Where Are Markets Today?
European and U.S. equity futures are opening flat, indicating that the market is taking a breather rather than reversing its trend after yesterday’s significant rotation in technology stocks negatively impacted market sentiment. Futures tied to the S&P 500 are currently flat, while Nasdaq futures are slightly down, and Dow futures are up by a small margin, indicating that the market is taking a cautious approach. European stock index futures are also flat, indicating that they are being negatively impacted by yesterday’s decline in technology stocks in the United States but are being positively impacted by cyclical and defensive stocks.
The first and most obvious reason is that technology and software stocks, which have traditionally been carrying an outsized weight in market rallies, continued to rotate out of these stocks, negatively impacting global stock market indices. This rotation in technology stocks has had a significant impact on stock market futures because these stocks have been carrying an outsized weight in market rallies in recent times. This rotation in these stocks has negatively impacted stock market futures in the United States and Europe, keeping them flat due to investors unwinding these trades.
Another key driver is earnings-related caution, with the market becoming increasingly selective as risk related to company earnings guidance increases. Disappointing earnings and related guidance from a number of major companies have increased the focus on forward earnings guidance rather than trailing results. Furthermore, with major earnings still to come from global bellwethers, investors seem unwilling to commit to risk ahead of greater clarity. This is also reflected in the futures market, with positioning suggesting consolidation rather than conviction.
Lastly, valuation and macro cross-currents are also influencing market caution. As investors have enjoyed double-digit returns for a number of years, there is little room for disappointment, and as a result, the market is becoming increasingly reactive to disappointing earnings. At the same time, mixed economic indicators and a lack of clarity on the sustainability of economic growth have created a sense of nuance within investors. As a result, it is clear why European and U.S. futures are trading flat to slightly mixed, as they are not signaling any stress but are requiring stronger earnings and participation before committing to the next move.
Major Index Performance as of Wednesday, 4 Feb 2026
- Nasdaq Composite: Currently trading at 23,255, down as technology and software stocks continue their decline.
- S&P 500: Currently trading at 6,924, down today as weakness in mega-cap names is being offset by gains in defensive names.
- Russell 2000: Currently trading at 2,660, relatively stronger today as investors are rotating into smaller-cap and more undervalued names.
- Dow Jones Industrial Average: Currently trading at 49,327, supported by industrial and defensive names but overall subdued.
The Magnificent Seven and the S&P 500
The S&P 500 is again under pressure from the Magnificent Seven, which has underperformed as a group this week after dominating gains for much of the past year. Investors are increasingly selling these names due to stretched valuations, margin pressure from rising input costs, and competition from AI technology affecting long-term earnings growth. The fact remains that the indexes are heavily dependent on these names, and the lack of sectoral diversity is preventing any significant upside move.
Drivers Behind the Market Move – Wednesday, February 4, 2026
As US and European financial markets face a complex array of fiscal events, macro-economic indicators, and political events, market sentiment is characterized by caution. Although market risks are partially contained, unresolved policy questions are creating market uncertainty. Here are the three major factors that are currently influencing financial market movements.
1. Fiscal Relief from Shutdown, but New Deadlines Ahead
Financial markets are taking some relief from the fact that a spending measure has been signed into law, thus ending a partial government shutdown. Although a shutdown would have been a major near-term operational risk, most government agencies are now funded until September 30. However, financial markets are also taking note of the fact that funding for homeland security has only been extended until February 13, with negotiations ongoing. Another important consideration is that the measure has only been passed by a slim margin, thus creating uncertainty about political consensus. Consequently, financial investors are not taking much comfort from these events, thus preferring to remain cautious.
2. Macro Data Tension Keeps Markets Data-Dependent
The economic data released yesterday provided a mixed picture, with stabilization in economic activity and ongoing cost pressures. This has maintained the perception that inflation is sticky, even as economic growth slows. The focus now shifts to the economic data to be released today, including EUR Core CPI, EUR CPI flash, ADP employment, and the ISM Services PMI. Strong data could reinforce the perception that monetary policy will remain restrictive for longer, weighing further on equities and high-beta assets. On the other hand, weak data could provide further support for the view that monetary policy will ease, but raise the risk of the sustainability of the rebound in economic growth.
