Further flash sell-off in metals on no particular catalyst spreads to other risk assets

Asia market update: Further flash sell-off in metals on no particular catalyst spreads to other risk assets, though at lower vol than last Fri.

General trend and developments

- Mid-session sell off on no particular catalyst for Gold and Silver spread into equities and crytpo. Silver dipped at worst -15% back down to $73/oz, Gold fell -3% to $4,800/oz handle while Platinum as much as 8% at worst.

- US equity FUTs saw Nasdaq -0.7% and S&P500 -0.5% at worst after positive Asia openings.

- Kospi had already opened -2% lower but plunged to more than -4% down, with Nikkei, Hang Seng and Shanghai losing >-1%. Bitcoin continued its plunge to $70K handle.

- As per last Friday’s even greater plunge, USD was well supported throughout, particularly against Euro, Swissie, Sterling, Aussie and Kiwi. (USD/JPY mostly flat).

-Japan 30-year bond auction was very well supported, well above the 12-month coverage ratio. 30-year yields fell -5bps after the auction, in a sign the markets are looking forward to an expected LDP-led victory with PM Takaichi (election on Sun, Feb 8th). Rumors also circulating in Japan that Takaichi may back down on her unexpected offer to voters last month to put Japan's 8% sales on ice for 2 years. [Rumors that at the time had Japanese bonds jump 6 standard deviations amid worries about the fiscal sustainability amid increased spending by the new govt].

- China analysts expect reserve requirement ratio (RRR) cuts to be unlikely ahead of the mid‑Feb Spring Festival, though implementation could be possible in the second quarter.

- Trump Xi phone call saw focus on soybeans to China and Trump's planned visit to China in April, as well as "the Taiwan issue".

- ByteDance yet to agree to Trump administration's conditions for sale of Nvidia H200s.

- Foreigners still piling into Japanese bonds last week: ¥2.08T v ¥377.9B prior (foreign buys of JP stocks also still strong, but less pronounced).

- Taiwan Semi CEO met PM Takaichi in Tokyo and confirmed to mass-produce 3nm chips at Kumamoto plant in Japan.

- Relatively dovish comments from Pres Trump re Fed Chair Powell today, saying that Powell was ‘respectful’ in explaining the Fed building renovations.

- US hosts critical minerals summit with 50 countries in attendance and VP Vance saying Trump administration plans to use tariffs to establish price floors.

- Overnight OIS chance of a BOJ rate hike fell slightly for March, down to 24.5% (vs 27.5% day before), April edged down to 74.5% (vs 76.5% day before) and June ticked down to 104% (vs 106% day before).

- ETF tracking US software sector loses almost $1T in past seven days as AI disruption fears widen.

- Google kept its recent AI sector dominance with earnings after the close. Shares down just -0.4% after hours outperforming the big sell off in many AI names of recent days and weeks. Google beat on the top line plus huge 44% y/y Capex increase and Gemini AI confirming strong MAU growth along with Google Cloud and beats of other core business metrics.

- Qualcomm -10% with revenue guidance missing expectations; memory chip shortage to impact smartphone supply.

- Arm Holdings -7.5% after hours with revenue outlook topping forecasts but bar is set high, with licensing revenues miss.

- US equity FUTs -0.1% during Asia trading.

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

- Thu Feb 5th (Thus eve UK BOE rate decision, EU ECB rate decision, US JOLTS tonight).

- Fri Feb 6th JP Dec Household Spending, JP BOJ Masu speech, (Fri night US Jan Nonfarm Payrolls delayed to next Wed , 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 -0.3% at 8,901.

- Australia Dec Trade Balance (A$): 3.4B v 3.5Be.

- New Zealand Jan Cotality Home Value M/M: -0.1% v -0.2% prior.

China/Hong Kong

- Shanghai Composite opens -0.7% at 4,075.

- Hang Seng opens -0.8% at 26,627.

- China CPIA (solar panel association) sees China installations for solar falling in 2026 to between 180-240 GW in 2026 - comments from CPIA head in Beijing.

- China said to 'gauge' demand for 14-day Reverse Repos (ahead of China Lunar New Year holidays from Feb 17th) - Traders.

- China 2025 Gold output 381.4 mt, +1.1% y/y; Gold consumption 950.1 mt, -3.6% y/y - China Gold Association.

- Hang Seng Materials Index -4.8%.

- China PBOC sets Yuan reference rate: 6.9507 v 6.9533 prior.

- China PBOC Open Market Operation (OMO): Injects CNY119B; Net injects CNY65B v drains CNY303B prior.

- China PBOC Open Market Operation (OMO): Injects CNY300B in 14-day Reverse Repos.

Japan

- Nikkei 225 opens +0.0% at 54,289.

- Japan sells ¥700B vs. ¥700B indicated in 30-year JGB Bonds; Avg Yield: 3.6150% v 3.4470% prior; Bid-to-cover: 3.64x v 3.14x prior.

