commentary

Equity markets ended last Friday on a weaker footing as investors reacted to a mix of monetary policy uncertainty and disappointing corporate news. The announcement that Kevin Warsh is set to become the next Federal Reserve chair prompted a reassessment of the outlook for interest rates, with markets questioning the timing and scale of future rate cuts. Interest rate sensitive stocks came under particular pressure, leaving small cap equities among the worst performers. The Russell 2000 fell 1.6 percent on the day, while the S&P 500 slipped 0.5 percent. Nervousness was also fuelled by sharp moves in commodities and currencies, with a stronger US dollar weighing heavily on precious metals.

Looking at the full week, equity markets remained volatile and sentiment fragile. Several poorly received earnings reports, including from major technology firms in the United States and Europe, added to concerns about valuations and the durability of profit growth. Inflation data in the US continued to point to ongoing price pressures, reinforcing uncertainty around the policy outlook. While US markets briefly touched record highs earlier in the period, confidence faded as the week progressed. Overall, investors remained cautious, balancing hopes for eventual policy easing against persistent inflation, mixed earnings signals and limited visibility as the reporting season continues.

Latest market and economic update

Asian stock markets fell sharply on Monday, led by heavy losses in South Korea and Hong Kong as an AI-driven tech sell-off deepened, tracking weak Wall Street futures. Chinese markets declined amid mixed PMI data, while Japan, Australia and Singapore also slipped. Investor sentiment remained cautious ahead of major US tech earnings.

US stock futures slipped on Sunday evening as investors grew cautious ahead of major earnings and key data. Tech sentiment remained fragile after Microsoft’s results revived AI return concerns. Focus turns to Alphabet and Amazon earnings, Trump’s Fed chair nominee Kevin Warsh, and Friday’s US jobs report, which could shape interest rate expectations.

European equities rose strongly on the final trading day of January, supported by firmer growth data. The STOXX 50 and STOXX 600 advanced as Eurozone GDP beat expectations. Banks and technology stocks rebounded, while Adidas surged on strong revenues. Mining shares lagged as metal price optimism faded.

The US dollar remained firm on Monday, with the dollar index holding above 97 after last week’s gains. Hawkish expectations around Fed chair nominee Kevin Warsh supported the currency. Against the euro, the dollar strengthened, pushing EUR/USD down to around 1.1862, as investors reassessed US rate cut expectations and relative policy outlooks.

Oil prices fell 4% on Monday as President Trump signalled US-Iran de-escalation, easing geopolitical risk after recent highs. A stronger dollar, profit-taking and OPEC+ holding output steady added pressure, highlighting underlying bearish fundamentals despite January tensions. Markets reacted to negotiation signals and reduced Strait of Hormuz risks.

China’s manufacturing activity contracted in January, with the official PMI falling to 49.3 amid weak domestic demand. New orders and exports declined, while services and construction also slipped into contraction. Although China met its 5% growth target last year, softer retail sales dragged fourth-quarter GDP growth to a three-year low.

A partial US government shutdown began after Congress failed to pass funding legislation. House Speaker Mike Johnson said he expects it to end by Tuesday, citing logistical delays. Most agencies would be funded while immigration enforcement reforms are debated, with disagreement between Republicans and Democrats over changes to ICE practices.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Oracle plans to raise $45–50 billion in 2026 via equity and a one-off bond issuance to fund AI and cloud expansion. Demand from partners such as OpenAI remains strong, but investors are uneasy over mounting costs, legal action from bondholders, falling shares and increased hedging activity, amid concerns over long-term returns and balance sheet risks.

SpaceX earned about eight billion dollars in profit on revenues of fifteen to sixteen billion dollars last year, largely driven by its Starlink business. The strong results support plans for a potential IPO later this year, with banks estimating a valuation above one point five trillion dollars. SpaceX is also discussing a possible merger with Elon Musk’s AI firm xAI.

Sandisk reported strong outlook for the third quarter, forecasting revenue and profit well above expectations as AI driven demand boosts data storage needs. Memory shortages are expected to persist, supporting longer term growth. The company also extended its flash chip supply agreement with Kioxia, improving visibility. Several brokerages upgraded their forecasts.

Exxon Mobil beat fourth quarter earnings forecasts, supported by low cost production in the Permian Basin and Guyana. Despite weaker oil prices last year, full year profits fell only modestly as costs were cut. Production hit a forty year high, while dividends and share buybacks remained strong and capital spending was disciplined.

Adidas reported strong preliminary fourth quarter results, showing double digit currency neutral growth and better than expected margins. The company announced its first share buyback since 2022, funded by strong cash flow. Analysts welcomed the results, highlighting broad based growth across markets and improved profitability despite tariff and currency pressures.

Reports suggested Ford discussed a potential US electric vehicle joint venture with China’s Xiaomi, which Ford strongly denied. The claims revived political concerns over Chinese involvement in the US auto industry. Lawmakers warned of supply chain risks, while US carmakers continue to scale back EV investment after losses and tougher competition from China.

Peloton has reduced its workforce by about 11 percent under a broader cost cutting plan. Chief executive Peter Stern informed employees that the cuts mainly affect engineers involved in technology and enterprise projects. The move comes just days before Peloton is set to release its latest quarterly earnings results.

Rio Tinto and Glencore are expected to seek more time from the UK Takeover Panel to continue merger talks, as valuation disagreements persist. The proposed deal would create the world’s largest mining group. Both sides remain interested, but pricing tensions between shareholders have slowed progress on what could be the biggest mining merger ever.

Citizens downgraded SAP to Market Perform after weaker than expected fourth quarter revenue and slowing cloud momentum. Although profits beat forecasts, cloud backlog growth disappointed and guidance for 2026 was cautious. The broker cited slower deal ramp ups, geopolitical risks and fading upgrade tailwinds, while remaining positive on SAP’s long term quality and AI potential.

Raymond James upgraded Sandisk to Outperform, citing exceptionally strong AI and data centre demand and tight supply conditions. The broker said traditional forecasts are being upended, with sustained pricing power and accelerating earnings. Rapid growth in data centre revenue and improving margins leave Sandisk well positioned for further upside despite its strong performance.

Wolfe Research upgraded Broadcom to Outperform, citing rising confidence in Google’s TPU programme and Broadcom’s role in custom AI chips. The firm expects rapid growth in TPU shipments, driving strong revenue and earnings gains. It raised forecasts for AI and networking revenues and sees further upside from additional accelerator projects.

Citi upgraded Spotify to Buy, citing attractive valuation, beatable forecasts and multiple potential catalysts. The bank expects revenue, margins and cash flow to exceed expectations, supported by higher premium pricing. Possible EU price rises, rival increases and faster buybacks could lift sentiment, though risks include acquisitions and competitive pricing pressures.

Shares in Auto1 rose after JPMorgan put the stock on Positive Catalyst Watch and raised its target price, citing improving unit economics and rising volumes. The bank lifted EBITDA forecasts and said profitability should continue to strengthen across segments, supported by AI driven pricing, new services and strong balance sheet positioning.

Upcoming data and events

The week ahead features the US jobs report, JOLTS, ADP and ISM surveys, alongside University of Michigan confidence data. Earnings from Alphabet, Amazon, AMD, Palantir and Qualcomm will be in focus. Central bank meetings at the ECB, Bank of England and RBA, plus Eurozone inflation and China PMIs, will guide markets.

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