Markets rocked by unwinding of Gold and Silver

EU mid-market update: Markets rocked by unwinding of gold and silver; Oracle's late Sunday evening filing for debt offering raises eyebrows.

Notes/observations

- Risk sentiment deteriorated across Asia and flowed into Europe. Basic Resources and Energy equity sectors underperform on heavy selling of gold and crude oil. Miners such as Endeavour Mining, Fresnillo and Antofagasta lagged; Defensives like Unilever and Coca-Cola held up. Semis were weaker (ASML, ASM International, STMicroelectronics).

- Commodities being the main volatility driver. Gold hit $4,400/oz, having been up near $5,600/oz last week; Brent Crude and WTI Crude slid to ~$66 and ~$61 as U.S.–Iran negotiations reduced risk premium and OPEC+ kept output steady. Precious metals sold off hard amid deleveraging and higher margins; base metals followed, with London Metal Exchange copper back below $13k as ANZ cited spillover from precious-metals liquidation.

- Mispriced risk about Oracle’s offering announced on Sunday is that the $45-50B 2026 funding plan is not a temporary bridge to cloud growth, but a structural rewrite where the firm must manufacture credit stability by continuously clearing equity supply as CDS tightens. The shift from “AI capex narrative” to “AI financing narrative” is causal and chronological - Stargate’s multi-GW scale, the Sept 2025 bond deal and ensuing lawsuit, CDS stress and project-financing pullback, and Feb 1’s board-approved schedule all point to a market treating this as OpenAI-duration underwriting, not balance-sheet optimization. The tell is whether the $20B ATM is absorbed fast enough to keep five-year CDS below the 200 bps regime line into mid-March and to price a marquee IG bond without a punitive concession, because that outcome separates “dilution buys the IG license” from “Oracle gets priced like infrastructure with special-situation credit.”

- TTN Note: It is unusual for a mega-cap to spell out an almost $50B one-year funding target and to source roughly half via equity-linked issuance - including an outsized $20B ATM plus mandatory converts - instead of leaning primarily on debt. It is also atypical to concentrate the entire debt portion into a single IG bond in early 2026 with no further debt planned, while disclosing no strategic anchor partner and effectively relying on public markets as the backstop. Oracle could not line up strategic partners for this debt offering - a quiet tell that Big Tech do not want to bankroll a direct cloud rival, and the AI heavyweights with cash are keeping their checks in their pockets.

- Press reports that OpenAI up-to-$100B plan first unveiled in September 2025 is reportedly "on ice," with internal Nvidia doubts and Huang privately playing down the odds the original megadeal gets finalized. Then Huang said Nvidia will "absolutely" participate in OpenAI's current funding round, but the investment will be "nothing like" $100B - even if it ends up Nvidia's largest check ever.

- Momentum began after US dollar firmed following the nomination of Kevin Warsh to lead the Fed, with analysts citing his bias toward balance-sheet reduction and tighter policy if inflation risks reappear. U.S. Treasury yields reversed part of their Friday rise ahead of the quarterly refunding update.

- Crypto followed the cross-asset deleveraging trend. Bitcoin fell below $80k after a sharp drop, with forced selling to meet margin calls being attributed to the collapse.

- In the U.K., the BOE is expected to hold at 3.75% on Thurs, but comments on fiscal-tightening risks could pressure GBP. Strategists at Citi still expect cuts starting April. Gilts eased slightly ahead of the meeting. In the eurozone, the ECB is set to hold; markets see limited near-term cut risk.

- Truflation’s real-time US inflation proxy just fell to 0.86% (lowest since 2020), signaling that disinflation is broadening from rents into travel lodging and steadily cooling food, even while January’s wholesale natural-gas shock has not yet fully passed through to retail utility bills due to typical rate-setting lags. This may point to softer official CPI prints into late February/early March 2026, with the key upside risk being a delayed rebound in utilities if January’s energy spike shows up in household bills.

- Asia closed lower with KOSPI underperforming -5.3%. EU indices +0.1-0.6%. US futures -0.9% to -0.3%. Gold -3.0%, DXY +0.1%; Commodity: Brent -4.3%, WTI -4.7%; Crypto: BTC -0.8%, ETH -3.9%.

Asia

- BOJ Jan Summary of Opinions (MPM) saw members increasingly concerned that persistent yen currency depreciation was skewing inflation risks to the upside.

- China Jan Manufacturing PMI (Govt Official): 49.3 v 50.1e (moved back into contraction); Non-manufacturing PMI: 49.3 v 50.3e.

- China Jan RatingDog PMI Manufacturing: 50.3 v 50.0e (2nd month of expansion).

- Japan Jan Final PMI Manufacturing: 51.5 v 51.5 prelim (confirms 1st expansion in 7 months).

- Australia Jan Final PMI Manufacturing: 52.3 v 52.4 prelim (confirms 3rd month of expansion).

- South Korea Jan PMI Manufacturing: 51.2 v 50.1 prior (2nd month of expansion).

