February 2, 2026

Precious Metals and Tech Stocks Tumble on New Fed Chair Appointment

The Market Mic Drop

"Global markets are bracing for further losses, with US futures pointing lower after the appointment of a new Fed Chair sparked a dramatic plunge in precious metals and cryptocurrencies, while political and economic uncertainty in the US adds to investor concerns."

Investor Action

The significant volatility and broad sell-off in supposedly 'safe' assets like gold and silver, coupled with weakness in technology stocks and cryptocurrencies, suggests a 'risk-off' mood is prevailing. Investors should review their portfolio's diversification and consider reducing exposure to highly speculative assets. The strengthening US dollar could continue to create headwinds for commodities and international equities. Caution is advised ahead of key US economic data, which may be delayed by the government shutdown.

Market Snapshot

📉 S&P 500: 6,939 (-0.43%)
📉 DOW: 48,892 (-0.36%)
📉 NASDAQ: 23,462 (-0.94%)
📈 STOXX 600 (E.U.): (+0.64%)
📈 FTSE 100 (U.K.): (+0.51%)
📉 CSI 300 (CN): (-1.00%)
📉 Gold: $4,700 (-9.00%)
📉 Silver: $82.00 (-24.94%)
📉 Bitcoin: $74,553 (-11.00%)
📉 Ethereum: $2,312 (-3.83%)

Pre-market Futures (Monday)

📉 DOW FUTURES: (-0.10%)
📉 S&P 500 FUTURES: (-0.42%)
📉 NASDAQ 100 FUTURES: (-0.71%)

US Markets React to New Federal Reserve Chair

Global markets experienced significant turbulence following the announcement that Kevin Warsh will be the next chair of the U.S. Federal Reserve. The appointment of the former Fed governor was seen by some as a move to ensure the central bank's independence, triggering a major shift in investor sentiment.

Kevin Warsh Appointed

Kevin Warsh, who served as a governor at the central bank between 2006 and 2011, has been officially named to lead the Federal Reserve. Historically, Warsh has been known for supporting higher interest rates and shrinking the Fed's balance sheet to control inflation. However, his more recent commentary has suggested a shift towards favouring rate cuts, a position more aligned with the White House.

Markets were initially reassured by his experience, particularly during the Global Financial Crisis, which led to a strengthening of the U.S. dollar.

Widespread Sell-off in 'Safe Haven' Assets

The most dramatic reaction was seen in commodities, which are often used by investors to hedge against economic uncertainty. The appointment appeared to calm fears about the Fed's stability, prompting a mass sell-off as traders took profits. This deleveraging event was intensified after the commodity exchange CME Group raised margin requirements for various metals, forcing further liquidations.

Silver experienced one of its worst-ever trading days, falling 28% on Friday in its sharpest drop since 1980, after declining more than 30% at one point. The popular iShares Silver Trust also registered its worst day on record.
Gold also plunged, declining by 9%.

Both precious metals extended their losses in early trading on Monday, signalling continued pressure.

Analyst Outlook

Despite the dramatic price drops, some market analysts believe the reaction is temporary. Analysts at J.P. Morgan expect the rally in gold to continue, forecasting prices could reach $6,300 an ounce by the end of 2026, driven by sustained demand from central banks and investors. This view suggests that the fundamental drivers for precious metals remain intact despite the short-term volatility.

Equity Markets and Global Fallout

Risk assets did not escape the volatility. Major U.S. indexes closed lower on Friday, led by technology stocks, with the S&P 500 recording its third consecutive day of losses. Despite the weak finish to the month, the Dow and S&P 500 both added more than 1% in January, while the Nasdaq rose nearly 1%.

The impact was felt across Asian markets during Monday trading:

South Korea’s Kospi index sank by more than 5%, triggering a temporary pause in trading.
Hong Kong’s Hang Seng Index lost nearly 3%.
Japan’s Nikkei 225 shed approximately 1%.

Oil prices also slid, partly due to reports of potential discussions between the U.S. and Iran, which eased concerns over supply disruptions.

US Economic & Political Headwinds

Adding to market uncertainty, investors are contending with domestic political friction and concerning economic forecasts in the United States.

January Jobs Report Concerns

A prominent Wall Street strategist has warned of a potential shock in this week's jobs report for January. Steve Englander of Standard Chartered suggests the report could show 10,000 fewer jobs than the expected 65,000 gain. This is due to annual benchmark revisions and a modified model designed to reduce historical overstatements of job growth. If corrected, the data could show that private payrolls contracted in the fourth quarter of 2025.

Government Shutdown Continues

Lawmakers are working to end a partial federal government shutdown that began on Saturday. Disagreements over funding for the Department of Homeland Security are at the centre of the issue. While the Senate approved a package of bills, it awaits approval from the House of Representatives.

House Speaker Mike Johnson stated on Sunday that he believes the shutdown could be resolved by Tuesday. The House is expected to take up the Senate-approved spending package on Monday. However, the shutdown could delay the release of key economic data, including the highly anticipated January jobs report from the Bureau of Labor Statistics.