3. Political and Trade Developments Reinforce Selectivity
The political commentary around immigration policy, election policy, and ongoing legal battles around tariffs has added to the uncertain environment. Ongoing commentary that the administration is focused on tariffs, alongside the legal battles around infrastructure spending, is increasing policy risk premiums. The positive engagement with the government of Colombia has provided a constructive dialogue, which is viewed favorably for the region. However, this has not been enough to overcome the broader trade and policy issues. The impact for the market is to favor balance sheet strength and earnings focus over growth stocks with high valuations.
In summary, the market moves seen today can be characterized as “relief without resolution.” The near-term risk of a shutdown has been alleviated, but the ongoing fiscal deadlines, economic data, and political commentary ensure that the US and European markets remain cautious, selective, and sensitive to the information flow.
Digesting Economic Data
The TRUMP Tweets and Their Implications
The spending measure to end the government shutdown has now been signed, removing the near-term fiscal drag from the market. However, the fiscal negotiations themselves have not been resolved, with the spending measure only extending the appropriation for the Department of Homeland Security until February 13th. As a result, from a market perspective, we have a near-term resolution that supports risk assets, but we have a defined future event horizon that keeps volatility risk front and center. The fact that the measure passed by such a slim margin only reinforces the sense of political consensus, which is always a reason to hold hedges.
The immigration and election administration commentary has added a layer of domestic political risk that cannot be ignored by the market. The repeated calls to nationalize election administration, and the desire to increase federal oversight of state elections, have met with opposition from lawmakers from the opposing party and the Senate leadership themselves. The fact is, these types of policy statements, while not immediately impactful to the economic landscape, increase policy uncertainty, which weighs on business confidence and long-term economic decision-making. As a result, for the market, the type of structural political risk that we see here is always supportive of defensive positioning and the desire for policy hedges.
On the foreign policy side, the administration’s approach to Colombia has been framed positively, and the cooperation on sanctions, counter-narcotics, and security issues is likely to set a positive diplomatic tone for the region. This should help stabilize the geopolitical risk premiums associated with the Latin American trade and security landscape, which may have a marginal impact on positive risk sentiment. However, the positive diplomatic tone is being offset somewhat by the legal battles over tariffs, which the administration also signaled as a core concern during the day. The tariff issues remain a significant concern for the global economy and markets due to their implications for global trade flows and inflation.
The lack of an agreement on digital asset legislation after the administration’s discussions on digital asset legislation and the acknowledgment of the division between the banking and crypto industries also indicate the lack of resolution on the digital economy front. This will remain a concern for investors and markets due to the ambiguity around the capital allocation for digital assets and the fintech ecosystem. In summary, the developments on the day suggest that the markets are seeing a broader theme of managing immediate crises but also facing medium-term policy, legal, and funding risks.
Boomer Wealth Concentration Accelerates as Asset Inflation Dominates
As depicted by the data relating to household balance sheets, the acceleration of wealth accumulation by the older population has been significant, with the total net worth of the Boomers increasing to 88.5 trillion by the third quarter of 2025, a significant increase from 78 trillion in 2022. The increase has been driven by gains from the stock market and asset inflation rather than wage growth, with the Boomers accounting for nearly half of the total wealth. The data depict the long-run exposure to equities, housing, and private assets, which continues to compound, reinforcing the dominance of asset owners rather than the income earners in the current cycle. From a market perspective, the data depict the sustained demand for financial assets and income-generating instruments, despite the shift in consumption patterns.
At the same time, the comparison to younger generations is becoming more pronounced. Younger households, while comprising the largest demographic within the adult population, have access to a significantly smaller share of aggregate wealth due to factors such as heightened housing costs, entry barriers to asset accumulation, and compounding. The comparison should be noted by analysts as an indicator of structural change favoring wealth accumulation through balance sheet strength rather than labor participation. It should be noted by analysts as an indicator of structural change favoring wealth accumulation through balance sheet strength rather than labor participation.
