Global markets move into the new week with a number of potentially high-impact catalysts. Japan’s general election lands first on Sunday, followed by US inflation and labour market data that continue to shape interest-rate expectations.
- Japan election: Policy continuity and political stability are generally viewed as supportive for regional markets.
- US inflation and labour market: The consumer price index (CPI) and the Employment Situation report (nonfarm payrolls, NFP) are the immediate macro focal points for the week.
- Bitcoin risk gauge: Bitcoin is back near levels last seen in late 2024 and remains well below its October 2025 peak.
- Sector rotation watch: Technology has recently underperformed while value and defensive segments have stabilised, with earnings season continuing to influence flows.
Japan election
The general election in Japan is primarily viewed through the lens of policy certainty. Markets typically favour a clear outcome and continuity in fiscal and monetary settings.
Unexpected results or coalition uncertainty may increase short-term volatility in the JPY and regional indices at the start of the week.
Key dates
- General election (Japan): Sunday, 8 February
- Results through Asian trade on Monday
Market impact
- JPY may be sensitive to results uncertainty or potential changes in policy direction
- Asia equities may see early-week volatility until results are clear
US inflation and labour market
Inflation remains the most direct input into interest-rate expectations, while the monthly NFP report provides a broad read on employment conditions and wage pressures.
Treasury yields and the USD often react quickly to these releases, with knock-on effects across equities, gold and growth assets.
Current pricing indicates markets assign less than a 30% probability of a cut by the April meeting, with June meeting hike probabilities above 50%.
Key dates
- Employment Situation: Wednesday, 11 February 08:30 (ET) | Thursday, 12 February 00:30 (AEDT)
- CPI (January 2026): Friday, 13 February 08:30 (ET) Saturday, 14 February 00:30 (AEDT)
Market impact
- Yields often move first, followed by USD and then risk assets
- Expectations for rate-cut timing may adjust quickly
- Growth and technology shares remain more rate-sensitive
Bitcoin
Bitcoin has declined to levels last seen prior to the US elections in November 2024 and is close to 50% below its October 2025 peak.
While not a traditional macro indicator, crypto markets could be viewed as a real-time read on investor risk tolerance. Sustained weakness can coincide with more cautious positioning across higher-beta assets, including technology shares.
Market impact
- Softer crypto sentiment may coincide with reduced speculative flows
- Risk appetite may remain more selective
Sector rotation
Over the past week, the Dow Jones Industrial Average has outperformed, trading just below neutral, while the Nasdaq-100 has declined more than 4%, reflecting sensitivity in large-cap technology to firmer yields.
What the move may reflect
- Rate-driven pressure on growth stocks
- Profit-taking after strong tech performance
- Earnings season favouring broader sector participation
- A generally more cautious tone across higher-beta assets
Markets typically look for sustained multi-week outperformance in financials, industrials or defensives before characterising the shift as structural rotation.
Market impact
- Tech remains more sensitive to yield moves
- Value and defensive sectors may see relative support
- Earnings guidance continues to influence leadership
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