Financial breakfast on February 3: The risk of shutdown disrupts gold prices, and the US-Iran dialogue suppresses oil prices

On Tuesday (February 3, Beijing time), spot gold traded around $4,734.70 an ounce in early Asian trading. Gold prices fell more than 4% on Monday, mainly due to the possibility that the new chairperson of the Federal Reserve will be inclined to cut interest rates and implement stricter balance sheet policies. At the same time, the Chicago Mercantile Exchange raised trading margin requirements, exacerbating the market sell-off. However, due to the risk of another US government shutdown, the release of employment data may be delayed, and gold prices rebounded. US crude oil traded around $62.23 a barrel, and oil prices fell more than 5% on Monday. US President Donald Trump said that Iran is engaged in "serious dialogue" with Washington, suggesting that tensions between the two countries have eased, easing supply worries. YesStoneAnalysts pointed out that the short-term market mood swings, investors need to be cautious.

Focus on the day

Today, we will focus on the monetary policy press conference held by Reserve Bank of Australia President Block, the speech delivered by Federal Reserve Governor Bowman, and the relevant remarks of the 2027 FOMC voting committee and Richmond Federal Reserve Chairperson Barkin.

stock market

US stocks closed higher on Monday, with the S & P 500 near all-time highs, mainly driven by gains in chip stocks and artificial intelligence-related stocks, while small-cap stocks also strengthened sharply. The Russell 2000 index jumped about 1%, significantly outperforming major indexes so far this year.

The S & P 500 rose 0.54 per cent to 6,976.44, the Nasdaq gained 0.56 per cent and the Dow Jones Industrial Average rose 1.05 per cent as the market volatility index eased slightly and trading volumes were slightly above recent averages.

Among technology stocks, Alphabet and Amazon rose 1.9% and 1.5% respectively, and the two are about to report earnings. The market pays attention to the progress of its artificial intelligence field. Chip stocks performed well, SanDisk rose 15.4%, AMD and Micron rose 4% and 5.5% respectively. Artificial intelligence data company Palantir closed slightly higher before after-hours earnings.

Disney's shares tumbled 7.4 per cent as it warned of a drop in international visitors to its theme parks and shrinking profits at its film and television division, in spite of the better-than-expected quarterly earnings. The energy sector followed oil prices down 2 per cent, while airlines generally rose 4-8 per cent as cost pressures eased.

In terms of economic data, the US manufacturing PMI rose for the first time in a year in January, indicating that economic activity has picked up. At the policy level, the House of Representatives is considering bills aimed at ending the government shutdown. Due to the shutdown, the release of the January employment report will be delayed.

Jin Shi

Gold and silver prices extended their losses on Monday as the Chicago Mercantile Exchange increased trading margin requirements, exacerbating the sell-off. Spot gold fell 4.8% to $4,630.59 an ounce, down about $900 from last week's all-time high. Spot silver fell 9.2% to $76.81 an ounce, down about 37% from last week's record high.

The sharp correction follows President Trump's nomination of former Federal Reserve governor James Walsh as the next chairperson of the Federal Reserve, and the market expects that the new chairperson may be inclined to cut interest rates and implement stricter balance sheet policies. At the same time, the strengthening of the dollar index to a high in more than a week also weighed on gold prices. Analysts pointed out that the price slump has squeezed out some speculative trading, which has helped cool the market. However, the Deutsche Bank report believes that the current environment has not formed the conditions for a sustained reversal in gold prices, and investors remain optimistic about the upside. Some of the sharp stones believe that the long-term allocation value is still worthy of attention.

Other precious metals also fell, with spot platinum and palladium prices falling 3.3% and 1.4% respectively.

oil market

Oil prices fell more than 5 per cent on Monday, retreating from multi-month highs. US President Donald Trump said Iran was in "serious talks" with Washington, allaying supply concerns by suggesting that tensions between the two countries had eased. Oil prices were also weighed down by factors such as a stronger dollar and forecasts of warmer weather in the US.

Brent crude futures fell 4.4 per cent to settle at $66.30 a barrel, while US crude futures fell 4.7 per cent to settle at $62.14 a barrel as officials from both countries said Iran and the US would resume nuclear talks on Friday.

Mr. Trump's recent statements that the US could intervene if Iran rejects the nuclear deal or continues to crack down on protesters supported oil prices in January. A stronger dollar has also made dollar-denominated crude more expensive for holders of other currencies. Meanwhile, forecasts of warmer weather in the US have caused diesel futures prices to fall sharply, further dragging down oil prices.