In this context, diversified asset management firms with significant exposure to equity inflows and retirement-driven investment trends are seen as undervalued, particularly those with the ability to generate fee-based income from an aging population seeking income stability and capital protection. Analysts should take note of trends in flows to retirement accounts, inheritance tax policy discussions, and trends in asset allocation towards defensive income-seeking strategies, as these will be critical to sustaining trends in asset-driven wealth accumulation and its spillovers to equity market leadership.
Manufacturing Expansion Returns as Cost Pressures Re-Intensify
The latest January 2026 data points to a clear re-entry into expansion territory as manufacturing activity bounces back strongly from a contraction in December. The rise in headline figures is driven by a strong increase in new orders as businesses restock following the holiday period. However, underlying pricing pressures have not shown significant relief. This confirms that underlying demand remains robust, particularly in cyclical industries. From a stock market perspective, this supports stocks with a link to industrial production, particularly those with pricing power.
However, the rise in input costs also creates a key concern. The rise in prices paid suggests that underlying cost pressures remain a factor in the supply chain. This means that any potential margin benefits from higher output will be limited. From a stock market perspective, when cost pressures remain high in manufacturing as a whole during periods of expansion, stocks with poor cost discipline tend to perform poorly. Analysts need to note this as a potential concern that may see revisions in earnings estimates favoring stocks with strong cost discipline, particularly those with automation-based pricing.
From this perspective, we see undervalued stocks in industrial automation and diversified manufacturing with strong cost discipline. Analysts need to monitor forward indicators of cost discipline as well as potential pricing pass-through in upcoming earnings cycles. In addition, ongoing cost pressures may also have implications for monetary policy. In this regard, sensitivity to finance conditions will also be a key factor in determining stock market support.
Equity Inflows Signal a Rotation Toward Scale and Earnings Visibility
Global fund flows indicate a renewed preference for equities as net flows increase and accelerate. The flows are concentrated in large-cap stocks and consumer-related growth areas. This indicates that investors are increasingly focused on balance sheets, earnings visibility, and liquidity as macroeconomic uncertainty persists. The flows into equities are concentrated, indicating that investors are betting on companies with a strong market share and pricing power. This has significant implications for markets as a whole because it suggests that investors are favoring a late-cycle allocation bias. This means that they are favoring resilience over potential market upside.
The continued outflows from small-cap equities and defensive non-cyclical areas indicate that investors are selectively rather than indiscriminately taking on risk. Small-cap companies tend to be sensitive to changes in financing costs and input prices. Defensive areas tend to lose favor as growth expectations stabilize. Analysts need to understand that this indicates a rotation within equities rather than a fear of equities. The reduced flows into safe-haven assets also suggest that volatility is not a concern.
In this regard, large-cap consumer-facing companies with strong cash flows and strong brands are undervalued. They are undervalued as they tend to perform well in stable employment markets without relying on excessive debt levels. Analysts need to monitor revisions in consumer cyclicals, changes in small-cap flows as a leading indicator of risk sentiment, and changes in defensive flows that may indicate renewed macro concerns.
Upcoming Economic Events
EUR Core CPI Flash Estimate y/y, CPI Flash Estimate y/y, ADP Employment Change, ISM Services PMI
As markets navigate a busy day of economic data, the focus remains firmly on inflation, employment, and service sector momentum in key economies. Collectively, these data points will provide important guidance on inflation dynamics, employment resilience, and the timing of future policy adjustments. With risk sentiment already selective, any deviation from forecast will likely lead to sharp asset price moves. Below, we highlight the key drivers and market implications under different scenarios.
EUR Core CPI Flash Estimate y/y and CPI Flash Estimate y/y
Inflation data from the eurozone will provide important guidance on whether inflation pressures are stabilizing or accelerating. Should actual inflation prints above forecast, markets will likely price in a longer period of restrictive policy, resulting in higher bond yields and a negative impact on interest-rate-sensitive equities, while supporting the euro. Conversely, a print below forecast will alleviate policy pressures, supporting equities and credit markets while reinforcing the view that inflation pressures are cooling decisively. Analysts should also focus on the sustainability of inflation pressures by monitoring the deceleration in core inflation.
