On February 4, 2026, global financial markets were once again thrown into sharp volatility following a heavyweight nomination by the Trump administration. With the nomination of the more “hawkish-leaning” Kevin Warsh to succeed the soon-to-depart Jerome Powell, market confidence in the future policy path of the Federal Reserve has been shaken.
Despite the U.S. January Manufacturing PMI rebounding to 52.6, the highest level in nearly three and a half years—highlighting the resilience and expansion of domestic demand—the U.S. Dollar Index paradoxically fell 0.12% to 97.42 on Tuesday, snapping its prior 1.5% rally.
Driven by this uncertainty, spot gold staged a dramatic comeback on Tuesday, surging more than 6% intraday, marking its largest single-day gain since the 2008 financial crisis. During the Asian session, gold prices stabilized near USD 4,974, as solid fundamentals combined powerfully with short-covering triggered by the so-called “Warsh shock.”
Asset Market Performance and Fundamental Analysis
1. U.S. Equity Markets
Index Performance
- Dow Jones Industrial Average (DJI): Closed at 49,240.99, down 167.42 points or 0.34%. As the market hovers just below the psychological 50,000-point threshold, selling pressure in heavyweight stocks intensified amid growing uncertainty surrounding the Fed chair nomination.
- S&P 500 Index (SP500): Closed at 6,918.08, marginally down 0.01%. While the index held above the 6,900 level, profit-taking in technology stocks was delicately offset by inflows into defensive sectors.
- Nasdaq 100 Index (NQ1): Closed at 25,432.00, down 0.08%. Previously crowded positions in AI and semiconductor stocks are facing technical pressure amid a recent wave of deleveraging.
Stock Highlight
- Intel (INTC): Closed at USD 49.25, up 0.90%. Support from the memory segment and recovery-driven fundamentals helped the stock outperform the broader market.
2. Foreign Exchange Market
- U.S. Dollar Index (DXY): At 97.381, down 0.23%. Following Kevin Warsh’s nomination as Fed Chair, expectations surrounding his potential “balance sheet reduction + rate cuts” policy stance have led to a reassessment of dollar liquidity, putting short-term pressure on the greenback.
- EUR/USD: At 1.1814, down 0.02%. Despite dollar weakness, subdued inflation expectations in the eurozone capped the upside for the euro.
- USD/JPY: At 155.88, up 0.11%. Remarks by Prime Minister Sanae Takaichi suggesting that a weaker yen benefits exports further reduced market expectations for a near-term rate hike by the Bank of Japan.
3. Precious Metals and Commodities
Precious Metals
- Spot Gold (XAUUSD): At USD 4,979.33 per ounce, rebounding 0.66% intraday. After experiencing the largest single-day drop in its recent history, gold is undergoing an oversold rebound, with the USD 5,000 level emerging as a key macro psychological defense.
- Spot Silver (XAGUSD): At USD 85.0932 per ounce, down 0.27%. Following extreme volatility, silver is consolidating at elevated technical levels as the tug-of-war between industrial demand and safe-haven demand intensifies.
Commodities
- WTI Crude Oil (XTIUSD): At USD 63.88 per barrel, down 0.09%. As geopolitical risk premiums quickly faded, oil prices retreated below the USD 64 level in search of a near-term bottom.
4. Digital Assets and Macro Dynamics
- Bitcoin (BTCUSD): At USD 75,890, rebounding 0.30%. After breaking below USD 80,000, speculative assets have shown heightened sensitivity to shifts in dollar liquidity conditions.
- Ethereum (ETHUSD): At USD 2,243.6, up 0.58%. Supported by technical buying, ETH has stabilized near the USD 2,200 support level, though relative strength indicators suggest it remains in a weak-following posture.
5. Today’s Focus
- New Zealand: Employment Change (QoQ)
- New Zealand: Unemployment Rate
- Eurozone: Core CPI Flash Estimate (YoY)
- Eurozone: CPI Flash Estimate (YoY)
- United States: ADP Nonfarm Employment Change
- United States: ISM Services PMI
