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Precious metals slump deepens, stocks follow

Gold and silver extended last week’s historic plunge on Monday, dragging other precious metals and bitcoin lower as a stronger US dollar and shifting expectations for Federal Reserve (Fed) policy following Kevin Warsh’s nomination as chair of the central bank weighed on sentiment. The renewed sell-off in metals and cryptocurrencies coincided with an AI-driven pullback in technology shares that left US equities weaker on Friday and sent Asian stock markets sharply lower to start the week, led by steep losses in South Korea and Hong Kong. Oil prices also retreated as signs of easing tensions between the US and Iran reduced the geopolitical risk premium.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

Negative market data
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Gold and silver extended last week’s historic slump on Monday, with spot gold dropping about 8.6% to USD 4450 per ounce after having fallen nearly 10% on Friday, and silver sliding 12.3% to just above USD 74 following a roughly 30% plunge on Friday that marked its worst daily fall since 1980. The sharp reversal comes after both metals hit record highs earlier last week, as profit-taking, a firmer US dollar and shifting expectations for Fed policy following US President Donald Trump’s nomination of Kevin Warsh as Fed chair weighed on prices. Bitcoin hovered just below USD 76,000 to start the week after a sharp weekend drop to its lowest level since last April, extending a four-month losing streak and leaving the cryptocurrency more than 12% lower since the start of the year.

Poor market sentiment spills over to Asian stocks

Asian equity markets fell on Monday as an AI-driven sell-off in US technology shares weighed on sentiment, with South Korea’s KOSPI dropping more than 5% and Hong Kong’s Hang Seng index losing 2.8%. Losses were led by major chipmakers Samsung Electronics and SK Hynix, while broader regional benchmarks including Japan’s Nikkei 225 (-1.2%), Australia’s S&P/ASX 200 (-1%) and China’s CSI 300 (-1.7%) also declined amid worries that artificial-intelligence enthusiasm has outpaced earnings support. Mixed Chinese purchasing managers’ indices added to the cautious tone, with the official manufacturing gauge pointing to renewed contraction even as a private survey showed a modest return to expansion for smaller, export-oriented firms.

Trump nominates Warsh as Fed chair

On Friday, Trump nominated former Fed governor Kevin Warsh as the next chair of the central bank, choosing him to succeed Jerome Powell over several other shortlisted candidates. Warsh, who served at the Fed during the 2008 financial crisis and previously worked at Morgan Stanley, has argued the central bank should cut interest rates, shrink its balance sheet and pay more attention to the disinflationary impact of artificial intelligence. While he has been sharply critical of current Fed policy and Powell personally - contending that inflation stems from excessive government spending and money creation rather than rapid growth or wage gains, and describing the US housing market as already in recession - he is still considered a more conventional pick than some of the candidates on Trump's shortlist for the position.

US stocks fall on Fed nomination

US stocks declined on Friday after Warsh's announcement, unsettling markets, which were concerned about the implications for monetary policy easing. The Dow Jones Industrial Average fell 0.4% to 48,892.47 points and the S&P 500 lost 0.4%, while the technology-heavy Nasdaq 100 dropped 1.3%, with all three indices also posting weekly losses but still showing gains for January. Company results produced mixed share price reactions, with modest advances for Apple and strong gains for telecom group Verizon and electric vehicle maker Tesla.

Oil prices drop on Iran signals

Oil prices fell nearly 5% on Monday, marking the sharpest daily decline in more than six months, after Trump said Iran was “seriously talking” with Washington, easing fears of conflict with the OPEC producer. Brent crude slipped 5.3% to below USD 66 per barrel and US West Texas Intermediate fell almost 5.5% to below USD 62, reversing part of January’s risk-driven rally fuelled by repeated US threats against Iran. The pullback was reinforced by a stronger US dollar, profit-taking and expectations of a fundamentally weak market, despite OPEC+ confirming on Sunday that it would keep output unchanged for March after having already frozen planned production increases for the first quarter.

Swiss leading indicator slips but stays above average

The KOF Economic Barometer for Switzerland fell by 1.1 points to 102.5 in January, down from a revised 103.6 in December, according to data released on Friday last week. The decline is driven mainly by weaker signals from the hospitality and construction sectors, while indicators for manufacturing and for financial and insurance services improved. Within the goods-producing sector, employment expectations, assessments of production constraints, earnings prospects and exports deteriorated, whereas order books, overall business situation and competitive position showed a more positive trend. The Swiss Market Index added 0.3% on Friday, lagging behind regional peers.

German economy stabilises as inflation ticks higher

Germany’s economy showed cautious signs of stabilisation as gross domestic product grew by 0.3% in the fourth quarter compared with the previous quarter, leaving output 0.6% higher than a year earlier. The labour market remained robust despite some softening, with seasonally adjusted employment edging just slightly down. Meanwhile, inflation is ticking up, with the headline rate expected to rise to 2.1% in January from 1.8% in December and core inflation seen at 2.5%. Germany’s DAX rose 0.9% on Friday, while the Euro Stoxx 50 gained 1%.

Labour markets and Bank of England in focus

This week, markets will focus on a busy run of central bank communications and key labour market data, particularly from the United States and the United Kingdom. The Reserve Bank of Australia releases its interest rate decision on Tuesday, while the Bank of England announces its monetary policy decision on Thursday. US data are dominated by labour market indicators, including the Job Openings and Labor Turnover Survey on Tuesday, the ADP nonfarm employment report on Wednesday, and Friday’s January employment report, complemented by consumer sentiment from the University of Michigan. Purchasing Managers’ Indices from major European economies, the UK and the US across Monday and Wednesday provide an update on momentum in both manufacturing and services. Investors will also keep a close eye on earnings, led by tech and semiconductors companies - Palantir (Monday), AMD (Tuesday), Qualcomm (Wednesday) and Google parent Alphabet (Wednesday) - as well as the pharmaceutical sector, with results due from Merck (Tuesday), Pfizer (Tuesday), Amgen (Tuesday), Eli Lilly (Wednesday), AbbVie (Wednesday) and Novartis (Wednesday).

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Intesa Sanpaolo, Palantir, and Walt Disney.

Economic data in focus: German retail sales (08:00); Swiss retail sales (08:30); Manufacturing Purchasing Managers’ Indices from several of the world’s largest economies, including Switzerland (09:30), Italy (09:45), France (09:50), Germany (09:55), UK (10:30), Brazil (14:00), Singapore (14:00), Canada (15:30), US (15:45) and US ISM (16:00).

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Editor: Alessandro Fezzi
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