ADP Non-Farm Employment Change
The private sector employment numbers are expected to provide an early indicator of labor market momentum, ahead of the broader employment report.
- A stronger-than-forecast reading will reinforce the notion that labor markets are holding up well, which should be beneficial for consumer-linked equities, although inflation concerns may resurface. This may also see yields rise and diminish the prospects of policy easing in the near term.
- On the contrary, a weaker reading will highlight slowing labor demand, which may pressure cyclical sectors, while supporting defensive sectors and fixed income assets. Analysts should also focus on the nature of the employment increase, as this may impact the overall perception of labor market tightness.
ISM Services PMI
The services sector remains the key driver of overall economic activity, and this report will be particularly influential in this regard.
- A stronger-than-forecast reading will highlight robust demand and pricing power, which should be beneficial for equities that are exposed to domestic consumption patterns, although inflation may resurface as a concern in the near term.
- On the contrary, a weaker reading will highlight diminishing demand, which may pressure cyclical sectors and increase the prospects of policy support. Analysts should also focus on the prices paid and employment indices, as these are often key leading indicators.
The combination of these reports will provide a litmus test as to whether the prevailing optimism about the economy can coexist with a resumption in inflation pressures, or whether policy uncertainty will resurface in the early part of the year.
Stock Market Performance
Indexes Hold Modest YTD Gains as Drawdowns Highlight Uneven Market Structure
Equity markets continue their positive year-to-date performance, but the underlying drawdowns highlight that the markets remain structurally uneven. From a risk management and stock selection perspective, this remains a key factor that Zaye Capital Markets continues to focus on, particularly during this period of uncertainty in the markets. Below, we provide a breakdown of the major indexes’ YTD performance, strictly from the information available within the chart:
S&P 500: Steady Index, Shallow Pullbacks
YTD: +2% | Max drawdown from YTD high: -3% | Avg. member drawdown: -7% | +40% since 4/8/25 low | Max drawdown since low: -5% | Avg. member: -20%
The S&P 500 continues its strong YTD performance, but also maintains its relatively shallow drawdowns. However, the average member of the S&P 500 has had a much deeper drawdown, particularly from the low. This highlights that the strong YTD gains have been driven by a relatively small subset of the S&P 500 constituents.
NASDAQ: Strong Recovery, Severe Internal Dispersion
YTD: +2% | Max drawdown from YTD high: -3% | Avg. member drawdown: -16% | +55% since 4/8/25 low | Max drawdown since low: -8% | Avg. member: -44%
NASDAQ has shown the strongest recovery since the April low but still shows significant internal weakness. The strong performance may mask underlying issues since the average member drawdown is still quite significant.
Russell 2000: Outperformance YTD, But Still Volatile
YTD: +6% | Max drawdown from YTD high: -4% | Avg. member drawdown: -11% | +50% since 4/8/25 low | Max drawdown since low: -9% | Avg. member: -32%
The small-cap segment has shown the best performance year to date but still shows significant volatility. The decoupling of performance and average member drawdowns suggests liquidity and balance sheet quality remain key differentiators for winners and losers within the small-cap segment.
Dow Jones: Relative Stability with Limited Upside
YTD: +3% | Max drawdown from YTD high: -2% | Avg. member drawdown: -7% | +31% since 4/8/25 low | Max drawdown since low: -6% | Avg. member: -16%
The Dow Jones shows a more stable performance with lower drawdowns and less volatility. This is consistent with its more defensive composition and may indicate a more stable performance during this time. The upside participation is still limited, and the drawdowns are not as significant as the other indices.
As a firm at Zaye Capital Markets, we will continue to monitor the market and its performance to gauge whether the performance is becoming more sustainable across the broader market.
