Friday's metals meltdown continues in Asia as gold, silver and copper rack up heavy losses. The question now is what happens next, says Pepperstone's Michael Brown. Like with the preceding rally, it'd be fair to say the pullback has run too far, too fast, the strategist says. Something of a "dead cat bounce" may well be on the cards, he adds. In the longer run, the bull case is solid: Reserve and retail demand are healthy, and those seeking a geopolitical hedge will still largely flock to precious metals rather than the dollar or U.S. Treasurys. A key factor will be whether enough market froth has been removed - and enough speculative positions washed out - to put fundamentals back in the driver's seat.

After opening slightly up and staying marginally above the flat line till about an hour before noon on Friday, Swiss stocks gained in strength and finally ended the trading session modestly higher. The benchmark SMI, which moved between 13,153.33 and 13,238.59, settled with a gain of 40.33 points or 0.31% at 13,188.26. Givaudan gained 2.1%. Straumann Holding closed with a gain of 1.6%, while Richemont and Roche Holding moved up 1.18% and 1.07%, respectively. Alcon, Julius Baer and Galderma Group gained 0.7 to 0.9%, while Kuehne + Nagel, VAT Group, Swiss Re, Sonova, ABB and Helvetia Baloise Holding ended higher by 0.4%-0.6%. Lonza Group slipped 1.7% and Logitech International lost 1.07%. UBS Group, Sandoz Group, Amrize and Lindt & Spruengli ended lower by 0.4%-0.5%. In economic news, a measure signaling future turning points in the Swiss economy decreased for the first time in five months in January, though it remained above its medium-term average, the results of a survey by the KOF Swiss Economic Institute showed. The economic barometer dropped to 102.5 in January from 103.6 in December, which was the highest score in fifteen months. The outlook is clouding over somewhat but remains above average, the survey said. Among the indicators, the decrease was mainly reflected in hospitality and for construction, while positive developments were seen in the indicator bundles for manufacturing and for financial and insurance services.

Europe
The major European markets closed on a firm note on Friday even as other markets in the region turned in a mixed performance, with investors digesting the latest batch of regional economic data and earnings news. The pan European Stoxx 600 closed up by 0.64%. The U.K.'s FTSE 100 climbed 0.51%, Germany's DAX ended with a gain of 0.68% and France's CAC 40 gained 0.68%. Switzerland's SMI settled 0.31% up. Austria, Belgium, Denmark, Ireland, Netherlands, Norway, Portugal and Spain settled on the positive side. Greece, Iceland, Poland, Russia and Sweden ended weak, while Czech Republic, Finland and Turkiye closed flat. In the UK market, gains in financials and consumer sectors offset losses in the mining sector. Lloyds Banking Group gained 3.3% as it launched a share buyback program to repurchase up to £1.75 billion of its ordinary shares. Natwest Group, Barclays, Standard Chartered and HSBC Holdings gained 1.2%-2%. Smiths & Nephew, Experian, Diageo, IAG and Haleon moved up 2%-2.35%. Kingfisher, Reckitt Benckiser, Sainsbury (J), Imperial Brands, GSK, Unilever, GSK, Scottish Mortgage, Pearson, British American Tobacco and Tesco also ended with strong gains. Endeavour Mining fell more than 6.5%. Fresnillo lost 5.1%, Antofagasta drifted down 3.65% and Anglo American Plc ended 2.6% down, while Glencore and Rio Tinto lost 1.7% and 1.6%, respectively. Airtel Africa closed 6.6% down. Metlen Energy & Metals ended lower by 3.3%. Mondi, Entain, 3i Group, Persimmon, Burberry Group, Rentokil Initial, Babcock International, Barratt Redrow and Weir Group lost 1%-2.7%.

United States
Stocks fluctuated over the course of the trading session on Friday but maintained a negative bias throughout the day before eventually closing mostly lower. After recovering from an early sell-off to end Thursday's session mixed, the major averages all finished the day firmly in negative territory. The tech-heavy Nasdaq led the way lower, slumping 223.30 points or 0.9 percent to 23,461.82, while the Dow slid 179.09 points or 0.4 percent to 48,892.47 and the S&P 500 fell 29.98 points or 0.4 percent to 6,939.03. Meanwhile, the major averages turned in a mixed performance for the week. While the S&P 500 rose by 0.3 percent, the Nasdaq dipped by 0.2 percent and the Dow decreased by 0.4 percent. The weakness on Wall Street may partly have reflected renewed concerns about inflation after the Labor Department released a report showing producer prices increased by much more than expected in the month of December. The Labor Department said its producer price index for final demand climbed by 0.5 percent in December after rising by 0.2 percent in November. Economists had expected producer prices to rise by another 0.2 percent. The report also said producer prices in December were up by 3.0 percent compared to the same month a year ago, unchanged from November. The annual rate of growth was expected to slow to 2.7 percent. Meanwhile, traders were also reacting to news that Trump announced his intent to nominate former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell. Gold stocks turned in some of the market's worst performances on the day amid a nosedive by the price of the precious metal, with the NYSE Arca Gold Bugs Index plummeting by 12.6 percent. Semiconductor and computer hardware stocks also saw substantial weakness, contributing to the slump by the tech-heavy Nasdaq. Steel, airline, biotechnology and housing stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.

Asia
After some significant price gains at the start of the year, Asian markets are seeing a sharp decline at the beginning of February. South Korea is experiencing a veritable slide in prices: the Kospi lost more than 5 per cent at times, leading to a brief trading halt. The sell-off is partly explained by profit-taking. However, the economic signals are not bad at all: in China, at least, RatingDog's purchasing managers' index improved significantly above the growth threshold to 50.3 from 50.1 points. According to Yao Yu, founder of RatingDog, the main reason for the improved environment was orders from abroad.

Bonds
In the U.S. bond market, treasuries gave back ground following the rebound seen on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 1.4 basis points to 4.241 percent.

Analysis
UBS lowers Logitech target to CHF 88 (94) – Buy
Bank of America lowers Givaudan target to CHF 4,000 (4,800) – Buy
Bank of America raises Eni target to EUR 16.50 (16) – Neutral

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.