Market drivers and catalysts
Equities: Semi-led rebound in the US, while Europe rallies with sharp dispersion and Japan extends record strength post-election
Volatility: Calm rebound, but key U.S. data ahead, downside protection still in demand
Digital assets: Crypto stabilises, ETF flows cautious, confidence still fragile
Currencies: Dollar trades softer on renewed risk appetite and post-election yen strength
Commodities: Precious metals recover strongly; oil drifts lower on easing tensions
Fixed Income: Treasuries slip as risk appetite returns; JGB yields rise on fiscal concerns
Macro: ECB and FED speakers
Macro headlines
Japan's Prime Minister Sanae Takaichi's ruling party clinched a landmark post-war victory, securing a two-thirds super majority in the lower house. A super majority in the lower house will make it easier for her coalition to pass legislation and put the contentious issue of constitutional amendment back on the table.
U.S. Treasury Secretary Scott Bessent highlighted Chinese traders' influence in recent volatile gold price swings, and that Trump’s nominee to become the next Federal Reserve chair, Kevin Warsh, “is going to be very independent, but mindful that the Fed is accountable to the American people”
Fed Vice Chair Jefferson stated that the current monetary policy is well-positioned for future conditions and emphasized preventing further labor market weakening. Fed's Daly is open to interest rate decisions, considering possible cuts in 2026 depending on inflation and labor market data. Meanwhile, House Minority Leader Jeffries announced that Democrats will not pass further funding for the Department of Homeland Security without ICE reforms.
Morgan McSweeney, Chief of Staff to Labour’s Keir Starmer, resigned amidst controversy over Peter Mandelson's appointment as UK ambassador to Washington, linked to Jeffrey Epstein.
Chinese regulators have advised financial institutions to rein in their holdings of US Treasuries, citing concerns over concentration risks and market volatility. The directive doesn’t apply to China’s state holdings of US Treasuries and was framed around diversifying market risk rather than anything to do with geopolitical maneuvering or a fundamental loss of confidence in US creditworthiness.
Macro calendar highlights (times in GMT)
1600 – NY Fed 1-year Inflation Expectations
Busy Monday for central bank speakers:
ECB: Simkus (0800), Lane (1200), Lagarde & Nagel (1600)
Fed: Waller (1830), Miran & Mann (1930), Bostic (1930)
Earnings events
Today: Apollo Global Management, Softbank Corp
Tuesday: Coca-Cola, AstraZeneca, Gilead Sciences, S&P Global, Welltower, BP, Duke Energy, Barclays, Spotify, Marriott, Ferrari, Robinhood, Cloudflare, Ford, Datadog, Kering, Xylem, Fiserv
Wednesday: Cisco, McDonalds, T-Mobile US; TotalEnergies, Shopify, Siemens Energy, EssilorLuxottica, Applovin, CVS Health, Hilton Worldwide, Vertiv Holdings, Motorola, Heineken
Thursday: Hermes, L’Oreal, Applied Materials, Siemens, Arista Networks, Unilever, Softbank Group, Anheuser-Busch InBev, British American Tobacco, Vertex Pharmaceuticals, Brookfield, Agnico Eagle Mines, Howmet Aerospace, Airbnb, Vale, Mercedes Benz, Japan Tobacco, KBC Group, American Electric Power, Zoetis, Coinbase
Friday: Safran, Enbridge, NatWest, Tokio Marine Holdings, Japan Post Bank, TC Energy, Cameco
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: Friday’s rebound was led by semiconductors, with Nvidia, AMD and Broadcom each jumping more than 7% as the market shrugged off last week’s AI-led wobble. The rally was broad enough to push the Dow above 50,000, while Caterpillar and Goldman Sachs were among the standout cyclicals as investors rotated back into growth-sensitive names. Not everything participated: Amazon slipped after flagging a sharp step-up in AI infrastructure spending, keeping the capex and margin debate alive even on a strong tape, while stock-specific earnings moves remained decisive.
Europe: Europe followed the risk-on mood, but the session was driven by single-stock dispersion. ASML bounced as tech recovered, and Vinci surged after results beat expectations, while defence names held firm with Kongsberg among the notable winners and Rheinmetall also bid as guidance was reinterpreted. The big counterweight was Stellantis, which slumped sharply after announcing €22.2bn in charges tied to resetting its strategy and accelerating EV and hybrid development, dragging the autos pocket even as the broader index advanced.
Asia: Asia started the week with a strong bid, led by Japan after PM Sanae Takaichi’s election victory boosted expectations for stimulus and pro-growth industrial policy. The Nikkei hit fresh records, with upside concentrated in domestics and theme leaders: Advantest rallied strongly, while Mitsubishi Heavy Industries gained on the defence theme, and broader risers included Aozora Bank, Tokyo Gas and JFE Holdings. In Singapore, the tone was more mixed as DBS drew focus after Q4 profit missed estimates, even as dividends and capital return support the shareholder story.
