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Gold and tech stocks hit by Fed jitters

Global markets shifted to a risk-off stance on Thursday after US President Donald Trump signalled he had chosen his next Federal Reserve (Fed) chair, with media reports pointing to former Fed governor Kevin Warsh. The prospect of a more hawkish Fed leadership drove the US dollar and Treasury yields higher, triggering a sharp pullback in gold and bitcoin. US equities finished Thursday mixed, with heavy losses in Microsoft weighing on tech-heavy indices, while European markets also came under pressure from a broad-based slide in technology shares. Asian stocks were mostly lower on Friday.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

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Global markets turned risk-off on Thursday after Trump signalled he had decided on his next Fed chair, with former Fed governor Kevin Warsh emerging as the leading contender in media reports. Warsh is widely seen as less inclined toward aggressive monetary stimulus than other potential candidates. The news sent gold and other risk-sensitive assets tumbling as the US dollar and Treasury yields moved higher. The Dollar Index gained 0.4% as yields on US Treasuries rose across the curve, with two-year and ten-year yields around 3.6% and 4.3%, respectively. Gold prices fell sharply, with spot prices down 4% to USD 5160 per ounce in Asian trading, following a record high just under USD 5600 on Thursday. Silver was also trading about 4% lower. Despite the sell-off, gold has gained more than 20% so far in January and is on track for a sixth consecutive monthly increase and its strongest monthly rise since 1980. Meanwhile, bitcoin plummeted, falling about 6.5% to trading around USD 82,500.

US avoids government shutdown after budget deal

Trump confirmed on Thursday that Republicans and Democrats in the Senate reached a budget agreement that should prevent a partial US government shutdown from Saturday by funding most federal operations until September. The deal separates funding for the Department of Homeland Security, which will receive a two-week stopgap allocation to allow more time for negotiations on migration policy. The House of Representatives is due to vote on the package on Friday under an expedited procedure that will require broad Democratic support.

US stocks mixed as Microsoft weighs on tech

US stock trading was mixed on Thursday as a sharp fall in software giant Microsoft, driven by concerns over slowing AI- and cloud-related growth and rising costs, pulled the Nasdaq 100 down 0.5% to 25,884.30 points, while the Dow Jones Industrial managed a late gain of 0.1% to close at 49,071.56 points and the S&P 500 slipped 0.1% to 6969.01 points. Strong quarterly results from Facebook parent company Meta Platforms (+10.4%) and IBM (+5%) among others supported major indices, partly offsetting weakness in Microsoft (-10%) and Tesla (-3.5%), where planned multi-billion investments in production restructuring were poorly received. After trading in New York finished for the day, Apple reported better-than-expected first-quarter results, as earnings per share rose to USD 2.84 on revenue of USD 143.8 billion, driven by record iPhone revenue of USD 85.3 billion compared with USD 69.1 billion a year earlier and ahead of market expectations.

Asian stocks mostly lower amid risk-off mood

Stocks in the Asia-Pacific region were trading mostly lower on Friday, reflecting the weaker close on Wall Street and Europe as investors shifted into a more risk-off stance. China led regional declines, with Hong Kong’s Hang Seng Index trading 2.1% lower and mainland China’s CSI 300 down 0.8%. Japan’s Nikkei 225 was trading essentially flat, after Tokyo’s Consumer Price Index rose 1.5% year-on-year in January, down from 2% in December and marking the weakest headline inflation reading since February 2022. Australia’s S&P/ASX 200 was 0.7% lower, while Korea’s Kospi was 0.1% higher, supported by robust gains in heavyweight chipmakers following upbeat earnings.

European stocks weighed down by tech slide

European equities fell on Thursday as sharp declines in technology shares in Europe and the US dragged the euro-area benchmark EuroStoxx 50 down 0.6% to 5891.95 points, with SAP losing about 16% after disappointing quarterly figures and guidance, and geopolitical tensions further dampening sentiment. The Swiss SMI rose 1% to 13,147.93 points. Technology shares recorded the steepest sector losses in Europe with a 3.9% drop, while weaker results from Swiss chemicals group Givaudan contrasted with record gains in industrial group ABB, whose strong order intake lifted peers Schneider Electric and Siemens.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from American Express, Chevron, Exxon Mobil, Regeneron Pharmaceuticals, and Verizon.

Economic data in focus: French gross domestic product (07:30), Swiss KOF Economic Barometer (09:00), German unemployment rate (09:55), German gross domestic product (10:00), German Consumer Price Index (14:00), Canadian gross domestic product (14:30), US Producer Price Index (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.