- Japan releases weekly flows data [period ended Jan 30th]: Foreign buying of Japan equities: ¥494.6B v ¥329.5B prior; Japan buying of foreign bonds: ¥713.7B v ¥190.4B prior; Foreign buying of Japan bonds [long-term debt securities]: ¥2.08T v ¥377.9B prior.

- Some are now skeptical that Japan PM Takaichi will proceed with pledge to cut taxes on food; cites the recent bond market volatility – financial press [update].

- Japan Dep Chief Cabinet Sec Sato: Private sector investments determined not only by FX.

Korea

- Kospi opens -2.2% at 5,251

- South Korea Industry Ministry plans >KRW460B investment related to 'cutting-edge' auto technology - Yonhap.

Other Asia

- (PH) Philippines Central Bank (BSP): Inflation outlook continues to be benign - financial press.

- (PH) Philippines Jan CPI M/M: 0.8% v 0.5%e; Y/Y: 2.0% v 1.8%e.

- (TH) Thailand Jan CPI M/M: -0.3% v 0.0%e; Y/Y: -0.7% v -0.4%e.

- (ID) Indonesia Q4 GDP Q/Q: 0.9% v 0.7%e; Y/Y: 5.4% v 5.1%e.

- (MY) Malaysia Econ Fin Min: Malaysia has shown strong resilience, attracting FDI - financial press.

- (IN) Russia Foreign Ministry: We have no reason to believe India has reconsidered their approach (to continue buying Russian oil) - Russian state media.

- (TW) Taiwan to review extension of anti-dumping duties on China foil - financial press.

North America

- (US) Treasury quarterly refunding announcement: to sell $58B in 3-year notes; $42B in 10-year notes and $25B in 30-year bonds; repeats to keep most auction sizes unchanged for next several quarters.

- (US) Reportedly Iran/US talks in Oman are back on for Friday after Middle East leaders urge Trump not to cancel - Axios.

- (US) Jan final S&P services PMI: 52.7 v 52.5e (confirms 36th month of expansion).

- (US) Jan ISM services index: 53.8 v 53.5e; prices paid: 66.6 v 65.0e; new orders index: 53.1 v 55.0e.

- (US) Doe crude: -3.5m v 0me; gasoline: +0.7M v +1.5Me; distillate: -5.6M v -2.5Me.

- (US) VP Vance: Reiterates Pres Trump supports critical mineral prices floors; USTR Greer will present specifics about critical minerals trade agreement - comments at critical minerals forum.

- (US) Zillow: U.S. home values fell on a monthly basis for the sixth consecutive month in January. This trend mirrors last year, when home values fell each month from August 2024 to February 2025.

- (US) President Trump: Powell was 'respectful' in explaining renovations - financial press.

- (US) FHA Director Pulte: Not actively looking at President Trump's 'homes idea' - Fox Business interview.

- (US) President Trump said to 'discuss' expanding immigration operations to 5 cities - Press.

- (US) Senator Thom Tillis (R-NC): Will support Warsh for Fed Chair once Powell probe is settled - CNBC.

- (US) MBA Mortgage Applications w/e Jan 30th: -8.9% v -8.5% prior.

- (US) Jan Monthly ADP Employment Change: +22K V +45KE; Manufacturing has lost jobs every month since March 2024.

- (US) Jan preliminary NA Class 8 Net Orders 32.5K units, -24% m/m, +27% y/y - FTRintel.com.

- (CA) Canada Jan Services PMI: 45.8 v 46.5 prior (3rd month of contraction).

- (BR) Brazil Jan Services PMI: 51.3 v 53.7 prior (3rd month of expansion).

- (IR) Iran-US nuclear discussions will be held in Oman on Fri (02/06) - Iranian state press.

Europe

- (PL) Poland Central Bank (NBP) leaves base rate unchanged at 4.00%; as expected.

- (PT) Portugal Q4 Unemployment Rate: 5.8% v 5.8% prior.

- (IE) Ireland Jan PMI Services: 54.5 v 54.8 prior (58th month of expansion).

- EU, Japan and US to sign MoU in next 30 days to shore up critical mineral security of supply; Will identify and support projects in mining, recycling, processing and refining - joint statement.

Levels as of 00:20 ET

Nikkei 225 -1.0%; ASX 200 -0.4%; Hang Seng -1.4%; Shanghai Composite -1.0%; Kospi -4.4%.

Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; DAX -0.5%; FTSE100 +1.5%.

EUR 1.1809-1.1783; JPY 0.6380-0.6370; AUD 0.7008-0.6959; NZD 0.6011-0.5977.

Gold -2.3% at $4,851/oz; BTC -7.2% at $70,853, Crude Oil -2.3% at $63.68/bbl; Copper -2.2% at $5.7950/lb.