RBA hawkish hike – Precious metals stabilize

Asia market update: RBA hawkish hike; Precious metals stabilize; US to cut India tariffs; CN/HK AI gloss wearing thin?

General trend and developments

- Australia’s RBA not only raised rates 25bps as expected to 3.85% (a unanimous decision), but the board indeed flagged this could well be the start of a new hiking cycle (as opposed to a one-off adjustment), saying the outlook for inflation has been materially revised higher over the forecast period and with a higher terminal rate of 4.20%. Markets now pricing in two more 25bps hikes later this year. AU 3-year yields +13bps and Aussie dollar +1.2%, retaking the 70 handle vs USD.

- In her post-rate presser, Gov Bullock said that a 50bps hike was Not discussed by the board, a comment that saw AU yields come off their highs.

- US Pres Trump said he was cutting India’s reciprocal tariffs from 25% down to 18%; Also said that India's PM Modi agreed to stop buying Russian Oil, and to buy "much more" from the US and, potentially, Venezuela. Adani Enterprises +10%.

- Spot Silver continues to recover, at best during Asia +7% at >$84/oz; Spot Gold +3.6% at best back to >$4,800/oz.

- Bitcoin also +4% to retake $78K.

- Kospi +6.5%, Nikkei +3.9% to hit fresh record high >54,500. No particular catalyst noted, but the lack of forced margin calls today in precious metals and crypto may have enabled somewhat of a relief rally after the extreme volatility the past few days.

- China / HK tech stocks down, with last year’s AI-darling Cambricon punished -14% today after guiding only CNY20B in revenues for 2026 when CNY30B was expected.

- Oracle and Nvidia both down in US trading despite higher equities overall (follows yesterday’s Oracle debt announcement and Nvida sprinkling some cold water on the scope of OpenAI funding).

- Japan 10-year auction was a bit weak, with the bid-to-cover weaker than the 12-month average. Japanese long-end yields were down while the front end (2 and 5 years) yields were up the most, flattening the curve with the Japanese election coming up and Takaichi’s LDP now expected to win a majority in the Lower House.

- US equity FUTs 0.3% to 0.5% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

- Tue Feb 3rd (Tue night US Dec JOLTS, likely to be delayed due to partial US govt shutdown).

- Wed Feb 4th NZ Q4 jobs, CN Jan Services PMI, (Wed eve EU Jan CPI, Wed night US Jan ISM Services PMI).

- Thu Feb 5th AU Dec Trade Balance, ID Q4 & 2025 GDP, (Thus eve UK BOE rate decision, EU ECB rate decision).

- Fri Feb 6th JP Dec Household Spending, JP BOJ Masu speech, (Fri night US Jan Nonfarm Payrolls, likely to be delayed due to partial US govt shutdown) US Michigan Consumer Sentiment).

- Sun Feb 8th Japan and Thailand elections.

Holidays in Asia this week

- Mon Feb 2nd Malaysia.

- Fri Feb 6th New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.9% at 8,852.

- Reserve Bank of Australia (RBA) raises cash rate target by 25bps to 3.85%; as expected.

- RBA Gov Bullock: Pulse of inflation is too strong - post rate decision press conference.

- Australia Dec Building Approvals M/M: -14.9% v -6.4%e.

- Australia Council of Trade Unions has called for the capital gains tax discount to be cut in half to 25% in order to help ease property prices - Local press.

- New Zealand Dec Building Permits M/M (NZD): -4.6% v 2.8% prior.

China/Hong Kong

- Shanghai Composite opens +0.7% at 4,043; Hang Seng opens -0.1% at 26,935- Cambricon shares -14% on disappointing FY26 Rev guidance of CNY20B v CNY30Be.

- China banks tighten risk controls amid gold price volatility - Chinese press.

- Shanghai issues 2026 economic targets: GDP growth ~5.0%, CPI up ~2.0%.

- China PBOC sets Yuan reference rate: 6.9608 v 6.9695 prior (strongest level since May 16, 2023).

- China PBOC Open Market Operation (OMO): Injects CNY106B; Net drains CNY297B v drains CNY76B prior.

- China Pres Xi: China to support LATAM, Caribbean nations and global south in protecting sovereignty - comments while meeting with Uruguay's Orsi.