Technology Sector Under Pressure from AI Developments

The technology sector faced a difficult session, driven by concerns over new artificial intelligence tools and their potential to disrupt established business models.

Google's 'Project Genie' Disrupts Gaming Stocks

Shares in video game and development platform companies fell sharply after Google unveiled an experimental AI tool named "Project Genie." This tool allows users to create interactive 3D virtual worlds from simple text prompts.

Investors are concerned that such technology could eventually bypass the need for complex, traditional game development engines. While the project is still in its early stages, the announcement had an immediate impact on related stocks:

Unity (U): -24.22%
Roblox (RBLX): -13.17%
Take-Two Interactive (TTWO): -7.93%

Broader Software Sell-off

The anxiety extended beyond the gaming industry into the broader software sector. The iShares Expanded Tech-Software Sector ETF (IGV) has fallen approximately 23% from its recent peak, placing it in a bear market.

There are growing fears that low-cost AI automation could erode the subscription revenues that have long been the foundation of the software industry. Adding to the negative sentiment, reports suggest that Nvidia may be putting its planned $100 billion investment in ChatGPT-developer OpenAI on hold. Even companies with solid earnings reports were not immune. For example, ServiceNow ($NOW) is down 24% this month despite positive results, and Microsoft ($MSFT) has dropped nearly 12% amid concerns over slowing growth in its cloud computing division.

Global Economic and Corporate Highlights

European Economy Shows Surprise Growth

The European Union's economy grew by 0.3% in the fourth quarter of 2025, a result that was better than analysts had expected. This marks the ninth consecutive quarter of expansion. The positive data was supported by Germany showing signs of climbing out of a recession and Spain's economy continuing its strong performance.

UK Strengthens Trade Ties with China

Following a recent trip, British Prime Minister Keir Starmer has secured new trade agreements with China. The deals include 30-day visa-free entry to China for British citizens and lower tariffs on whiskey. In a related development, the British-Swedish pharmaceutical company AstraZeneca announced a new $15 billion investment in China.

Chinese Electric Vehicle Sales Weaken

Data from January has underscored a slowdown in the electric vehicle (EV) sector, particularly in China. Major Chinese EV makers Li Auto, NIO, and XPeng collectively reported their slowest sales growth in three years. This trend has prompted companies like Tesla to publicly shift their focus toward adjacent technologies like artificial intelligence, robotics, and self-driving taxis.

Food Industry Sees Wave of Divestitures

Major food producers are increasingly looking to streamline their operations by splitting up or selling underperforming businesses. This trend is driven by heightened regulatory scrutiny and shrinking consumer demand for processed goods.

Companies such as Kraft Heinz and Keurig Dr Pepper are reportedly planning splits, following Unilever's move to spin off its ice cream business last year. According to a survey by Bain, 42% of M&A executives in the consumer product sector are preparing to sell an asset within the next three years.

Key Company Updates

Deckers (DECK): The parent company of UGGs and Hoka running shoes saw its shares rise by over 19% after reporting better-than-expected earnings. The growth was attributed to a successful resurgence of the UGG brand and continued strong sales from Hoka.
Disney (DIS): The company reported first-quarter earnings that beat analyst expectations, sending its shares up 3% in pre-market trading. Its experiences division, which includes theme parks and cruises, hit $10 billion in quarterly revenue for the first time. The board is expected to meet this week to vote on a successor for CEO Bob Iger.
GameStop (GME): The company is shifting its strategy, with CEO Ryan Cohen planning a major acquisition to transform GameStop into a conglomerate that invests in various industries. The plan has received backing from prominent investor Michael Burry.
Starbucks (SBUX): The coffee giant revealed ambitious expansion plans, aiming to open 5,000 more stores in the U.S. and double its global presence, with a significant focus on growth in China.
Amazon (AMZN): The company's documentary about first lady Melania Trump, titled "Melania," earned $7 million at the domestic box office in its opening weekend, the highest debut for a non-music documentary in over a decade.

Cryptocurrency Market Follows Precious Metals Downward

The downturn in traditional 'safe haven' assets extended to the cryptocurrency market. Bitcoin slumped over the weekend, falling below the $80,000 mark for the first time since April to a 10-month low of $74,553. The sharp decline erased over $111 billion in total crypto market capitalisation and led to the liquidation of $1.6 billion in leveraged trading positions in a 24-hour period.

The drop of almost 40% from its highs in October is partly linked to the sell-off in gold and silver, as investors worry that a stronger U.S. dollar under a new Fed regime could negatively impact the value of digital assets.

Focus on MicroStrategy

The falling price of Bitcoin has put a spotlight on MicroStrategy (MSTR), a company known for its large holdings of the cryptocurrency. The recent price drop has pushed Bitcoin below the company's average purchase price of approximately $76,000 per coin. This means the company's significant $54 billion position is currently unprofitable, raising concerns for investors.

NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).