Volatility
Market volatility cooled sharply into the end of last week as equity markets rebounded, with the S&P 500 rising nearly 2% on Friday while volatility indicators retreated. The VIX closed at 17.76, down meaningfully on the day, and short-dated measures fell even more sharply, reflecting reduced near-term stress after last week’s sell-off. That said, investors are unlikely to stay complacent for long, as several key macro events are clustered ahead.
The focus now shifts to U.S. labour market data on Wednesday and U.S. inflation data on Friday, both of which have the potential to reset expectations around interest rates and growth. Between now and then, markets may remain relatively calm, but history suggests price swings can accelerate quickly once these numbers hit the tape.
Based on options pricing, the S&P 500 is expected to move roughly ±108 points (about ±1.55%) into Friday, highlighting that investors are still pricing in meaningful uncertainty for the week ahead.
Skew check (today’s expiry): options markets continue to price downside protection more expensively than upside exposure, with puts trading richer than calls around current levels. This indicates that, despite the equity rebound, investors remain more concerned about renewed downside than missing further upside.
Digital Assets
Crypto markets are attempting to stabilise after last week’s sharp drawdown, with Bitcoin holding above $70,000 and Ethereum trading near $2,100. The rebound reflects a broader improvement in risk sentiment, supported by strong equity performance and easing volatility, but confidence remains fragile after heavy liquidations earlier in the month.
ETF flows remain a key signal. Bitcoin spot ETFs saw significant outflows on 5 February, with IBIT accounting for a large share, followed by a partial rebound in flows on 6 February. In Ethereum ETFs, ETHA stood out as the main source of outflows late last week, suggesting that investors are still cautious about maintaining exposure rather than aggressively adding risk.
Among major altcoins, price action remains mixed. XRP is modestly higher, while Solana and several higher-beta tokens are consolidating after recent volatility. The broader message is that crypto is no longer in free fall, but investors are still selectively reducing leverage and waiting for clearer signals from macro data and ETF flows before committing fresh capital.
Fixed Income
US Treasury yields rose for a second day on Monday after reports that China urged banks to curb their exposure to US Treasuries. Yields also drew support on Friday from a return of risk appetite, with US equity indices clawing back earlier losses. The benchmark 10-year note rebounded from a 4.16% low on Thursday to 4.23%, with short-term resistance seen around 4.30%.
In Japan, a resounding victory for Prime Minister Sanae Takaichi’s ruling party raised fiscal concerns, pushing 10-year JGB yields up 6 basis points to 2.29%, not far from last month’s multi-decade peak of 2.36%. The rise was somewhat curbed after the Japanese Finance Minister Katayama, said that the Liberal Democratic Party’s proposed consumption tax cut would be limited to two years and apply only to food, adding that it would not rely on additional debt issuance.
Commodities
Gold trades back above USD 5,000 following last week’s exceptionally volatile trading, which saw the yellow metal slump to a USD 4,402 low before staging a strong rebound on Friday. Attention now turns to whether volatility can moderate enough for the market to transition back toward a more sustainable advance, supported by longer-term demand drivers.
Silver trades near USD 82 after recovering from another sharp sell-off on Friday that briefly pushed prices toward USD 64. The near-50% decline since the 29 January peak triggered extreme volatility that continues to distort price discovery; however, an ongoing drawdown in visible stocks is still attracting speculative interest on hopes that tight conditions could eventually trigger another squeeze.
Managed-money accounts or hedge funds have for several weeks been selling into the precious-metals rally amid increasingly challenging trading conditions driven by elevated volatility, higher exchange margins, and tightening VAR constraints. That deleveraging accelerated in the week to 3 February, with gold net longs cut by 23% to an October low, silver net longs reduced by 38% to a 23-month low, and platinum positioning trimmed by 42% to near-neutral.
Oil prices edged lower as easing Middle East tensions reduced near-term supply risks. Brent slipped toward USD 67 after posting an almost 4% weekly loss, while WTI traded near USD 63, following talks in Oman between Iran and the US on Tehran’s nuclear programme, which Iran described as “a step forward.” Hedge funds have increased their net long position in WTI and Brent crude futures to a six-month high at 341.3k from near-flat positioning at the start of the year, leaving prices vulnerable to a further deflation of the risk premium.
Currencies
The yen strengthened against the dollar to 156.22 from a 157.75 high on Friday after Japan’s top currency official said the government remains on high alert as it monitors the foreign exchange market following the ruling party’s landslide election victory. Officials aim to stabilize the currency amid fiscal stimulus plans. While boosting exports, a weaker yen strains household budgets and risks further depreciation.
USD weakness carried over from Friday into Monday’s session amid improved global risk sentiment and partly driven by the mentioned JPY strength amid intervention concerns. The
- The weekly Commitment of Traders report covering the week to 3 February showed a speculative positioning heavily skewed toward US dollar selling despite a modest rebound in the greenback that week. As a result, the gross short across the eight IMM currency futures more than doubled to a six-month high of USD 17.4 billion
