Markets Weekly Outlook - NFP, CPI, and Japan’s high-stakes election

On Friday, the stock market saw a major surge, highlighted by the Dow Jones hitting a historic record of 50,000 points. While general optimism returned to Wall Street, the day was defined by a split in the tech world.

Chipmakers like Nvidia, AMD, and Broadcom saw their stocks jump by over 7% as investors realized these companies would profit immensely from the massive amounts of money being spent on artificial intelligence infrastructure.

In contrast, Amazon’s stock fell nearly 7%. Even though the company is a leader in the cloud and AI space, investors were spooked by its plan to increase spending by more than 50% this year to build out AI data centers. This follows a similar trend seen with Alphabet (Google), as the biggest tech giants race to dominate AI technology regardless of the high costs.

The broader market performed well, with the S&P 500 rising 1.73% and the Nasdaq up 1.91%. This rally helped recover some losses from earlier in the week when market participants were worried that AI might actually hurt profit margins for software companies.

AI Spending in 2026

Smaller companies also saw a boost, with the Russell 2000 index jumping 3.3%, suggesting that market participants are starting to move money into different parts of the economy.

Earnings reports from other sectors showed a mix of big wins and heavy losses.

Roblox shares climbed 11% due to strong future projections, while Molina Healthcare crashed 25% after predicting much lower profits than expected. Overall, corporate health remains strong; about 80% of companies that have reported their results so far have beaten analyst expectations, which is significantly higher than the usual average.

Read More: Beyond the Rate Hold: Examining the ECB's path forward amidst Euro strength

The week also brought two uneventful central bank meetings with both the ECB and BoE holding rates steady. The BoE did survive a close 5-4 vote though, while the ECB battles Euro strength which could prove to be a surprise headache moving forward.

On the FX front, on Friday the US dollar dropped slightly from its highest value in two weeks. This happened because market participants felt more comfortable buying riskier assets again, moving away from the "safe" dollar after a rough week of worrying about high spending in the tech industry.

Even with this daily drop, the dollar is still finishing the week stronger overall, partly because new data shows that American consumers are feeling a bit more confident about the economy.

The Japanese yen had a particularly bad week, marking its worst performance since last October. Traders are nervous about a national election happening this Sunday in Japan, which could change how their economy is managed. Currently, the dollar is trading at about 156.98 yen.

Meanwhile, other major currencies like the Euro and the British Pound also gained some value back on Friday after losing ground earlier in the week.

In the world of cryptocurrency, Bitcoin had a wild ride; it jumped over 8% on Friday to reach about $68,613, recovering from a massive crash earlier in the week that saw it hit its lowest price since late 2024.

Commodities saw a big Friday as well as gold prices bounced back and were on track to end the week with overall gains. This recovery was driven by market participants looking for deals after a previous price drop, as well as a slightly weaker US dollar, which makes gold cheaper to buy.

There is also ongoing concern about diplomatic talks between the US and Iran taking place in Oman, which keeps markets interested in gold as a safety net.

By the afternoon, the price of gold rose nearly 4% to reach about $4,955 per ounce. This big jump helped the metal recover from a very volatile morning and a sharp loss on Thursday. Overall, gold is ending the week about 2% higher.

Meanwhile, silver also began to recover after its price had fallen to its lowest point in a month and a half.

The upcoming week is set to be a high-stakes period for global markets as a "deluge" of rescheduled US economic data meets critical growth updates from Europe and a high-stakes political showdown in Japan.

US Data Deluge: NFP and CPI take center stage

The primary focus for market participants will be the rescheduled US labor and inflation data, which were delayed due to a recent federal government shutdown. The Non-Farm Payrolls (NFP) report, now slated for Wednesday, February 11, is expected to show a modest gain of 70,000 jobs (up from 50,000 in December), with the unemployment rate holding steady at 4.4%.

However, downside risks remain. Recent ADP figures showed only 22,000 private-sector gains, and "professional and business services" are seeing a sharp decline in hiring rates, a potential early sign of AI-driven displacement. If the NFP underwhelms, it could cement expectations for a Fed rate cut as early as March or April.

Following the jobs data, Friday’s Consumer Price Index (CPI) report will provide the final piece of the puzzle. While headline inflation held at 2.7% in December, the Fed remains wary of stickiness. A hot inflation print would likely force the US dollar to reverse any NFP-related losses, as it would challenge the narrative of aggressive rate cuts in 2026.

Japan’s Snap Election: A turning point for the Yen

Over the weekend, Japan heads to a snap election called by Prime Minister Takaichi. The outcome will be the primary driver for the Yen (JPY) on Monday morning.

Landslide for Takaichi: Markets expect this would lead to continued fiscal expansion and pressure on the Bank of Japan (BoJ) to keep rates low, potentially pushing the USD/JPY back toward the 160.00 level.

Loss of Majority: A poor showing for the coalition could trigger safe-haven flows into the Yen, as it might signal a more hawkish BoJ path and political instability.

Europe: GDP and central bank pivot points

In Europe, the focus shifts to growth momentum. The UK’s Q4 GDP (Thursday) and Eurozone GDP (Friday) will be scrutinized for signs of recovery.

United Kingdom: Following a razor-thin 5-4 vote by the Bank of England to hold rates last week, a soft GDP print would significantly raise the odds of a March rate cut. Analysts note that while manufacturing has seen a boost from car production, the broader services sector remains sluggish.

Eurozone: President Lagarde has recently expressed concern that a "strong Euro" could suppress inflation too much. A weak GDP reading could reinforce the ECB’s increasingly dovish stance.

China: Deflation Watch

On Wednesday, China releases its CPI and PPI data. Market participants are looking for evidence that recent stimulus efforts are curbing deflationary pressures. While domestic demand remains weak highlighted by a 17% drop in property investment, a rise in business selling prices in January suggests that the worst of the deflationary cycle might be bottoming out.

From a technical perspective, the Nasdaq has staged a significant recovery on Friday.

The index has gained around nearly 3% and reclaimed the 25000 handle with the index printing a bullish engulfing candle.

This would hint at future gains heading into next week.

Over the week the Nasdaq will still finish in the red but the momentum appears to have shifted back in favor of bulls to end the week.

On the daily timeframe the period-14 RSI, is heading to ward the 50 neutral level which could prove to be the next big test for bulls.

A break above the 50-handle on the RSI will be another sign that the momentum has shifted to bullish.

That will be the test next week, as well as the 100-day MA which rests at 25224.

Nasdaq 100 Daily Chart, February 6, 2026

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