Market snapshot: another day, another dollar dip

Further geopolitical concerns and domestic issues in the US continue to drive demand for precious metals. ii's head of markets explains what's happening now.

27th January 2026 08:21

by Richard Hunter from interactive investor

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The US dollar remains under pressure on a number of fronts, with alternative investment destinations reaping the benefit.

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The latest round of political uncertainty relates to the possibility of another government shutdown, with the Democrats threatening to block a federal spending package arising from the administration’s crackdown on immigration and including an allocation for Homeland Security in the face of the recent shootings in Minnesota.

In addition, increasing speculation of a coordinated effort with Japan to intervene and support the yen is weighing on the greenback, and the announcement of a landmark trade deal between the EU and India will raise further questions.

Elsewhere, the President continued his tariff tirade, raising duties on some South Korean goods from 15% to 25% on the basis that a preliminary trade pact had not yet been approved from the authorities there. This is apart from a threat to Canada of 100% tariffs should it proceed with a free trade deal with China, the likelihood of which has been denied by Prime Minister Carney.

Even so, the latest level of uncertainty provided a fresh springboard for precious metals, with gold advancing once more to briefly touch $5,100 an ounce and with silver also in demand as investors sought to hedge their portfolio risk.

Despite the brittle backdrop, the main US indices posted advances on the day after a losing week, as attention turned towards a raft of upcoming earnings. Four of the “Magnificent Seven” will be reporting over the coming days in the form of Tesla Inc (NASDAQ:TSLA), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc Class A (NASDAQ:META) and Apple Inc (NASDAQ:AAPL), with most of those stocks seeing some buying interest ahead of the numbers. So far, an estimated 75% of companies have exceeded earnings expectations, although the possibility of failure set against high expectations is elevated, as evidenced by the reaction to the recent Netflix Inc (NASDAQ:NFLX) and Intel Corp (NASDAQ:INTC) updates.

In the meantime, US markets have made steady but unspectacular progress in the year to date, with the Dow Jones having risen by 2.8% and the more tech-focused S&P500 and Nasdaq by 1.5% after a shaky start. The rotation trade also remains in evidence, with a gain of 6% for the Russell 2000 index comfortably outstripping the main indices.

Asian markets were upbeat overnight, partly on hopes of strong earnings from the US tech heavyweights in the next couple of days. In spite of the current activity surrounding the domestic bonds and currency which imply a headwind for exporters, the Nikkei 225 in Japan also posted a marginal gain, in line with most markets in the region.

Insulated from some of the concerns which have been troubling investors overseas, the main UK indices made further cautious gains at the open. For the more domestically focused FTSE250, the announcement of accelerating shop inflation in January and food prices in December had little more effect than consolidating the view that an interest rate cut from the Bank of England remains off the table for now. The index has nonetheless seen the benefit of some overseas buying interest so far this year, with the FTSE250 having posted a gain of 4.1% as a result.

At the top table, stocks with an exposure to China were in demand, with gains for the likes of Burberry Group (LSE:BRBY), Prudential (LSE:PRU) and HSBC Holdings (LSE:HSBA), while banks in general attracted some buying interest ahead of what will be an unusually elongated reporting season, beginning with Lloyds Banking Group (LSE:LLOY) on Thursday and not ending until HSBC on 25 February. The gains were enough to offset some rare and muted losses among resource stocks such as Endeavour Mining (LSE:EDV), Fresnillo (LSE:FRES) and Antofagasta (LSE:ANTO), leaving the FTSE100 ahead by 2.5% in the year to date.

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