- Taiwan Jan PMI Manufacturing: 51.7 v 50.9 prior (2nd month of expansion).

- Japan Dep Chief Cab Sec Ozaki: PM Takaichi was not highlighting "benefits of a weak Yen".

Global conflict/tensions

- US Envoy Witkoff: Had productive talks with Russia special envoy Dmitriev in Florida.

- Ukraine President Zelenskiy: Next US‑Russia‑Ukraine trilateral meetings will take place Feb. 4‑5th in Abu Dhabi.

Europe

- S&P raised Italy outlook to Positive from Stable; Affirms BBB+ sovereign rating.

Americas

- House Speaker Johnson (R) said to be 'confident' partial shutdown will end by Tues [Feb 3rd].

- Trump said Fed Chair Nominee Warsh could receive support from the Democrats.

- Warsh return to the Fed said to revive tensions over the central bank's $6.6T QE handgover.

Energy

- Eight OPEC+ members confirm to maintain pause in oil production for March.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.01% at 611.06, FTSE +0.09% at 10,233.11, DAX +0.40% at 24,613.96, CAC-40 +0.11% at 8,135.46, IBEX-35 +0.35% at 17,934.28, FTSE MIB +0.15% at 45,575.50, SMI +0.61% at 13,258.90, S&P 500 Futures -0.56%].

Market Focal Points/Key Themes: European indices open generally lower and remained under pressure through the early part of the session; markets expressing risk avoidance amid commodity volatility; among sectors managing to stay in the green are telecom and consumer discretionary; sectors leading the way lower include energy and technology; oil & gas subsector dragged down after Trump signals de-escalation over Iran; earnings expected in the upcoming US session include Tyson Foods, Walt Disney and Palantir.

Equities

- Consumer discretionary: Pandora [PNDORA.DK] +8.5% (drop in silver prices).

- Financials: Intesa Sanpaolo [ISP.IT] -1.0% (earnings), Julius Baer [BAER.CH] -5.0% (earnings).

- Healthcare: Novo Nordisk [NOVOB.DK] -2.0% (hearing analyst downgrade).

- Industrials: NCC [NCCA.SE] +1.0% (said to be in advanced talks to sell its industry business to a consortium including CRH Plc and Heidelberg Materials AG).

- Technology: ASML [ASML.NL] -3.5% (report on $100B megadeal between OpenAI and Nvidia 'is on ice'; Oracle debt offering).

Speakers

- ECB Survey on the Access to Finance of Enterprises (SAFE ): Companies inflation expectations broadly unchanged across all time horizons.

- Norway PM Store: It is wrong to say NATO gives nothing to the US.

- Iran Foreign Ministry spokesperson: Reviewing various diplomatic tracks.

Currencies/fixed income

- USD maintains a steady tone during the session against the major pairs. Greenback continued to find some support in the aftermath of President Trump’s announcement of Warsh as the next Fed Chair. Commodity-related FX pairs saw heightened volatility as precious metal and oil prices initially slumped by double digits.

- EUR/USD at 1.1860 after probing above the key 1.20 level last week. Focus on the ECB rate decision on Thurs where the central bank is expected to kept policy steady. ECB likely to comment about potential effects of a strong currency on the inflation path.

- GBP/USD drifted higher to test above the 1.37 level. BOE expected to keep policy steady later this week.

- USD/JPY edging towards the 155 area with focus on the upcoming parliamentary elections.

- Prospects of a less-dovish Fed continued to hamper the commodity markets with precious metals falling again sharply lower before the EU open. Gold and silver slumped dramatically during the Asian session (-15% and 10-% respectively at one point) but clawed their way back as the session progressed.

- 10-year German Bund yield last at 2.85%, France 10-year Oat at 3.44% and 10-year Gilt yield at 4.50% 10-year Treasury yield: 4.22%; 10-year JGB: 2.23%.

Economic data

- (NL) Netherlands Dec Retail Sales Y/Y: 3.0% v 4.3% prior.

- (SE) Sweden SEB Housing Price Indicator: 44 v 37 prior.

- (RU) Russia Jan Manufacturing PMI: 49.4 v 48.1 prior (8th month of contraction).

- (NL) Netherlands Jan Manufacturing PMI: 50.1 v 51.1 prior (8th month of expansion).

- (DE) Germany Dec Retail Sales M/M: 0.1% v 0.1%e; Y/Y: 3.2% v 2.0%e.

- (UK) Jan Nationwide House Price Index M/M: 0.3% v 0.3%e; Y/Y: 1.0% v 0.7%e.

- (TR) Turkey Jan Manufacturing PMI: 48.1 v 48.9 prior.

- (CH) Swiss Dec Real Retail Sales Y/Y: 2.9% v 1.7% prior.

- (SE) Sweden Jan PMI Manufacturing: 56.0 v 55.4 prior.

- (TH) Thailand Jan Business Sentiment Index: 49.1 v 49.8 prior.

