Economy February 6, 2026

Market Overview

Global markets are being driven by a mix of commodity volatility, a tech-driven risk re‑pricing and policy moves aimed at reshaping strategic supply chains. Precious metals and oil saw sharp moves that reflect rapid changes in risk sentiment and geopolitical developments [1][6]. Meanwhile, re‑rating in technology — both in US capex expectations and China/Hong Kong tech declines — is reshaping capital allocation and growth expectations across markets [2][4][17]. Softness in labor and consumer indicators in the US and signs of demand weakness in discretionary sectors amplify downside risks to near‑term growth [28][29].

Key Developments

1) Commodity shocks: Silver plunged after investors unwound positions, signaling rapid liquidity shifts and risk‑on/off swings in asset markets [1]. Oil also dropped amid revived US‑Iran talks that reduced near‑term premium for supply disruption fears [6]. Venezuela’s assurances to China about oil pricing and investment point to persistent geopolitical complexity in energy markets [18], while contested public statements about Russian oil purchases by India add uncertainty to global oil flows [20].

2) Strategic supply‑chain policy: The US push to form a critical‑minerals trade bloc and set price floors with allies underscores a strategic industrial policy shift to reduce Chinese dominance in essential inputs for EVs, batteries and renewables [3][21]. This policy pivot will materially affect global sourcing, investment incentives and the cost structure of transition technologies.

3) Tech re‑rating and capex implications: Alphabet’s move to significantly lift AI infrastructure capex signals larger tech sector spending on compute and data centers, which can be stimulative for cloud, semiconductor and energy demand over the medium term [4][17]. But simultaneous heavy selling in software and Chinese tech — with Hong Kong‑listed Chinese tech entering bear market territory — points to divergent investor expectations about revenue growth vs. cost intensity and geopolitical/regulatory risks [2][7].

4) China demand weakness: China’s EV sales slowdown, including a near two‑year low for BYD, suggests cooling domestic demand in a sector that had been a key growth engine for regional supply chains and commodity consumption [8]. This dovetails with broader market risk in Asia, where equity declines are tracking global tech weakness [11].

5) Early signs of US demand softness: The ADP private payrolls print was weak, and January car sales sputtered, indicating tentative consumer strength and potential downside to consumption‑led growth near term [28][29].

Financial Impact

- Growth: Soft labor prints and weakening auto sales point to downside risks for US consumption in the first half, which could translate into slower GDP momentum than consensus if the pattern continues [28][29]. China's EV pullback and tech weakness weigh on Asia growth and export demand [2][8][11]. - Inflation and policy: Commodity swings (oil down, metals volatile) create ambiguous inflationary signals — lower oil eases near‑term CPI, but targeted capex in AI and potential minerals price floors could raise sectoral input costs and support longer‑run inflation in specific goods [1][6][4][21]. Central banks will likely look through transient commodity moves but monitor persistent sectoral price pressures. - Corporate earnings and capital allocation: Elevated AI capex by large tech firms will support demand for semiconductors and cloud services over time, even as investors rotate away from highly valued software names facing demand/valuation reset [4][17][7]. Policy to onshore or preferentially source critical minerals could increase capex and reshoring costs for manufacturers but improve supply resilience.

Market Outlook

Near term (weeks): Expect elevated volatility as markets digest geopolitical talks (US‑Iran), commodity moves, and fresh data releases (jobs, CPI) that will influence risk sentiment and rate expectations [6][28]. Watch China demand signals and earnings from major tech and industrial companies for clues on growth momentum [2][8][17]. Medium term (3–12 months): Critical‑minerals policy action and large‑scale AI capex will reshape investment flows — supporting capex in compute, energy infrastructure and domestic mining/processing while raising transitional costs for global manufacturers [3][4][21]. If labor and consumption weakness persist, policymakers may face tradeoffs between supporting growth and managing inflation. Key catalysts to monitor: US jobs and CPI prints, progress on US‑Iran talks, announcements on critical‑minerals agreements or price floors, China monthly sales/industrial data, and tech sector earnings that clarify capex timing and scale [6][21][28][29][17].