Market update: 3 February 2026
Australian shares were broadly flat this week as gains in resources and consumer staples were offset by weakness in tech. A hotter-than-expected inflation reading lifted expectations for another rate hike from the RBA, while the Australian dollar rose above US$0.70, weighing on some sectors despite positive momentum elsewhere.
In the US, markets ended mixed. The S&P 500 edged higher, while the Nasdaq and Dow finished slightly lower. Early optimism faded later in the week following President Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair, which strengthened the US dollar and added to market volatility. Tech earnings were a major focus, with Meta rallying on plans to double AI spending, while Microsoft dipped on cloud concerns. Meanwhile, the Fed held interest rates steady, pointing to a stable labour market and signs of improved economic growth. Commodity markets also saw big swings, with gold pulling back sharply after hitting record highs.
European equities moved slightly higher, supported by stronger eurozone growth, rising confidence and steady interest rates. However, weakness in the UK housing market, including an 18-month low in mortgage approvals, signalled that pockets of softness remain.
In Greater China, markets finished mixed. The Hang Seng gained 2.4%, while the Shanghai Composite slipped. Thirteen provinces, including Guangdong and Zhejiang, lowered their 2026 GDP growth targets, reflecting a more cautious outlook across key regions.
Japan’s Nikkei fell 1.0% as political uncertainty ahead of the upcoming 8 February election drove currency volatility. At the same time, soft inflation data tempered expectations for further tightening from the Bank of Japan.
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