Saxo weekly market compass – 2 February 2026

Recap week of 26 to 30 January 2026

Headlines & introduction

January ended with equities still resilient, but cross-asset stress shifted decisively into commodities.
Markets opened the week supported by earnings and steady growth signals, then turned more cautious as policy uncertainty and a violent reversal in precious metals tightened risk discipline. Equity indices held near record levels, but leadership narrowed and dispersion increased. The defining late-week development was the metals rout and the risk of spillovers into funding conditions and broader risk appetite.
Market pulse: risk stayed on, but conviction required protection.

Equities

• US equities hovered near records as earnings optimism met rate sensitivity.
  US indices oscillated around fresh highs, with the S&P 500 briefly trading above the 7,000 mark before easing into month-end. Early-week support came from AI-linked names and select mega-cap results, but tone shifted after the Federal Reserve held rates steady and attention turned to policy continuity and leadership risk. Rising yields and a firmer dollar weighed on long-duration growth late in the week, leaving the Nasdaq more exposed than the Dow as investors prioritised balance-sheet strength and earnings quality.
  Market pulse: US markets stayed firm, but leadership narrowed and valuation discipline returned.

• Europe and Asia saw sharper rotations as growth data met earnings reality.
  European equities ended January supported by improving activity signals, with euro area GDP expanding 0.3% quarter-on-quarter in Q4, easing recession concerns and underpinning banks and cyclicals across core markets. Stock-specific earnings dominated performance. Luxury names sold off on cautious guidance, while technology diverged sharply after SAP’s cloud outlook disappointed. UK equities were steadier, helped by defensives and energy, while Nordic markets saw pronounced single-stock volatility. In Asia, Japan underperformed as yen strength weighed on exporters, while Hong Kong extended its January rally before a sharp pullback at week’s end as global risk sentiment cooled.
  Market pulse: macro improved at the margin, but earnings and global risk set direction.

Volatility

Surface calm masked pockets of rising stress.
Equity volatility remained contained for most of the week, with headline measures anchored in the mid-teens. Short-dated volatility reacted to the Fed decision and major earnings rather than signalling systemic fear. Late in the week, stress migrated into commodities, where forced unwinds amplified price swings. That shift unsettled broader sentiment despite stable equity volatility readings.
Market pulse: volatility stayed low, but the stress point moved elsewhere.

Market sentiment based on options flow data

Positioning stayed constructive, but risk discipline clearly tightened.
Options activity suggests investors remained engaged while becoming more selective in how exposure was expressed. Broad index positioning indicates a willingness to stay invested, but this exposure is increasingly paired with protection, highlighting the elevated priority of risk management. Among large US technology stocks, flows favoured balanced structures that combine participation with defined outcomes, including income generation and capped upside. Overall, the options market points to confidence in market resilience, alongside a clear acknowledgement that near-term event risk warrants caution rather than unhedged optimism.
Market pulse: engaged participation, disciplined risk control.

Digital assets

Crypto tracked macro liquidity rather than crypto-specific news.
Digital assets softened into month-end, moving in line with broader risk sentiment. Price action suggested gradual deleveraging rather than panic, as a firmer dollar and sensitivity to real yields weighed on demand. ETF flows reinforced the cautious tone, with selective resilience earlier in the week giving way to broader outflows as policy uncertainty rose.
Market pulse: crypto stayed defensive, awaiting clearer macro signals.

Fixed income

Bonds quietly regained defensive appeal.
Rates traded in a relatively narrow range, but directionally investors leaned toward safety as commodities collapsed. US Treasuries attracted demand as leverage was reduced across other asset classes, while longer-dated yields eased back toward key technical levels. In Japan, government bond yields stabilised after softer inflation data and reduced near-term tightening pressure.
Market pulse: fixed income resumed its stabilising role.

Commodities

Metals broke first as leverage and margin dynamics flipped a record rally into a rout.
The week’s defining move was the collapse in precious metals following an extraordinary run. Gold and silver fell sharply after reaching record highs, with silver’s drawdown particularly severe as crowded positioning unwound. Exchange margin increases amplified the move, forcing deleveraging into thin liquidity. The impact quickly spread to listed miners and commodity-linked equities, while a firmer dollar added pressure across non-yielding assets. Energy and industrial metals also retreated, reinforcing the sense of a broad-based tightening in risk conditions rather than a single-market correction.
Market pulse: metals shifted from momentum to forced de-risking, and the aftershocks still matter.

Currencies

The US dollar found a floor after extreme weakness.
FX markets pivoted as the commodity shock and policy uncertainty drove renewed demand for the dollar. The euro held relatively firm on improving growth data, while the yen remained volatile. Commodity-linked currencies reversed earlier gains in line with falling metals and energy prices.
Market pulse: currencies moved from trend to consolidation as stress rose.

Key takeaways

• Equities remained resilient, but leadership narrowed and dispersion increased.
• Volatility stayed low in equities, with stress migrating into commodities.
• Options markets signalled engagement paired with tighter risk control.
• Bonds regained defensive appeal late in the week.
• Precious metals experienced a historically violent reversal.
• The US dollar stabilised after sharp early-week weakness.

Looking ahead (week of 2 to 6 February 2026)

Markets test whether the metals shock stabilises or spills further across assets.
The immediate focus is on whether gold and silver can find a base after margin-driven deleveraging, or whether further selling pressures miners, commodity-linked credit and broader risk sentiment. If metals volatility persists, investors will watch for knock-on effects via a firmer dollar, tighter financial conditions and rising cross-asset correlations.

Macro data then becomes the referee. The US calendar is dense, with ISM manufacturing, job openings and ADP employment early in the week, culminating in Friday’s January employment report. Labour-market surprises will be critical for rate expectations following the Fed’s recent hold.

Earnings remain central to index leadership. Results from Alphabet, Amazon, AMD, Disney and Palantir will shape views on AI investment, cloud demand and margins. In the current environment, markets are likely to reward visibility and balance-sheet strength over headline beats, especially if cross-asset volatility remains elevated.

Market pulse: containment first in metals, then in rates expectations.

Conclusion

January closed with equities near record levels, but the week’s message came from commodities rather than stocks. Leverage can unwind faster than narratives, and the metals rout has tightened risk discipline across markets. If stability returns quickly, risk assets may regain momentum. If not, spillovers into currencies, credit and volatility could keep investors cautious as February begins.