The Strongest Sector In All These Indices
Energy Leads Year-to-Date Even as Defensive Sectors Win the Day
Based strictly on the sector figures shown, Energy is the strongest sector overall on a year-to-date basis, up 12.1%. That lead stands well above the next strongest groups, including Materials up 9.4% and Consumer Staples up 9.2%, followed by Industrials up 8.0% and Communication Services up 6.1%. From our perspective at Zaye Capital Markets, this is a clear signal that the market’s biggest leadership this year has been driven by energy-linked pricing and earnings strength rather than broad-based growth.
That said, the single-day move on 2/2/2026 shows a different message: Energy fell -2.0% on the day, while Consumer Staples led with a 1.6% gain, followed by Industrials up 1.3% and Financials up 1.0%. This split matters because it shows that even while Energy remains the year’s strongest performer, short-term positioning can still rotate toward defensive demand and steadier cash-flow areas when risk appetite cools.
Our takeaway is straightforward: Energy remains the year-to-date leader at 12.1%, but the day’s leadership came from Consumer Staples at 1.6%, reinforcing that sector strength is not uniform across timeframes. We are watching whether this rotation continues, especially with the broad index up 1.9% year-to-date and up 0.5% on 2/2/2026, because persistent defensive leadership would suggest the market is rewarding stability over higher-risk growth areas like Information Technology, which is down -1.2% year-to-date despite being up 0.5% on the day.
Earnings
Earnings Recap – 03-Feb-2026 (Yesterday)
Earnings reported on 3rd Feb 2026 revealed a wide disconnect between companies with high demand visibility and companies facing competitive or execution challenges. Consumer staples, semiconductor, and healthcare sectors reported good results, whereas digital payments and entertainment segments reported mixed underlying trends.
- PepsiCo reported revenue for Q4 2025 at $29.34 billion, up 5.6% year-over-year and above expectations of $28.97-$28.98 billion. Adjusted EPS came in at $2.26, beating market expectations. Organic revenue growth came in at 2.1%, and management reaffirmed 2026 guidance for 2-4% organic revenue growth and 4-6% core constant currency EPS growth. This is consistent with our view on strong pricing power and earnings stability in consumer staples.
- PayPal reported weaker-than-expected results with revenue for Q4 2025 reported at $8.7 billion, missing expectations of $8.80 billion. Adjusted EPS came in at $1.23, missing market expectations, although GAAP EPS came in at $1.53. Transaction margin dollars came in at $4.0 billion, whereas 2026 revenue guidance came in lower than expectations, reinforcing underlying concerns.
- Advanced Micro Devices reported strong results with revenue for Q4 2025 reported at a record $10.3 billion, up 34% year-over-year, and non-GAAP EPS came in at $1.53, beating expectations. Data center demand drove revenue, and revenue for Q1 2026 is expected to be $9.8 billion.
- Electronic Arts reported net revenue of $1.901 billion in Q3 FY2026, along with robust net bookings of around $3.05 billion, but its EPS declined under GAAP to $0.35. Merck reported robust revenue of $16.4 billion in Q4 FY2026, along with EPS of $2.04, driven by core pharmaceutical sales, while maintaining measured 2026 guidance.
Earnings Preview – 04-Feb-2026 (Today)
Today’s earnings include large-cap technology, healthcare, media, and industrial automation companies, where guidance will be the key earnings driver rather than just earnings results.
- Google Alphabet will be viewed in terms of its advertising demand trends, cloud growth, and margin control as its investment in artificial intelligence infrastructure continues at a robust rate. We will be looking at whether its revenue growth continues to offset its rising capital and operating costs.
- Novo-Nordisk will be viewed in terms of its updates on diabetes and weight management therapy demand trends, prices, and capacity expansion. Its forward guidance will be key in terms of its long-term growth sustainability.
- ATS Corporation earnings will be viewed in terms of its industrial automation investment trends. Its forward guidance will be key in terms of its capital spending sustainability.
- Fox Corporation earnings will be viewed in terms of its advertising revenue trends, affiliate fee trends, and cost control.
- Eli Lilly earnings will be viewed in terms of its revenue growth trends from core therapies, capacity expansion, and its R&D spending control. Its forward guidance will be key in terms of its near-term investor positioning in the entire healthcare sector.
