US markets extended their rebound on Wednesday, with major indices notching their second consecutive day of gains as investors looked past trade tensions between the US and China. The Dow Jones Industrial Average jumped over 300 points, led by a sharp rally in Nvidia and Amgen, while the S&P 500 and Nasdaq also closed higher despite weakness in key tech stocks like Alphabet and AMD. The latest rally comes after an initial market selloff earlier in the week, triggered by fresh tariffs on Chinese imports and subsequent retaliatory measures from Beijing. However, with stronger-than-expected private payroll data signalling resilience in the labour market and a wave of upbeat corporate earnings, investors regained confidence, fuelling a broad-based market recovery.

Key Takeaways:

  • Dow Climbs Over 300 Points for Second Straight Gain: The Dow Jones Industrial Average surged 317.24 points, or 0.71%, to close at 44,873.28, marking its second consecutive day of gains. The blue-chip index was led higher by Nvidia, which jumped over 5% after Super Micro Computer announced full production availability of its AI data centre with Nvidia’s Blackwell platform. 
  • S&P 500 and Nasdaq Extend Gains Despite Tech Weakness: The S&P 500 advanced 0.39% to end the session at 6,061.48, while the Nasdaq Composite added 0.19%, closing at 19,692.33. The S&P’s gain was driven by strong performances in semiconductor and healthcare stocks. However, the Nasdaq was weighed down by losses in Alphabet (-7%) and AMD (-6%), both of which fell sharply after reporting disappointing earnings results.
  • European Markets Post Gains as Earnings Take Centre Stage: European stocks traded higher on Wednesday, with the pan-European Stoxx 600 rising 0.47%. The FTSE 100 gained 0.61% to 8,623.29, led by GSK (up 7.6%) following strong earnings and upgraded sales guidance. Spain’s Banco Santander surged 8.3% after reporting record quarterly profits, while Novo Nordisk advanced 4.54% on robust obesity drug sales. However, France’s CAC 40 slipped 0.2%, dragged lower by weak industrial production data, while Italy’s FTSE MIB fell 0.4%. The DAX closed 0.2% higher at 21,552, extending its recovery after a choppy session. Meanwhile, France’s December Industrial Production declined by 0.4% month-over-month. The Eurozone’s Composite PMI stood at 50.2, in line with forecasts, while the Services PMI came in at 51.3, slightly below the expected 51.4. The Eurozone’s PPI rose 0.4% month-over-month, beating the forecasted 0.3% increase, but remained flat year-over-year, compared to expectations of a 0.1% decline.
  • Asia-Pacific Markets Mostly Higher Amid Trade Uncertainty: Asian stocks followed Wall Street’s lead, with most major markets closing in positive territory. Japan’s Nikkei 225 inched up 0.09% to 38,831.48, while the broader Topix index climbed 0.27% to 2,745.41. South Korea’s Kospi surged 1.11% to 2,509.27, and the small-cap Kosdaq gained 1.54% to 730.98, driven by stronger-than-expected consumer price index data (up 2.2% year-over-year). Meanwhile, China’s CSI 300 fell 0.58% to 3,795.08, reversing early gains after the Caixin Services PMI dropped to 51.0 in January from 52.2 in December, signalling a slowdown in services activity. Hong Kong’s Hang Seng index slipped 0.97%, weighed down by regulatory concerns surrounding Apple. Whilst Indonesia’s economy expanded by 5.03% in 2024
  • Private Payrolls Growth Tops Expectations: The US labour market showed resilience in January, as private sector companies added 183,000 jobs, exceeding economists’ forecasts of 150,000. The figure also surpassed the revised 176,000 jobs added in December. However, all job creation came from service providers, who added 190,000 positions, while goods producers shed 6,000 jobs. Wages for workers who remained in their roles grew 4.7% year-over-year, a slight uptick from 4.6% in December, signalling continued strength in wage growth despite broader economic concerns.
  • US Treasury Yields Decline as Labour Market Remains Stable: The yield on the 10-year US Treasury fell by over 8 basis points to 4.428%, as traders assessed signals of a stable labour market. Meanwhile, the 2-year Treasury yield slipped more than 2 basis points to 4.191%, reflecting cautious investor sentiment ahead of Friday’s nonfarm payrolls report.
  • Oil Prices Slide Amid Inventory Build and Trade Concerns: Crude oil prices fell sharply on Wednesday as US crude and gasoline inventories rose significantly, signalling weaker demand. Brent crude dropped $1.59 (2.09%) to $74.61 per barrel, while West Texas Intermediate (WTI) fell $1.67 (2.3%) to $71.03 per barrel. The decline came as refiners underwent seasonal maintenance amid softening gasoline demand. 

