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[HFM.]

Date: 5th February 2026.

Big Day for Central Banks as Tech Stocks Slide and Precious Metals Turn Volatile.

Global financial markets are facing renewed pressure as a sharp pullback in technology stocks ripples across regions, while traditionally defensive assets such as gold and silver fail to provide stability. What started as a valuation-driven selloff in US tech has evolved into a broader reassessment of risk, affecting Asian equities, European markets, commodities, currencies, and cryptocurrencies.

At the centre of the turbulence lies growing scepticism around artificial intelligence (AI) valuations, rising capital expenditures, and the sustainability of recent market gains.

Tech Stocks Under Pressure as AI Valuation Concerns Grow​

Asian technology shares extended their losses, with MSCI’s Asia Tech Index falling for the fifth time in six sessions. Major companies such as Samsung Electronics and SoftBank Group declined, while South Korea’s Kospi Index, widely viewed as a proxy for AI-related investment, dropped more than 3%.

The weakness followed a volatile US session where disappointing earnings reactions from Alphabet, Qualcomm, and Arm reignited concerns that AI expectations may be running ahead of near-term profitability. Even companies that reported stronger-than-expected earnings struggled to support their share prices, a sign that market sentiment toward high-growth tech stocks has shifted.

Semiconductor and Software Stocks Lead the Decline​

The selloff has been particularly intense among chipmakers and software companies, as investors question whether massive AI-related spending will translate into sustainable revenue growth. Fears are also emerging that AI innovation could disrupt existing software business models rather than enhance them.

The Nasdaq 100 recorded its worst two-day decline since October, breaking below its 100-day moving average, a technical level often associated with further downside risk. Meanwhile, Hong Kong’s Hang Seng Tech Index has fallen nearly 20% from recent highs, placing it firmly in bear-market territory.

Market Rotation Signals Caution, Not Capitulation​

Despite the speed of the selloff, market participants are increasingly viewing the move as a sector rotation rather than a systemic panic. With the US economy showing resilience, investors are reallocating capital toward defensive sectors, including healthcare, consumer staples, and select industrial names.

This rotation has led to significant value destruction within the technology sector. In just two days, hundreds of billions of dollars were erased from the market capitalisation of companies across the AI ecosystem, particularly among US-listed software firms.

Gold and Silver Prices Plunge Amid Position Unwinding​

In a surprising development, precious metals, often seen as safe-haven assets, have come under intense selling pressure.

Silver Suffers Historic Selloff​

Silver prices collapsed by as much as 17%, marking one of the sharpest drops on record. After surging to multi-year highs on speculative inflows, geopolitical uncertainty, and expectations of lower US interest rates, the metal has retreated more than one-third from its recent peak.

Thin liquidity, leveraged positioning, and aggressive profit-taking amplified the move, creating a feedback loop that weighed heavily on broader market sentiment.

Gold Prices Follow Lower​

Gold prices also fell sharply, posting their largest decline since 2013 before stabilising. Although longer-term fundamentals remain intact, the abrupt pullback underscores how quickly crowded trades can unwind when sentiment shifts.

Base metals such as copper also weakened, pressured by rising inventories and slowing global growth expectations.

Bitcoin and Crypto Markets Slide as Risk Appetite Fades​

Bitcoin extended its losses, briefly drifting toward the $70,000 level as global risk appetite deteriorated and the US dollar strengthened. Despite its reputation as an alternative asset, Bitcoin continues to trade in line with broader liquidity conditions, particularly during periods of heightened volatility.

Currency Markets Focus on Central Banks and Political Risk​

In foreign exchange markets, the US dollar gained modestly, pushing the euro and British pound slightly lower ahead of interest-rate decisions from the European Central Bank (ECB) and the Bank of England (BoE). Both central banks are widely expected to keep rates unchanged, but traders remain sensitive to forward guidance.

Japanese Yen Nears Intervention Levels​

The Japanese yen has weakened for several consecutive sessions, approaching levels that previously triggered official intervention. Political developments are adding to the pressure, with markets anticipating that a strong election outcome for Japan’s ruling party could enable more expansionary fiscal policies, a combination that may further weigh on the currency.

Oil Prices Ease as Geopolitical Tensions Cool​

Crude oil prices declined after Iran confirmed it would engage in negotiations with the United States, easing immediate concerns about supply disruptions. At the same time, ongoing dialogue between US and Chinese leaders has kept trade relations and geopolitical risk firmly in focus.

