By Gregor Stuart Hunter
SINGAPORE, Feb 2 (Reuters) – A collapse in precious metals spilled over into broad markets in Asian trading on Monday, prompting broad selling of many of the top-performing stocks of the past year.
MARKETS:
PRECIOUS METALS: Silver fell as much as 14.2% to lows of $72.63 and gold tumbled as much as 7.5% to $4,499.34.
EMERGING MARKET STOCKS: South Korea’s Kospi, last year’s best performing major market globally in U.S. dollar terms, slumped 5.6% at one point, while Jakarta’s market extended losses from last week, with losses reaching as much as 5.7%. MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 2.8%.
US STOCKS: S&P 500 e-mini futures were last down 1.2%, while Nasdaq futures slumped 1.6%.
CRYPTOCURRENCIES: Ether was down as much as 5.24% to $2,166.79, while Bitcoin slid 2.4% to $74,546.46 after rising as much as 2.2% earlier.
Here are comments from market analysts.
CHRISTOPHER FORBES, HEAD OF ASIA AND MIDDLE EAST, CMC MARKETS
“It’s risk off and de-leveraging – a flushing out of leverage in the system which has built up. Cheap and easy access to risk in concentrated positions across mainly retail investors is being unwound.”
GREGOR GREGERSEN, FOUNDER, SILVER BULLION, SINGAPORE:
“When it comes to the physical markets, we have had shortages in retail silver products for months. These shortages are now getting significantly worse. We are seeing suppliers—even some institutional-level suppliers—raise premiums, and some have stopped taking new orders altogether. We are also seeing jurisdictions such as China, Dubai, and India where prices for physical silver are considerably higher than Western spot prices, resulting in significant dislocation and disruption.
“A year ago, we were pricing silver bars at 60 to 70 cents above spot in dollar terms. Today, premiums are more in the range of USD 3.50–4.50, and smaller retail bars regularly sell for as much as USD 8 over spot..we are focused on managing strong demand in the face of limited supply and determining how much physical premiums need to increase. These are the kinds of questions we are dealing with right now.”
MARK MATTHEWS, HEAD OF RESEARCH FOR ASIA, BANK JULIUS BAER, SINGAPORE:
“The financial asset most influenced by Fed policy is the treasury bond. But it’s yield was almost unchanged when Warsh’s nomination was announced. So precious metals prices – which are much less directly linked to Fed policy – can’t have collapsed because of Warsh’s nomination. It was just a coincidence they happened on the same day.
“The more likely explanation is that precious metals prices collapsed simply because they had already gone parabolic in the previous week. Once profit taking started, it just snowballed.
“Of course prices could fall from here, and probably should given oil is down 5% today. It generally leads the commodity complex. But as soon as people feel the precious metals market has stabilized, they will jump back in and buy. Their two fundamental drivers remains unchanged – namely the US dollar should continue to depreciate, and central banks should increase their holdings in gold.
“The price ascent probably won’t be as steep as it was before, but that’s a good thing.”
ORIANO LIZZA, SALES TRADER, CMC MARKETS, SINGAPORE: “There has been a lot more increased funding and things over the weekend and obviously first thing this morning as well, from our client side, looking to protect positions should they not want to liquidate or realise any of those losses. It’s just basically a byproduct of the market, something like this ensues panic, and then you do get a lot more inquiries. “We’ve probably seen an increase in trading volumes and things like that, as with other brokers… there’s been a lot more institutional activity as well we’ve seen since Friday, and that’s because they kind of need to shore up their positions with us, because they’re using us for liquidity, and they need to make sure they can hold on to those positions.”
JAMES OOI, MARKET STRATEGIST, TIGER BROKERS, SINGAPORE: “The stock rout we are seeing is partly driven by margin calls following the sharp sell-off in gold and silver, as well as Oracle’s $50 billion fundraising and the broader crypto downturn. Policy uncertainty surrounding Kevin Warsh’s potential appointment as Fed chair has also weighed on market sentiment. While he appears supportive of rate cuts, his preference for shrinking the Fed’s balance sheet still signals tighter financial conditions overall.”
MARC VELAN, HEAD OF INVESTMENTS, LUCERNE ASSET MANAGEMENT, SINGAPORE:
“It’s certainly been a lively start to the week.
“This looks less like a single catalyst and more like a classic de-leveraging / liquidity squeeze. Crowded positioning in the most liquid leaders, systematic selling (vol-targeting / CTAs), and margin-driven liquidation tend to hit ‘what you can sell’ first. That dynamic fits with prior leaders underperforming and correlations rising.
“Precious metals: the speed and magnitude of the move suggest a positioning washout rather than a clean macro re-pricing. From here, further downside is possible, but the key question is whether forced selling continues – typically you see a sharp rebound attempt followed by a choppier consolidation phase.
“In this type of tape, the early havens are usually USD cash and short-dated, high-quality duration. Beyond that, dispersion tends to rise and traditional ‘havens’ can fail if the move is driven by leverage rather than fundamentals.”
SEO SANG-YOUNG, ANALYST, MIRAE ASSET SECURITIES, SEOUL:
“A commodity market shock of increased volatility in gold and silver triggered a liquidity shock for institutional investors with margin calls. That resulted in a sharp drop in Bitcoin prices as well as stock markets, and the domestic market is falling more steeply than others because its rally had been much faster. We are not seeing margin calls for retail investors yet, but the market is in panic selling, so it is inevitable for market volatility to remain high for the time being.”
CHRISTOPHER WONG, STRATEGIST, OCBC, SINGAPORE:
“The continued selloff in precious metals reflects a stacking of technicals and sentiment pressure. While prices are now less elevated after the correction, sensitivity to the U.S. dollar, yield repricing and Fed policy uncertainty remains high, and margin-related selling and the triggering of sell-stops further amplified the move.”
(Reporting by Gregor Stuart Hunter, Rae Wee and Jihoon Lee; Editing by Ronojoy Mazumdar)
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