Written by Tech stocks underperform; bitcoin at three-month low
Monday’s improved performance from risk assets proved short-lived as investors face new hurdles almost daily. The current muted risk-off tone is mostly attributed to the weakness seen in US equity indices. The gradual adoption of AI is proving a headache, and not a tailwind, for specific industries as they transition to the new era. Coupled with concerns about the humungous capital expenditure plans from technology firms, investors are feeling less comfortable about the immediate outlook.
The technology sector of the S&P 500 index is 3.7% down this week, experiencing its sixth consecutive negative week. This is the longest ‘red’ patch since May 2022 when the world was coming out of the COVID pandemic, the Fed started to tighten its monetary policy stance, and there were concerns about overstretched valuations. Interestingly, back then a local trough was reached in early 2023, which acted as the basis for the rally that led to current market levels.
Cryptos and silver are feeling the brunt of the current weak risk appetite. Bitcoin and Ethereum are hovering at their lowest levels since November and May 2025, respectively, suggesting that the crypto market might have fallen out of fashion. The lack of progress regarding the key CLARITY Act can be blamed, but there seems to be a genuine lack of interest. Silver can be partly blamed for this situation, as its recent parabolic performance guided hot money away from cryptos.
Gold survives crash; Trump pushes for lower Fed rates
Unsurprisingly, gold is behaving more maturely than silver in the current setup. The shiny metal is hovering below the $4,900 level, with geopolitics keeping gold bid and die-hard bulls believing that the long-term bullish trend remains intact.
US President Trump is doing his fair share to support gold by maintaining his usual rhetoric about the Fed, feeding widespread concerns about the Fed’s independence. Warsh’s confirmation hearings at the Senate will be the next focal point for the market, with the date yet to be confirmed.
Until then, investors will digest the various data releases without altering rate expectations. Around 50bps of easing is currently priced in, as Wednesday’s weak ADP employment print dampened expectations for a strong nonfarm payrolls report. As a reminder, the NFP release has been moved to Wednesday, February 11, with the CPI report now scheduled for a Friday, February 13 release, following the brief partial shutdown.
Dollar rally pauses; BoE and ECB meet today
The dollar index is up 0.7% this week, as, excluding the aussie being boosted by the hawkish RBA, the greenback is posting gains across the FX spectrum. This rally against the euro appears to have paused, despite yesterday’s weak eurozone PMI services surveys.
The focus today shifts to the BoE and ECB policy meetings. At 12:00 GMT we will find out if the recent decent UK data have convinced most of the doves to stay on the sidelines today, or whether another 5-4 voting result will widely open the door to a March move. The quarterly inflation projections and Governor Bailey’s press conference will also be closely monitored, with investors interested in the MPC’s risk assessment regarding inflationary persistence. Markets are currently pricing in 38bps of easing in 2026, with just a 5% chance of a surprising rate cut today.
Interestingly, at the end of the day, political developments might steal the spotlight. PM Starmer is once again under pressure regarding the Mandelson-Epstein ties, fueling the current pound weakness.
Finally, at 13:15 GMT, the ECB press statement will be announced, with the usual press conference held 30 minutes later. No rate cut is expected, which means that the Lagarde Q&A session will get most of the market attention.
Most ECB members appear comfortable with the current growth and inflation dynamics, but there are concerns about the recent rally in euro/dollar, Warsh’s nomination, the Fed’s independence, and the recent market rout. Most of these fall outside the ECB remit, hence jawboning is the only tool Lagarde possesses, with caution most likely being the name of the game today.
By XM.com