Stock Market Overview – Wednesday, 4 Feb 2026
The US stock market is trading lower today, with investor sentiment deteriorating further due to the ongoing pressure faced by technology stocks and the increasing concern of valuation concentration. However, the risk appetite is selective, with capital flows remaining defensive and certain sectors of the market, such as cyclicals, gaining favor. As per the analysts at Zaye Capital Markets, the ongoing stock market trend is a continuation of the digestion phase, but the fatigue faced by mega-cap stocks is affecting the US stock market indices.
Stock Prices
Economic Indicators and Geopolitical Developments
The ongoing stock market trend is a reflection of the unease faced by investors regarding the adoption of artificial intelligence, which is likely to disrupt the software and platform businesses, affecting the future stock prices and earnings. However, the ongoing geopolitical tensions in the energy sector, coupled with the uncertain labor market data, is keeping the stock market cautious. The high precious metal prices indicate the risk aversion, which is still high, despite the ongoing stock market trends.
Latest Stock News
The ongoing stock market trend is witnessing a number of company-specific catalysts, which is affecting the stock prices of technology, healthcare, and payments stocks.
The ongoing stock market trend is affecting the stock prices of healthcare stocks, with Novo Nordisk warning investors regarding the pricing pressures faced by the company, with the company guiding investors towards a -5% to -13% adjusted sales growth in 2026, compared to the expected growth of 2%, with the company anticipating a decline in the stock prices due to the loss of exclusivity for semaglutide, despite the ongoing rollout of Wegovy.
The ongoing stock market trend is affecting the stock prices of payments stocks, with PayPal facing execution risks, despite the company enjoying the first-mover advantage in the peer-to-peer payments space and strong brand recognition, with the company failing to monetize the business and positioning the agents in the commerce space.
In technology, Apple is incorporating Anthropic and OpenAI agents into its Xcode coding environment. This represents a further integration of agent technology into coding and software development. Advanced Micro Devices continues to demonstrate accelerating growth in data center sales. The segment is compounding into a $20B run rate engine. In Q4, the segment reported $390M in China sales for its MI308 products. It expects $100M more in Q1. However, the segment is poised for 60%+ growth over the next 3-5 years. This is due to record server CPU sales, which now account for more than half of server revenue. Additionally, its MI500 AI accelerator card is on track for a 2027 launch.
We are also seeing a further intensification of the theme related to AI funding and ownership. Alphabet’s prior stake in SpaceX has now become a case study in venture capital returns as a result of the merger between SpaceX and xAI at a combined valuation of $1.25T. Thus, what was a prior investment has now resulted in a 100x return on that investment. Furthermore, Nvidia is said to be finalizing a $20B investment into OpenAI as part of a latest funding round. Again, capital continues to flow into the infrastructure and model layers of the stack.
2026 Top Software Revenue Growth Estimates
- Palantir Technologies Inc. – 61%
- AppLovin Corporation – 36%
- Zeta Global Holdings Corp. – 34%
- Cloudflare Inc. – 27%
- Snowflake Inc. – 24%
- Figma Inc. – 24%
- Duolingo Inc. – 23%
- Rubrik Inc. – 23%
- Zscaler Inc. – 23%
- CrowdStrike Holdings Inc. – 22%
- Klaviyo Inc. – 22%
- Monday.com Ltd. – 21%
- Samsara Inc. – 21%
- GitLab Inc. – 20%
- ServiceNow Inc. – 20%
- MongoDB Inc. – 20%
- Atlassian Corporation – 20%
- SentinelOne Inc. – 20%
The Magnificent Seven and the S&P 500
The S&P 500 is again under pressure from the Magnificent Seven, which has underperformed as a group this week after dominating gains for much of the past year. Investors are increasingly selling these names due to stretched valuations, margin pressure from rising input costs, and competition from AI technology affecting long-term earnings growth. The fact remains that the indexes are heavily dependent on these names, and the lack of sectoral diversity is preventing any significant upside move.
