Gold tanks, bonds go bid as tech leads stocks lower

• US stocks slide as consumer confidence sinks most in four years
• Treasury yields sink, hits USD as JPY outperforms
• Ukraine to agree with US on terms for minerals deal
• Gold tumbles as investors cash in, Bitcoin dips to $88,000 on sour macro outlook

FX: USD got hit by selling as tariff comments from Trump saw bonds go aggressively bid. That saw the US Treasury 10-year yield sink below 4.30%. It was trading at 4.66% two weeks ago. The “Trump trade” is being re-examined, as well as the US exceptionalism theme after weak consumer confidence figures. We highlighted yesterday that this data was worth watching out for. Price action is tracking Trump’s first term with a dollar bump reversing a few weeks on from his inauguration.

EUR performed relatively well, though it is still struggling to break decisively above 1.05. The 100-day SMA sits at 1.0542. Narrower interest rate differentials between the US and Europe are helping support the euro. A boost in German defence spending will need more borrowing and is keeping rates high. Whisper it quietly, but the German fiscal stance could be shifting. European stock markets also underpin some support for the single currency, as they continue to outperform their US peers by some margin since the new year.

GBP also saw buying though cable remains in consolidation mode above 1.26. Various BoE officials have spoken this week, but BoE rate cut pricing has barely changed, with around 50bps priced in for this year. The 100-day SMA resides at 1.2648.

USD/JPY outperformed on haven buying and the US Treasury 10-year yield moving lower. The major is now trading below the midpoint of the September to January rally at 149.22.  It looks to be only a matter of time before another bearish breakdown, potentially towards 146, if this support is decisively pierced.

AUD suffered on the risk off move. Inflation data will grab some attention after the RBA’s moderately hawkish stance last week after its first rate cut in four years. USD/CAD moved north for a third straight day towards the 50-day SMA at 1.4340.

US stocks: The benchmark S&P 500 fell for a fourth straight day, losing 0.47% to settle at 5,955. The tech-heavy Nasdaq finished down 1.24% at 21,195. The Dow gained 0.37% to close at 43,621. It’s the longest losing streak on the benchmark S&P 500 since January 2. The index is now down 0.69% since inauguration day. Tech again led the sell-off with communication services falling the most, while consumer staples enjoyed the largest gains. Nvidia dropped 2.8% ahead of its much-anticipated earnings release. Tesla slid 8.4% as the EV-maker sunk below the $1trn market cap for the first time since November 14. Data showed sales in Europe plunging 45% during the first month of the year. The stock has now given back over one third of its value since hitting a record top at $488.54 in mid-December.

Asian stocks: Futures are in the red. Stocks traded lower after the soft handover from Wall Street where tech tanked. The ASX 200 saw defensive resilience in energy but selling in tech and financials. The Nikkei 225 gapped lower on the open after its return from holiday. But shares of the big four trading houses buoyed the index after reports Berkshire Hathaway would raise their investments. The Hang Seng and Shanghai Comp sold off on trade frictions as the negative mood was bolstered by the US seeking to tighten chip controls on China.

Gold sold off aggressively falling below $2900 at one point during the session. It was its biggest one-day dollar and percentage drop since December 19. Profit-taking from possible margin calls seems to be the best reason for the big downside move.

Day Ahead – Australia CPI, Nvidia’s earnings

Australian CPI is set to rebound, with the headline rising one-tenth to 2.6%. Markets will look closely at the trimmed mean to gauge whether the sharp decline to 2.7% in December was the start of a broader trend. Last week, the RBA was cautious on future rate cuts due to still sticky inflation and the solid jobs market. Uncertainty over US protectionism also looms large. Money markets price in around 50bp of RBA rate cuts by year-end.

As we mentioned yesterday, Nvidia’s release Q4 earnings after the US closing bell.  The tech titan is seen as a bellwether for the AI theme and will be their first results since the DeepSeek shake up of the AI ecosystem. The chipmaker suffered a record one-day loss in market value ( -17% or $593bn) after the low-cost AI model sent shockwaves through markets.

Chart of the Day – Nvidia volatility likely

Expectations are for NVDA’s fourth-quarter profit to hit $20.89 billion, driven by a roughly 72% rise in revenues from a year earlier, according to consensus. Options markets imply a 7.7% swing for the shares in either direction following the results. That would be in line with the stock’s average move of 7.6% on the day after results over the last 12 quarters. The AI chipmaker’s market cap is roughly $3.4 trillion, which is around 6.3% of the S&P 500 index weighting.

Guidance will be key for both supply and demand for its chips to justify its own valuation. That is currently 32x forward 12-month earnings estimates, down from 40 in early November, and vs S&P 500 trading at 22x. On the chart, the 200-day SMA is at $126.20. The y-t-d swing low is $113.01. Upside levels are $136.31 and $153.13.

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