Market Outlook: Volatility Likely to Persist​

The dominant theme across global markets is reassessment. After months of momentum-driven gains, particularly in AI-related assets, investors are now scrutinising valuations, earnings sustainability, and balance-sheet strength more carefully.

While long-term structural trends such as artificial intelligence, digital transformation, and automation remain intact, recent price action serves as a reminder that even the strongest narratives are vulnerable to corrections.

As markets navigate earnings season, central bank policy signals, and political developments, volatility is likely to remain elevated, with diversification and risk management taking centre stage once again.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

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Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date: 09th February 2026.

Japan Sees Record-Breaking Election Victory.

Japan’s political developments are evolving quickly and are having a direct impact on financial markets. The NIKKEI 225 rose to all-time highs and has already risen more than 16% in 2026 alone. In addition to this, the Japanese Yen also rises 0.80% after the market open.

Japan’s snap elections have come to a halt with the Liberal Democratic Party coming out as the winner. The Prime Minister's party won more than two-thirds of the lower house, giving her a stronger mandate to push through her policies.

Sanae Takaichi’s Historic Victory​

On Sunday, the LDP won 316 of 465 lower-house seats on its own, giving it more than a two-thirds supermajority. The LDP, with its coalition partner, will now control over 350 seats (75% of the house). That result is the largest single-party majority since the LDP’s founding in 1955 and the most seats ever won by any party in postwar Japanese elections.

Analysts were expecting Mrs Takaichi’s party to easily win the elections due to high approval ratings. The Prime Minister's high approval ratings were the main reason behind the snap elections. The victory indicates the public’s support for more growth-oriented economic policies.

Why is the NIKKEI 225 The Best Performing Index?​

The NIKKEI 225 is 2026’s best-performing index, rising 16% this year so far. The NIKKEI 255 in the past 12-months has risen 46%, 33% higher than the second-best-performing index. The figures can easily indicate the strength of the index and its trend.

Investors are increasing their exposure to the NIKKEI 225 as inflation returns to Japan for the first time in decades. The lack of inflation was one of the key reasons for investors limiting their exposure to the Japanese markets.

However, the latest and strongest price driver is the elections and the Prime Minister's victory. Japan’s Prime Minister is a clear supporter of an expansionary policy and strong ties with the US. She campaigned on and is expected to pursue policies that emphasise government spending to stimulate economic growth, including fiscal measures aimed at boosting domestic demand and strengthening long-term growth prospects.

NIKKEI 225 - Technical Analysis​

HFM - NIKKEI 225 1-Hour Chart

The price of the NIKKEI 225 opened on a bullish price gap measuring 1.98% and then rose a further 1.75%. However, the price soon after came under pressure and fell back to Friday’s closing price. Considering the strong overbought indications from the RSI and MACD, the selloff was not a surprise.

Nonetheless, the buy signal remains relatively strong despite the retracement forming. This is also partially due to the strong bullish price movement from Friday. The NIKKEI 225 rose more than 5% on Friday alone.

On the 1-hour chart, price action continues to show bullish indications, with the price holding above previous highs. The recent decline appears consistent with earlier temporary pullbacks rather than a trend reversal. The price also remains firmly above key Moving Averages and on the positive side of the RSI and MACD.

However, the price movements on smaller timeframes seem less positive as the price retraces. If the price returns above 56,499.3 and thereby crosses the 200-bar SMA, the buy signals potentially may return.

The Japanese Yen​

The best performing currency of the day is the Japanese Yen due to the results of the elections. The worst-performing currencies are the US Dollar and the British Pound. The Japanese Yen is increasing in value as sentiment towards the currency partially improves. Though another key reason for this is investors' expectations of more inflation due to any upcoming expansionary policy amendments.

Investors are hoping that the policy and higher inflation will prompt the Bank of Japan to continue increasing interest rates throughout the year. However, regardless of the JPY’s bullish reaction to the elections, technical analysis indicates a bumpy ride as the price struggles to maintain momentum.

HFM - USDJPY 1-Hour Chart

Key Takeaways:​

• Historic LDP win gives PM Takaichi a strong mandate for growth-focused policies.
• NIKKEI 225 hits all-time highs, up 16% in 2026 on political and inflation tailwinds.
• Technical signals remain bullish, with recent pullbacks seen as temporary retracements.
• Japanese yen strengthens on improved sentiment and expectations of higher inflation.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.