Weak US economic data and geopolitical tensions are impacting risk sentiment, putting broad pressure on equities, boosting government bond prices, and extending the decline in precious metals.
On January 8, US stock index futures fell across the board, while most Asian equity indices declined, with South Korean stocks bucking the trend to hit a new record high. US and global government bond prices rose, and the US dollar was largely flat. Gold and silver led the decline in precious metals, while crude oil rebounded due to geopolitical supply concerns, and cryptocurrencies faced pressure.
The optimistic sentiment that has supported risk assets since the start of the year is showing signs of fading as geopolitical uncertainties intensify. Concurrently, traders are closely watching the US Supreme Court's key ruling on former President Trump's global tariff policies, expected this Friday.
Saxo Bank's Chief Investment Strategist, Charu Chanana, stated:
"Markets are taking a breather after a strong start to 2026, and no one wants to add new risk exposure ahead of Friday's US jobs report. The Fed's policy debate is not over, and regional security concerns are also keeping investors cautious."
Key market movements are as follows:
Dow Jones futures fell nearly 0.3%, S&P 500 futures dropped over 0.3%, and Nasdaq 100 futures declined over 0.5%. The Nikkei 225 index closed down 1.6% at 51,117.26 points, while Japan's TOPIX index fell 0.8% to close at 3,484.34 points. The yield on the 10-year US Treasury note fell 1 basis point to 4.13%, the yield on the 10-year Japanese government bond dropped 4.5 basis points to 2.075%, and the yield on the 10-year Australian government bond decreased 9 basis points to 4.67%. The US Dollar Index was essentially flat, while the Japanese Yen rose 0.1% against the dollar to 156.56. Spot silver fell 2.23% to $76.45 per ounce. Spot gold declined 0.43% to $4,437 per ounce. Bitcoin fell 1.1% to $90,034.81, and Ethereum dropped 1% to $3,114.62.
The strong start for US stocks this year is showing signs of cooling, with US equity futures falling collectively. Mixed US economic data, combined with a flurry of geopolitical policy statements from former President Trump, prompted traders to take some profits ahead of the Non-Farm Payrolls report. Overnight ADP data indicated a moderate pace of private-sector hiring in December, suggesting momentum in the labor market is slowing. However, the subsequently released ISM services index expanded at its fastest pace in over a year, painting a picture of still-robust economic demand; these conflicting signals have left the market in a wait-and-see mode. Markets are closely focused on the US December Non-Farm Payrolls report, scheduled for release on Friday local time. This marks the first release since the US government shutdown six weeks last October, which disrupted the collection of key economic data for months.
Although most Asian stock indices followed the decline in overnight US markets, South Korean stocks hit a record high after strong earnings expectations for Samsung Electronics boosted market sentiment. Samsung Electronics' share price fell 1.6% as investors took profits following recent gains, after rising 3% in early trading. Samsung released its Q4 earnings guidance today: operating profit is expected to reach as high as 20 trillion won, tripling year-on-year and surging 64% quarter-on-quarter to set a historical record, while sales also soared to a record high of 93 trillion won.
Against the backdrop of pressure on risk assets, global bond markets have become a "safe haven" for capital flows. The yield on the 10-year US Treasury note fell in response to 4.14%. Government bond prices in major European countries broadly rose, while Australian bond prices also received a significant boost due to weaker-than-expected inflation data and clear cautious policy signals from the central bank. The global bond market is experiencing its busiest start on record. Data compiled by Bloomberg shows that as of January 7, total borrowing by corporations and governments in various money markets across the US, Europe, and Asia has reached approximately $245 billion. This figure sets a new historical record for the period. US investment-grade bond issuance reached $72 billion over two days, and single-day fundraising in Europe exceeded 57 billion euros, both setting new records.
Precious metals markets experienced another collective adjustment. As previously mentioned, the precious metals market faced liquidity impacts due to the commencement of the annual weight rebalancing of the Bloomberg Commodity Index. This mechanism began after the market close today and will continue until the 14th. This rebalancing will reduce gold's weighting from 20.4% to 14.9% and sharply cut silver's weighting from 9.6% to 3.94%, forcing passive funds tracking the index to make mechanical adjustments to their positions.
Crude oil prices fluctuated amid geopolitical news. At 8:43 AM Eastern Time on the 7th, US European Command stated on social media that it had seized an oil tanker in the North Atlantic, which was reportedly flying a Russian flag.
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