Japan

- Nikkei 225 opens +1.3% at 53,332.

- Japan sells ¥2.6T vs. ¥2.6T indicated in 10-year JGB bonds; avg yield: 2.2490% v 2.095% prior; bid-to-cover: 3.02x v 3.30x prior.

- Japan Jan Monetary Base Y/Y: -9.5% v -9.8% prior.

- Japan Fin Min Katayama: Continues to refrain from commenting on intervention data; expecting excess of ¥4.5T from currency reserves in the current fiscal year.

- Japan Ruling LDP party likely to win majority in lower house.

Korea

- Kospi opens +3.3% at 5,114.

- South Korea Jan CPI M/M: 0.4% v 0.4%e; Y/Y: 2.0% v 2.0%e.

- Bank of Korea (BOK): Affirms inflation expected to stay around 2.0% [target] in Feb.

- South Korea President Lee: Will crack down on speculation in the property market in Korea.

- South Korea Vice Fin Min: Will closely monitor financial market.

- South Korea's Kospi program trading briefly halted after sharp equity rises.

Other Asia

- (IN) India Official: India’s commitment to buy US goods under deal includes petroleum, defence, electronics, pharma, telecom products, aircraft - financial press.

- (SG) Singapore Jan Purchasing Managers Index (PMI): 50.5 v 50.3 prior.

- (TW) Taiwan Economy Min: Planning to build rare earth production line in 3 years which will meet 50% of domestic demand.

- (TW) Taiwan Economy Min: Planning to build rare earth production line in 3 years which will meet 50% of domestic demand.

- (TW) Taiwan National Development Council sees 2026 GDP at 4.6%.

- (SG) Singapore to announce 2025 GDP on Feb 10th.

- (IN) India Official: India’s commitment to buy US goods under deal includes petroleum, defence, electronics, pharma, telecom products, aircraft - financial press.

North America

- (US) Jan final S&P manufacturing PMI: 52.4 v 52.0e (confirms 5th month of expansion, highest since Aug 2025).

- (US) Jan ISM manufacturing: 52.6 v 48.5e; new orders 57.

- (US) US treasury quarterly financing estimates: to borrow $574B in Jan-Mar quarter v $550Be and $578B prior estimate; Apr-June to borrow $109B v $25Be.

- (US) Reportedly Pres Trump is set to launch a strategic critical-minerals stockpile with $12B in seed money; To be named "Project Vault" - - press.

- (US) Secretary Kennedy announces $100M Investment in Great American Recovery in an effort to solve homelessness, fight opioid addiction, and improve public safety by expanding treatment that emphasizes recovery and self-sufficiency.

- (US) Pres. Trump: Cutting India reciprocal tariffs from 25% down to 18%; India's PM Modi agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.

- (US) US-Iran talks likely in coming days; To involve Witkoff and Araghchi - Iranian press.

- (US) House rules panel advances Senate funding package - US financial press.

- (CA) Canada Jan Manufacturing PMI: 50.4 v 48.6 prior (1st expansion in 12 months, highest since Jan 2025).

- (BR) Brazil Jan Manufacturing PMI: 47.0 v 47.6 prior (9th month of contraction).

Europe

- (EU) Former ECB Pres Mario Draghi: EU must become federation to avoid being picked off by China and US - FT.

- (DE) Germany Chancellor Merz: Reiterates that Mercosur will take effect provisionally.

- (IE) Ireland Jan PMI Manufacturing: 52.2 v 52.2 prior (13th month of expansion).

Levels as of 00:20 ET

Nikkei 225 +3.9%; ASX 200 +0.9%; Hang Seng -0.0%; Shanghai Composite +0.5%; Kospi +6.6%.

Equity S&P500 Futures +0.3%; Nasdaq100 +0.5%; DAX +0.0%; FTSE100 -0.2%.

EUR 1.1817-1.1786; JPY 0.6439-0.6425; AUD 0.7034-0.6946; NZD 0.6042-0.5996.

Gold +3.5% at $4,820/oz; BTC +3.8% at $78,570, Crude Oil -0.5% at $61.82/bbl; Copper +1.0% at $5.8888/lb.