Major Index Performance as of Wednesday, 4 Feb 2026
- Nasdaq Composite: Currently trading at 23,255, down as technology and software stocks continue their decline.
- S&P 500: Currently trading at 6,924, down today as weakness in mega-cap names is being offset by gains in defensive names.
- Russell 2000: Currently trading at 2,660, relatively stronger today as investors are rotating into smaller-cap and more undervalued names.
- Dow Jones Industrial Average: Currently trading at 49,327, supported by industrial and defensive names but overall subdued.
In our opinion, as presented by Zaye Capital Markets, the current market is highly selective and is more focused on valuations and earnings and balance sheets than the direction of the indexes.
Gold Price: How Geopolitics and Important US Economic Announcements Are Influencing the Gold Price in Early 2026
Gold prices are trading near a price of about $5,071.79 per ounce, continuing a recent run of gains that have been fueled by the safe-haven appeal of the precious metal due to increased geopolitical tensions and overall uncertainty. In fact, on February 4, gold rose about 2.7% and easily surpassed the important psychological barrier of the $5,000 level as conflict risk premiums returned to the market and investors sought to move away from volatile equity markets and into more tangible assets. The recent resumption of military conflict in the Middle East, as well as continued uncertainty surrounding fiscal negotiations in the United States, have only added to this demand and further underscored the ability of gold to act as a hedge against systemic risk and a means of capital preservation during a time of overall uncertainty. EUR inflation data, US ADP employment data, and ISM Services PMI are due to be released later today, and these will likely have a significant effect on the overall direction of interest rate policy, a major driver of gold prices and its relative valuation compared to other, more conventional assets – weaker data will likely continue to boost gold prices, while better data will likely temper “safe haven” demand, though underlying geopolitical tensions will continue to support gold prices.
With the mixed bag of economic news from yesterday, which saw gold futures volumes ease and central banks weigh in on macro trends, sticky inflation expectations, and some weakness in equities, there is already a bullish foundation set for gold. The interplay between geopolitical risk and gold, which is highly sensitive to monetary policy, has set up what we call a “dual catalyst” for the price of gold. As such, the uncertainty will continue to drive up demand for gold, but the expectation is for softer labor and inflation data, which will delay any interest rate hikes and therefore make gold more attractive from an opportunity cost standpoint. When looking at the macro view, what we are seeing is an ecosystem in which the safe-haven appeal of gold is being underpinned not by one factor but by multiple factors, including fiscal risks, political noise, and macro data, which is highlighting the need for capital preservation and diversification into real assets. Until such time as geopolitical tensions ease significantly or real yields move up sharply, the current elevated price regime for gold is likely to persist.
Oil Prices: Why Oil Prices Are Volatile as Politics, OPEC Signals, and Key Data Collide
Oil prices are rising and volatile as of Wednesday, 4 February 2026, as Brent oil prices are trading around the high-$60s per barrel, and WTI oil prices are trading around the mid-$60s per barrel. Geopolitics and demand concerns are currently influencing oil prices as they have been pulled in different directions. Recent geopolitical events have added a risk factor to oil prices, mainly on issues of security, sanctions, and global oil supply routes. Politics surrounding government funding, immigration enforcement, tariffs, and other issues have added to oil price volatility. This is likely to be beneficial for oil prices as it increases the chances of supply disruption and policy-driven trade tensions, notwithstanding sufficient oil supplies. However, oil prices are also susceptible to any sign of de-escalation of tensions as oil prices have been swinging significantly on changes in tone and sentiment.
From a macroeconomic point of view, the economic indicators released yesterday are adding to the mixed sentiment. Stabilizing manufacturing indicators are being offset somewhat by ongoing cost pressures, which are fueling the fear of uneven growth and sticky inflation. This does not suggest that there will be any significant run-ups in oil prices, as the expectations of demand remain muted. Today’s economic indicators will play an important role in determining the direction of oil prices. EUR Core CPI, the Flash Estimates for CPI, ADP Employment, and the ISM Services PMI are the important economic indicators to be released today. Strong numbers will have a positive impact on oil prices, as they will indicate stronger demand for oil. Guidance from the major producers continues to influence the market. OPEC’s message is one of discipline when it comes to supply management, and the international energy agencies are emphasizing the finely balanced market and the impact of geopolitical events.
