Sigma Capital

02-02-2026

Stocks, oil, precious metals plunge on volatile start to the week

Source: MIST

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Stocks, oil, precious metals plunge on volatile start to the week


Investors resumed Friday's rollercoaster ride as they assessed geopolitical developments, the latest batch of company earnings and the outlook for US interest rates.

After a strong January fuelled by artificial intelligence bets, stocks went into reverse last week as traders again questioned the wisdom of the vast sums pumped into the sector and when they will see returns.

That has also raised fears of a tech bubble that could soon pop.

The latest round of selling came after Microsoft announced a surge in spending on AI infrastructure, reviving concerns companies could take some time before seeing a return on their investments.

Seoul, which has hit multiple records this year thanks to its big tech weighting, plunged more than five percent, with chip giant SK hynix shedding eight percent and market heavyweight Samsung off more than six percent.

Tokyo, also home to several big-name tech firms, shed more than one percent, as did Taipei, where chip giant TSMC is listed.

Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila and Bangkok also tumbled.

Jakarta tanked more than five percent, extending last week's rout after index compiler MSCI called on regulators to look into ownership concerns and a warning it would hold off adding Indonesian stocks to its indexes or increasing their weighting.

Oil prices plunged on easing US-Iran tensions.

Both main crude contracts shed more than five percent as Donald Trump said he was hopeful of reaching a deal with Tehran after it warned that any attack on the Islamic republic would trigger a regional conflict.

Trump Fed pick


Supreme leader Ayatollah Ali Khamenei on Sunday likened the recent protests to a "coup" and warned a US attack would trigger a regional conflict.

Asked about the Iranian leader's warning, Trump told reporters on Sunday: "Of course he is going to say that.

"Hopefully we'll make a deal. If we don't make a deal, then we'll find out whether or not he was right," he said.

Oil's drop was helped by a stronger dollar, which came on the back of news that Trump had tapped Kevin Warsh to head the US central bank.

The president said the former Morgan Stanley investment banker and Fed governor "will go down as one of the GREAT Fed Chairmen, maybe the best".

Traders regard Warsh as the toughest inflation fighter among the final candidates, raising expectations of monetary policy that would underpin the greenback.

The choice also eased concerns about the Fed's independence following a series of attacks on incumbent Jerome Powell over his reticence to cut rates as quickly as the president wanted.

The dollar surged, having plunged most of last week on concerns the White House was happy to see it weaken.

"Warsh emerged as one of the more hawkish voices during his time at the Fed, at times opposing rate cuts during the 2008 (global financial crisis) out of concern on inflation risks," wrote Brian Levitt at Invesco.

"At first glance, his monetary policy track record would seem to conflict with Trump's desire for lower rates, although his tone has shifted in recent months."

Warsh was "currently in favour of greater policy easing in 2026, driven by a view that productivity gains could boost US economic growth without driving higher inflation", he added.

The announcement sent dollar-priced precious metals plunging Friday, with gold losing as much as 12 percent and silver more than 30 percent at one point.

And the losses mounted on Monday, with gold shedding as much as 10 percent to touch just below $4,403, while silver briefly lost around 12 percent to $75. That left them well down from their record highs of $5,595 and $121 touched last week.

"The question everyone is now asking is what happens next?" said Pepperstone's Michael Brown. "Here, I would flag that in a similar manner to the rally seen in recent weeks, there is now a solid argument that the pullback has also run 'too far, too fast'."

- Key figures at around 0700 GMT -

Tokyo - Nikkei 225: DOWN 1.3 percent at 52,655.18 (close)

Hong Kong - Hang Seng Index: DOWN 2.9 percent at 26,601.18

Shanghai - Composite: DOWN 2.5 percent at 4,015.75 (close)

Euro/dollar: DOWN at $1.1850 from $1.1856 on Friday

Pound/dollar: DOWN at $1.3672 from $1.3688

Dollar/yen: DOWN at 154.61 yen from 154.64 yen

Euro/pound: UP at 86.70 pence from 86.63 pence

West Texas Intermediate: DOWN 5.3 percent at $61.76 per barrel

Brent North Sea Crude: DOWN 5.1 percent at $65.78 per barrel

New York - Dow: DOWN 0.4 percent at 48,892.47 (close)

London - FTSE 100: UP 0.5 percent at 10,223.54 (close)