Softer US yields and easing inflation expectations support equity gains

The yield on the US 10-year Treasury note eased to 4.21% on Monday, trimming earlier gains as sentiment brightened ahead of key data this week: the delayed unemployment report, Consumer Price Index (CPI) and retail sales. These releases will offer insights into US economic health and the Federal Reserve's (Fed) path, with markets expecting no change in March 2026, a possible cut in June and another later in the year.

One-year-ahead inflation expectations fell to a six-month low of 3.10% in January 2026 (from 3.40% in December 2025). Longer-term expectations held at 3%, earnings growth ticked up to 2.70% and unemployment concerns rose slightly to 41.90%. Yields had climbed earlier on reports of Chinese regulators urging banks to cut US Treasury exposure amid concentration risks and volatility.

US equities rose, powered by artificial intelligence (AI) stocks ahead of the data. The S&P 500 gained 0.54% and the Nasdaq 100 rose 1.01%. Nvidia, Broadcom and AMD added around 3%, while Palantir and Oracle climbed 4.50% and 8%, respectively. Software lagged, with Intuit and Salesforce down over 2% on AI disruption fears. Eli Lilly edged higher after its $2.4 billion acquisition of Orna Therapeutics.

European indices rallied on strength in banks, industrials and tech, backed by positive corporate news and a favourable macroeconomic outlook. The STOXX 50 jumped 1% to a record 6 058; the STOXX 600 rose 0.60% to 621, also a high. UniCredit surged 6.40% on robust fourth quarter results and a strong dividend, fuelling eurozone bank gains. SAP and Adyen rebounded 2.50% to 5%, shaking off last week's automation-led sell-off. TotalEnergies, Siemens, EssilorLuxottica, and Siemens Energy advanced ahead of earnings.

Germany's DAX 40 climbed 1.20% to 25 015, its highest since mid-January 2026 and a top European performer. The FTSE 100 edged up 0.16% to 10 386.23, nearing records on miners and defence stocks despite a mid-session dip.

In commodities, gold rose nearly 2% to around $5 056 per ounce, aided by softer real yields, a weaker dollar, and safe-haven flows. Silver surged over 6% to about $83 per ounce, building on last week's recovery from sharp losses. Platinum added 0.91% to $2 119.85 per ounce. Brent crude gained 1.91% to $69.35 per barrel. 

South African equities ended mixed, with the JSE Metals and Mining Index rising by 0.81%, while the JSE All Share Index (ALSI) gained 0.19%. The Top 40 advanced by 0.24%, while the JSE Industrial 25 declined by 0.28%. The rand traded at R15.89 against the US dollar at 20h00 SAST.

Asian equity markets edged higher on Monday after Japan’s Liberal Democratic Party, led by Sanae Takaichi, secured a decisive election victory, bringing greater political clarity and supporting global investor sentiment. Japan’s Nikkei 225 surged by nearly 4%, while Hong Kong’s Hang Seng advanced by 1.76%, with the Shanghai Composite increasing by 1.38%. South Korea’s Kospi climbed by 4.10% and China’s SSE Composite Index gained 1.41%.