Previously, tensions in the Middle East and the US polar vortex drove US crude oil futures up 14% in January and Brent crude oil up 16%. As the impact of these short-term factors weakened, the market focus turned back to the fundamentals of the expected increase in global crude oil inventories this year.

OPEC +, which decided at a meeting on Sunday to keep March crude output unchanged, had frozen production increases for the January-March 2026 period in November due to weak seasonal demand.

currency market

The dollar rallied across the board against major currencies on Monday, supported by safe-haven inflows and strong US manufacturing data, as markets weighed in on the possible policy implications of a new Fed chair nominee.

The dollar's gains were underpinned by data showing that US manufacturing had returned to growth in January despite cost pressures and supply chain challenges, as a sell-off in precious metals triggered broader risk aversion, further boosting the greenback.

The dollar index rose 0.44% to 97.64. The euro fell 0.53% to $1.1788, further away from the $1.20 mark. Markets expect the European Central Bank and the Bank of England to leave interest rates unchanged at their meetings later this week.

Currencies heavily influenced by commodity prices and global risk sentiment were weak, with the Australian and New Zealand dollars both falling against the dollar as markets focused on the Reserve Bank of Australia's interest rate decision.

In the yen, the dollar rose 0.57 per cent to Y155.64 on expectations of a landslide victory for the Liberal Democratic party, led by Prime Minister Sayo Takaichi, in the upcoming general election, which could pave the way for a more expansionary fiscal policy. However, traders remained wary of co-ordinated intervention by the US and Japan.

International News

The differences between the two parties in immigration enforcement are difficult to resolve, and the government shutdown may be extended

The US House of Representatives is politically divided over Mr. Trump's immigration enforcement actions, which could lead to an extension of the partial government shutdown that began on Saturday. Mike Johnson, the House speaker, faces a tricky path in pushing through a bill that has passed the Senate. The bill, the product of negotiations between Mr. Trump and Chuck Schumer, the Democratic leader, would fund most federal agencies until September 30 and the Department of Homeland Security until February 13. The arrangement preserves funding for operations while bipartisan negotiations are underway on changes to enforcement policy. But the bill has faced skepticism within both parties and could lead to an extension of what was expected to be a brief weekend shutdown. Johnson expects the rules committee to hold a preliminary vote on Monday and has expressed hope for final approval on Tuesday. If the shutdown continues this week, it could result in a delay in the release of the closely watched Labor Department jobs report on Friday. The tax filing season, which began last week, could also be affected. Over time, pay and service delays for government contractors will spread further, and non-essential government employees could be forced to take unpaid leave.

Ukraine: Bilateral talks will be held in Abu Dhabi

The Ukrainian side posted on social media on the 2nd that the Ukrainian negotiating delegation is scheduled to participate in the second round of relevant tripartite talks in Abu Dhabi, the capital of the United Arab Emirates, on the 4th, and also hold bilateral talks with the US side on a number of agreements. The Ukrainian side said that the members of the delegation include the secretary of the National Security and Defense Council, the director of the president's office, the first deputy director of the president's office, the military chief of general staff and the adviser to the president's office. The Ukrainian side also said that during the second round of tripartite talks, the Ukrainian delegation will hold bilateral talks with the US side, ready to take real steps, believing that a lasting peace can be achieved.

Trump has raised $483 million to bolster midterm election odds

President Donald Trump says his only fear is losing Republican control of Congress in the November election. The latest campaign finance filings show he has raised an unprecedented amount of money to prevent that from happening. According to documents filed with relevant committees, by the end of December, Trump's political committees and the Republican National Committee had raised a total of $483 million. This amount is almost three times the total amount raised by Democrats. Trump said recently that both Republican and Democratic presidents appear to lose in the midterm elections.

Israel demands that the United States negotiate with Iran

According to local media reports on the evening of February 2, Israel will make tough demands against Iran in talks with the visiting US presidential envoy on February 3, that is, in any possible agreement between the United States and Iran, Iran must agree to the following three red lines: not to develop a nuclear program, not to develop a ballistic missile program, and not to provide support to so-called armed groups that threaten Israel. The report also said that Israel still believes that it is possible to overthrow the Iranian regime through military means.

Due to the partial government shutdown, the Bureau of Labor Statistics has delayed the release of its employment report

On February 2nd local time, the US Bureau of Labor Statistics said that due to the partial shutdown of the federal government, the US January employment report originally scheduled to be released on the 6th will not be released on time. The relevant person in charge of the Bureau of Labor Statistics said that the report will be rescheduled after government funding is restored.

