Markets Look for Sentiment Stabilisation as Volatility Remains Elevated

U.S. markets are entering the session in search of sentiment stabilisation, with investors balancing macro uncertainty, geopolitical risks and heightened volatility.

The release of U.S. Labor Department reports has been postponed until February 11 due to the government shutdown. As a result, attention shifts to the preliminary February consumer sentiment index from the University of Michigan, where consensus expectations point to a decline to 54.3 from 56.4 in January. The data may provide additional signals on household expectations and inflation perceptions.

Geopolitics remains a key swing factor. Market participants are closely watching nuclear talks between the U.S. and Iran taking place in Oman. Any signs of progress could ease concerns around global energy security and weigh on oil prices, while setbacks would likely reinforce risk premiums in energy markets.

During Asian trading hours, WTI crude oil rose by around 1.5%, while gold and silver rebounded after a sharp selloff in the previous session. Bitcoin also moved higher after testing the psychologically important $60,000 level, though its correction from all-time highs is now approaching 50%.

U.S. equity futures remain in negative territory but are attempting to recover after post-market weakness. Overall, the risk balance remains neutral, though volatility remains elevated.

What’s Happening in the Market Today

Previous session. U.S. equity indices ended the prior session lower. The S&P 500 broke below its medium-term ascending channel, testing the 6,800 level. The Nasdaq formed a local corrective move but managed to hold near 24,500.

Today. Futures on both indices are showing signs of a rebound. Maintaining support above 6,800 on the S&P 500 and 24,500 on the Nasdaq remains critical to prevent a deeper correction. A successful push above 6,850 and 24,900 respectively would open room for a broader recovery attempt.

Key Market Drivers

• U.S. equities remain under pressure following a widening selloff in technology stocks.
• Investors await preliminary inflation expectations and consumer sentiment data from the University of Michigan.
• Crypto-related stocks continue to track Bitcoin’s corrective phase.
• Technology shares face additional pressure after a mixed earnings report from Amazon, marked by an EPS miss and elevated capital expenditure plans.
• Baker Hughes is set to release its weekly U.S. rig count data.

Sector Performance

Cyclical sectors posted broad losses, with materials (XLB), retail (XRT), consumer discretionary (XLY) and financials (XLF) among the weakest performers.

Growth-oriented sectors also declined, led by MJ, TAN and SKYY, while semiconductors (SOXX) ended the session near flat.

Defensive sectors showed relative resilience. Healthcare (XLV) underperformed, while consumer staples (XLP) and utilities (XLU) finished largely unchanged.

Intermarket Overview

Oil prices continue to move within a short-term ascending channel, approaching a test of the 64.5 level. U.S. Treasury yields remain near 4.2% after breaking below the lower boundary of a medium-term uptrend. The VIX is holding near 21, staying within a local rising channel.

Gold is consolidating below its descending trendline from recent highs, near the 4,900 area, signalling ongoing indecision in defensive assets.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.