FX Today:

  • EUR/USD edges higher but remains under pressure: The EUR/USD pair climbed 0.26% on Wednesday, closing at 1.0405, as the euro attempted to rebound from recent losses. Despite the slight uptick, the pair remains within a broader downtrend, struggling to gain momentum above key resistance levels. The 50-day moving average at 1.0411 continues to cap gains, with further upside potential leading to tests of 1.0450 and 1.0500. However, failure to hold above 1.0400 could see renewed selling pressure, with downside targets at 1.0350 and 1.0300. A more sustained recovery would require a breakout above the 100-day moving average at 1.0638.
  • GBP/USD extends gains as trade fears subside ahead of BoE decision: The British pound posted its third consecutive daily gain, rising 0.18% to 1.2503 on Wednesday. The pair has rebounded more than 100 pips from last week’s low of 1.2380, supported by easing trade war concerns. However, resistance looms at the 50-day moving average at 1.2504, with a break above this level required to sustain upward momentum. If GBP/USD pushes beyond 1.2550, a rally toward 1.2600 could follow, where selling pressure has previously emerged. On the downside, immediate support is found at 1.2450. The 100-day moving average at 1.2755 remains a key level in the broader trend, with traders awaiting the Bank of England’s policy announcement for further direction.
  • USD/JPY tumbles, breaking key support levels: The USD/JPY pair fell sharply on Wednesday, losing 1.04% to close at 152.72—its biggest single-day drop in nearly two months. The decline saw the pair break below the 100-day moving average at 152.41, confirming a shift in momentum after last week’s failed attempt to reclaim 155.00. The next key support level stands at 152.00, last tested in early December, with a further slide potentially exposing the 200-day moving average at 150.50. Any rebound would face resistance at 154.00, followed by the 50-day moving average at 154.82. The short-term bias remains bearish unless the pair reclaims levels above 154.00.
  • AUD/USD climbs as risk sentiment improves: The Australian dollar gained ground on Wednesday, with AUD/USD rising 0.61% to 0.6286, reaching its highest close in over a week. The pair benefited from a softer US dollar following mixed economic data and stronger risk appetite. However, expectations of a dovish stance from the Reserve Bank of Australia next month could limit further upside potential. The pair has rebounded nearly 100 pips from last week’s low of 0.6200 but remains capped below the 50-day moving average at 0.6292. A breakout above this level would confirm bullish momentum, targeting 0.6350 next. On the downside, support is found at 0.6250, with further declines potentially dragging the pair back to 0.6200. 
  • Gold extends rally, nearing key resistance at 2,900: Gold prices continued their upward march on Wednesday, gaining 0.72% to close at 2,861.73 as investors flocked to safe-haven assets amid escalating trade tensions. The metal has now surged over 200 points in the past two weeks, solidifying its strong bullish trend. Gold remains well above the 50-day moving average at 2,682.14, reinforcing the uptrend, with the next key resistance level at 2,900.00. A short-term retracement remains possible as traders take profits, with immediate support at 2,820.00 and stronger buying interest near 2,780.00. If gold stays above this range, further upside toward the psychological barrier of 3,000.00 is likely. However, a deeper pullback could see prices test the 50-day moving average at 2,682, though the overall trend remains firmly bullish.

Market Movers:

  • Nvidia surges on AI partnership: Nvidia shares jumped 5.2% after Super Micro Computer announced full production availability of its AI data centre featuring Nvidia’s Blackwell platform. Super Micro shares also rallied 8%, benefiting from strong demand in the AI sector. 
  • Alphabet plummets after cloud revenue miss: Google-parent Alphabet tumbled 7.0%, making it the biggest loser in the Nasdaq 100, after reporting disappointing fourth-quarter cloud revenue. Investors were spooked by the company’s rising artificial intelligence costs and concerns that it may take longer than expected to monetize its AI ambitions. 
  • AMD slides as data centre revenue disappoints: Advanced Micro Devices (AMD) shares fell 6.0% after the company’s fourth-quarter data centre revenue of $3.86 billion came in weaker than the anticipated $4.09 billion. 
  • Novo Nordisk jumps on strong obesity drug demand: Novo Nordisk shares gained 4.54% after reporting better-than-expected fourth-quarter profit, driven by continued strong demand for its blockbuster obesity drugs.

As markets digest a mix of corporate earnings, economic data, and geopolitical tensions, investor sentiment remains cautiously optimistic. The Dow Jones surged over 300 points, extending its rebound for a second day, while the S&P 500 and Nasdaq edged higher, despite weakness in major tech stocks like Alphabet and AMD. European markets also posted gains, led by Novo Nordisk, although weaker economic data in France and the Eurozone raised concerns. In Asia, Japan’s Nikkei and South Korea’s Kospi advanced, while China’s CSI 300 fell as services sector growth slowed. Meanwhile, oil prices tumbled over 2% amid rising US crude inventories and renewed trade concerns, while gold continued its rally toward $2,900, signalling persistent risk aversion.