Bitcoin Prices: Why Bitcoin Prices Are Falling Amid Political Uncertainty and Risk-Off Markets
Bitcoin is trading at levels closer to the mid-$70,000 mark per coin and has been hovering at levels closer to multi-month lows following a long sell-off, which has accelerated at the beginning of February. As per market data, Bitcoin has dipped to its lowest levels since the end of 2024 and has only seen a moderate rebound. The cryptocurrency market has seen a decline due to a shift in global markets into a risk-off environment, which has seen billions of dollars in liquidations. As per technical indicators, bearish momentum has been seen in Bitcoin, and sentiment indicators are at their lowest levels, indicating a high level of fear. These levels have been driven by a shift in capital towards traditional safe-haven assets.
Bitcoin has seen a decline due to a shift in global markets into a risk-off environment. As per technical indicators, bearish momentum has been seen in Bitcoin. Sentiment indicators are at their lowest levels, indicating a high level of fear. These levels have been driven by a shift in capital towards traditional safe-haven assets.
Political developments have introduced another degree of uncertainty in the digital asset market. Although the signing of a spending law has eliminated shutdown risks for now, the limited margin by which it passed, ongoing negotiations over homeland security funding, as well as renewed legal and tariff priorities, have maintained policy risks at high levels. More importantly, for crypto assets, the absence of common ground after meetings over digital asset legislation, as well as ongoing divisions between banks and crypto companies, have maintained high levels of regulatory risks, which have impacted fresh inflows. Yesterday’s economic data also maintained market caution, with mixed messages on growth and inflation not providing enough impetus for rapid policy easing, as well as high real yields. Today’s inflation, labor, and employment data, including flash estimates for CPI, ADP employment change, as well as ISM services PMI, are critical for Bitcoin’s near-term direction. Lower-than-expected data could provide relief for rate expectations, stabilizing Bitcoin, while stronger-than-expected data could reinforce dollar strength, exerting additional downward pressure on Bitcoin, making it highly dependent on macro data instead of crypto-specific factors.
ETH Prices: Why Ethereum Prices Are Under Pressure as ETF Flows Shift and Whales Reposition
Ethereum is currently trading in the low-to-mid $2,200 region, with prices continuing to face pressure after undergoing a strong correction in recent weeks, placing it among the weaker-performing major cryptocurrencies in recent trading sessions. Prices are reflecting that Ethereum has been struggling to hold onto important levels as overall cryptocurrency markets remain cautious. However, in terms of price movements, it’s important to note that Ethereum has not been performing in isolation. Recent spot ETF flows have revealed that Ethereum has witnessed outflows, with these outflows placing additional selling pressure on Ethereum. However, it’s also important to note that Ethereum’s current price struggles are not entirely negative. On-chain movements over the last week have revealed that whales are accumulating Ethereum, with tens of thousands of ETH being accumulated by these larger wallets as selling has intensified.
From a macro and sentiment perspective, Ethereum still appears to remain sensitive to the same factors as the broader risk assets. The economic data released yesterday reinforced the current environment, and with mixed growth and ongoing inflation uncertainty, rate expectations remain high and limit the appetite for speculative assets. This environment tends to remain more unfavorable for Ethereum than defensive assets as a result of the increased opportunity cost with higher real rates. In terms of upcoming releases and how they might affect the direction of ETH, today’s inflation and labor releases will likely play a significant role in determining the direction of the asset’s price. A weaker-than-expected reading might alleviate rate expectations and provide a degree of relief for crypto assets as a whole, allowing ETH to stabilize as a result of whale accumulation offsetting selling pressure. A stronger reading might continue to favor dollar strength and a more unfavorable environment for Ethereum, regardless of the ongoing buying interest from a whale perspective. The current state of the ETH ecosystem can be defined as a tug-of-war between institutional outflows and strategic whale accumulation.