- (PL) Poland Jan Manufacturing PMI: 48.8 v 49.1e.

- (HU) Hungary Jan Manufacturing PMI: 49.2 v 52.7e.

- (ES) Spain Jan Manufacturing PMI: 49.2 v 49.9e.

- (CH) Swiss Jan PMI Manufacturing: 48.8 v 47.1e (37th month of contraction); PMI Services: 53.8 v 51.4 prior.

- (CZ) Czech Jan Manufacturing PMI: 49.8 v 50.6e.

- (NG) Nigeria Jan PMI (whole economy): 49.7 v 53.5 prior- (IT) Italy Jan Manufacturing PMI: 48.1 v 48.5e (2nd month of contraction).

- (FR) France Jan Final Manufacturing PMI: 51.02v 51.0 prelim (confirmed 2nd month of expansion).

- (DE) Germany Jan Final Manufacturing PMI: 49.1e v 48.7 prelim (confirmed 43rd month of contraction).

- (EU) Euro Zone Jan Final Manufacturing PMI: 49.5 v 49.4 prelim (confirmed 3rd month of contraction).

- (GR) Greece Jan Manufacturing PMI: 54.2 v 52.9 prior (35th month of expansion).

- (ZA) South Africa Jan Manufacturing PMI: 48.7 v 40.5 prior (4th month of contraction).

- (CH) Swiss Weekly Total Sight Deposits (CHF):452.7 B v 449.3B prior; Domestic Sight Deposits: 436.6B v 433.6B prior.

- (UK) Jan Final Manufacturing PMI: 51.8 v 51.6 prelim (confirmed 3rd month of expansion).

Fixed income issuance

- None seen.

Looking ahead

- (RO) Romania Jan International Reserves: No est v $77.0B prior.

- (ZA) South Africa Jan Naamsa Vehicle Sales Y/Y: No est v 19.2% prior.

- (IT) Italy Jan Budget Balance: No est v €11.7B prior.

- (AR) Argentina Jan Government Tax Revenue (ARS): No est v 16.527T prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 Germany to sell combined €4.0B in 3-month and 9-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 06:00 (PT) Portugal Dec Industrial Production M/M: No est v -3.0% prior; Y/Y: No est v 0.3% prior.

- 06:00 (IL) Israel to sell bonds.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 06:30 (CL) Chile Dec Economic Activity Index (Monthly GDP) M/M: No est v -0.6% prior; Y/Y: 1.0%e v 1.2% prior.

- 06:45 (UK) BOE’s Breeden.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (BR) Brazil Jan Manufacturing PMI: No est v 47.6 prior.

- 08:00 (SG) Singapore Jan Purchasing Managers Index (PMI): No est v 50.3 prior; Electronics Sector Index: No est v 50.9 prior.

- 08:00 (CZ) Czech Jan YTD Budget Balance (CZK): No est v -290.7B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.6-8.2B in 3-month, 6-month and 12-month bills.

- 09:30 (CA) Canada Jan Manufacturing PMI: No est v 48.6 prior.

- 09:45 (US) Jan Final S&P Manufacturing PMI: 51.9e v 51.9 prelim.

- 10:00 (US) Jan ISM Manufacturing: 48.5e v 47.9 prior; Prices Paid: 59.0e v 58.5 prior.

- 10:00 (CO) Colombia Jan PMI Manufacturing: No est v 52.6 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:00 (IT) Italy Jan New Car Registrations Y/Y: No est v 2.2% prior.

- 12:30 (US) Fed's Bostic.

- (IT) Italy Jan Budget Balance: No est v €11.7B prior.

- (AR) Argentina Jan Government Tax Revenue (ARS): No est v 16.527T prior.

- 15:00 (US) Treasury Quarterly Borrowing Estimates.

- 16:45 (NZ) New Zealand Dec Building Permits M/M: No est v 2.8% prior.

- 18:00 (KR) South Korea Jan CPI M/M: 0.5%e v 0.3% prior; Y/Y: 2.1%e v 2.3% prior; CPI (ex-food/energy) Y/Y: 2.0%e v 2.0% prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 84.0 prior.

- 18:50 (JP) Japan Jan Monetary Base Y/Y: No est v -9.8% prior.

- 19:30 (AU) Australia Dec Building Approvals M/M: -6.4%e v +15.2% prior; Private Sector Houses M/M: No est v 1.3% prior.

- 20:01 (IE) Ireland Jan PMI Manufacturing: No est v 52.2 prior.

- 22:30 (AU) Reserve Bank of Australia (RBA) Interest Rate Decision: Expected to raise Cash Rate Target by 25bps to 3.85%.

- 22:30 (AU) RBA-Statement on Monetary Policy (SOMP).

- 22:35 (JP) Japan to sell 10-year JGB Bonds.

- 23:00 (SG) MAS to sell 4-week, 12-week and 36-week bills.

- 23:30 (AU) RBA Gov Bullock post rate decision press conference.