The French National Assembly has officially passed the 2026 budget

On the evening of February 2 local time, the French National Assembly rejected two no-confidence motions proposed by the left-wing camp and the far-right National League. With both motions not passed, the French Parliament officially passed the 2026 national budget. Previously, the no-confidence motion proposed by the left camp received 260 votes, falling short of the 289 absolute majority required for passage. Subsequently, the motion proposed by the National League was also rejected. As a result, the French government avoided the risk of being overthrown, and the budget was finally passed.

Trump announces lower tariffs on India

Trump tweeted that he had spoken with Indian Prime Minister Narendra Modi, and the two sides talked about a trade deal and ending the conflict. Trump said that Modi agreed to stop buying Russian oil and significantly increase oil purchases from the United States and possibly Venezuela; the United States and India immediately reached a US-India trade agreement. Under the agreement, the United States will reduce reciprocal tariffs from 25% to 18%. India will also proceed to reduce tariffs and non-tariff barriers to the United States to zero. Trump said that Modi also promised to significantly increase purchases of American goods and promised to provide India with more than $500 billion of American energy, technology, agricultural products and other products.

Kuwait's crude oil exports fell sharply in January

Kuwait's crude oil exports fell in January due to factors such as OPEC + suspending the resumption of crude oil market supply plan and Kuwait's large Zur refinery resuming full production after equipment failure. Tanker tracking data showed that Kuwait's total crude oil exports fell to about 1.52 million barrels per day in January from 1.78 million barrels per day in December, the lowest level since August last year.

Britain imposes new round of sanctions on Iran

The British Foreign Secretary announced on the 2nd that the UK has imposed a new round of sanctions on Iran, involving Iranian law enforcement forces and 10 individuals including the interior minister. According to a statement released by the British Foreign Office on the same day, the British government's sanctions are due to recent changes in the situation in Iran. Among the sanctioned individuals, in addition to the interior minister, are the police chief of Lorestan Province, the head of the Iranian Public Security Police, and the relevant head of the Iranian Islamic Revolutionary Guard. The British Foreign Office said that the UK has so far imposed more than 550 sanctions on Iranian-related individuals and organizations, including sanctions on the Iranian Islamic Revolutionary Guard as a whole.

The UK Treasury offers up to £100,000 compensation package for officials who leave voluntarily

The Treasury is offering up to £100,000 in compensation to officials who leave voluntarily as part of a redundancy plan. The chancellor plans to cut about 300 of his department's roughly 2,100 staff by 2030, according to several people familiar with the matter. The Treasury has also frozen external recruitment for many non-essential positions. Officials could still be made redundant if offices are short of voluntary departures.

Domestic News

Notice of the Ministry of Commerce and Other 9 Units on Printing and Distributing the "2026" Tesco Chinese New Year "Spring Festival Special Event Plan"

Afterburner trade-in. Encourage all localities to increase the number of trade-in subsidies for consumer goods during the Spring Festival, increase offline physical retail support, mobilize enterprises to continue to carry out exhibitions and sales activities related to automobiles, home appliances, digital and smart products during the Spring Festival, guide enterprises to create smart end points and other product experience zones, give more discounts to store experience consumers, increase policy interpretation and offline experiential consumption publicity, and create a strong atmosphere of replacement.

The relevant persons in charge of the Ministry of Finance, the Ministry of Commerce, and the State Administration of Taxation answered reporters' questions on the "Notice on Launching the Pilot Work of Award-winning Invoices"

Q: What are the main contents of the pilot work of prize-winning invoices? A: The main content of the pilot work of prize-winning invoices is to organize a lottery for the invoices obtained by consumers for purchasing goods and services, which specifically involves retail, catering, accommodation, culture and art, entertainment, tourism, sports, and resident service industries. The implementation time is 6 months, and this work will be carried out in about 50 pilot cities. In accordance with the requirements of the notice and in light of local conditions, the pilot cities will formulate an implementation plan for the pilot work of prize-winning invoices, clarify the scope of prize-winning invoices, participation methods, winning rules, award setting, prize redemption methods, and reporting requirements for illegal acts, and announce them to the public.

China Unicom: Adjustment of the scope of application of telecommunications service value-added tax items

China Unicom announced that from January 1, 2026, the Ministry of Finance and the State Administration of Taxation have stipulated that the applicable tax items for business activities providing services such as mobile phone traffic in China will be adjusted from value-added telecommunications services to basic telecommunications services, and the corresponding value-added tax rate will be adjusted from 6% to 9%. The adjustment of the scope of application of tax items will have an impact on the company's revenue and profits. The company will focus on the core track, improve operational efficiency and promote high-quality development.