U.S. Markets

U.S. equity futures steadied after a sharp technology-led sell-off, as investors grew more selective amid stretched valuations and a heavy earnings calendar, keeping near-term market sentiment cautious.

Asia & Commodities

Asian equity markets largely tracked Wall Street losses driven by weakness in technology stocks, while gold surged past $5,000 an ounce, reflecting increased demand for defensive assets amid rising volatility.

Digital Assets

Bitcoin fell to its lowest level since late 2024 as investors rotated out of risk-sensitive assets amid geopolitical uncertainty, though industry participants continue to point to resilient long-term adoption trends.

Private Markets

Private credit and alternative asset manager stocks dropped sharply on concerns that AI-driven disruption in the software sector could raise credit risks, highlighting investor sensitivity to sector concentration within private markets.

February Economic Calendar

• Feb 5 – Bank of England Monetary Policy Meeting: The BoE is expected to hold rates, with markets focused on guidance for future easing amid slowing wage growth and mixed inflation pressures.
• Feb 6 – U.S. January Employment Report: A critical update on labor market conditions that could sway Fed expectations on rate cuts and economic momentum.
• Feb 6 – Earnings Heavyweights (U.S.): Major U.S. companies continue reporting, influencing equity sector performance and sentiment.

U.S. Futures Steady as Tech Weakness Weighs on Markets

U.S. equity futures were little changed after a sharp rotation out of technology stocks dragged major indexes lower in the prior session, highlighting growing investor sensitivity to valuations and earnings outlooks. Futures linked to the S&P 500 and Nasdaq 100 hovered near flat levels, while the Dow Jones Industrial Average edged higher following its recent record high. The previous session saw the Nasdaq Composite fall 1.4% as large-cap technology names including Nvidia and Microsoft declined more than 2%, making technology the weakest sector.

After-hours trading added to the cautious tone, with Chipotle sliding nearly 6% on softer traffic trends and Advanced Micro Devices dropping sharply after an underwhelming outlook. Investors appear increasingly selective as stretched valuations meet a heavy earnings calendar, with results from Alphabet and Amazon due later this week, setting the stage for further near-term volatility.

Asia Shares Slide on Tech Pullback as Gold Breaks Above $5,000

Asia-Pacific markets mostly declined as the technology-led sell-off on Wall Street weighed on regional sentiment, while investors continued to rotate toward defensive assets, lifting gold to fresh record highs above $5,000 an ounce. Japan’s Nikkei 225 fell 1.2%, pressured by sharp losses in semiconductor and gaming stocks, while Hong Kong’s Hang Seng Index and China’s CSI 300 edged lower. In contrast, Australia’s S&P/ASX 200 and South Korea’s Kospi posted modest gains, reflecting more resilient domestic positioning.

The cautious tone followed a weak U.S. session in which the S&P 500 and Nasdaq Composite retreated amid broad declines across major technology names, reinforcing investor concerns over stretched valuations. Meanwhile, spot gold extended its advance to around $5,002 per ounce, underscoring rising demand for perceived safe assets as equity volatility persists.

Australia Resumes Tightening Cycle as Inflation Pressures Rebuild

Australia’s central bank raised its policy rate by 25 basis points to 3.85%, marking the Reserve Bank of Australia’s first hike since November 2023 as inflation climbed to a six-quarter high. The decision, which matched market expectations, reflected stronger-than-anticipated private demand, tightening labor market conditions and rising capacity pressures, according to the RBA.

Policymakers emphasized that inflationary momentum picked up materially in the second half of last year and signaled little appetite for near-term rate cuts. Australia’s economy grew 2.1% in the third quarter, its fastest pace in nearly two years, reinforcing the central bank’s meeting-by-meeting approach and keeping the door open to further tightening if price pressures persist.

Private Credit Stocks Sink on AI-Driven Software Concerns

Shares of publicly listed private credit and alternative asset managers fell sharply as investors reassessed exposure to the software sector amid concerns that artificial intelligence could disrupt traditional business models and credit quality. Stocks including Blue Owl, TPG, Ares Management and KKR declined by double digits, while Apollo Global Management and BlackRock also posted notable losses.

The sell-off follows a steep downturn in listed software stocks, with the iShares Software ETF down about 20% year to date, as investors worry that AI adoption could pressure margins and growth. Analysts estimate that private credit portfolios have significantly higher exposure to software-related risk than the high-yield bond market, raising concerns about potential defaults and redemptions if disruption accelerates.

While the repricing reflects heightened risk awareness rather than systemic stress, it underscores growing investor scrutiny of sector concentration within private markets as AI-driven change reshapes parts of the technology landscape.

Conclusion

Recent market moves underscore a broader shift toward caution as investors reassess risk across equities, digital assets, and private markets. Technology stocks remain a key source of volatility, driving pullbacks in U.S. and Asian equities, while concerns around AI-driven disruption are prompting renewed scrutiny of sector concentration, particularly in private credit.

At the same time, elevated geopolitical uncertainty and policy ambiguity have weighed on cryptocurrencies, reinforcing their sensitivity to global risk sentiment. Against this backdrop, the surge in gold prices highlights a growing demand for defensive positioning, suggesting portfolios are increasingly balancing growth exposure with capital preservation as markets navigate a more selective and valuation-conscious phase.

Investment Insights

• Rotate, don’t retreat: Recent market moves point to selective rotation rather than broad risk aversion, favoring companies and sectors with resilient earnings, pricing power, and balance-sheet strength over higher-valuation growth names.
• Reassess technology exposure: AI-driven disruption is creating clear winners and losers across software and private markets, reinforcing the need to evaluate sector concentration and credit quality, particularly in private credit portfolios.
• Manage volatility across asset classes: Continued swings in equities and digital assets highlight the importance of diversification and risk controls, while elevated gold prices signal investor demand for defensive hedges amid macro and geopolitical uncertainty.