Dow Jones & Nasdaq 100: Overnight Session Hit by AI, Fed Jitters

• Dow Jones E-mini dropped 259 points, Nasdaq 100 E-mini fell 217 points, and S&P 500 E-mini declined 40 points during the Asian session following Microsoft's steep decline on slower cloud growth concerns
• US producer prices expected to show 2.7% year-over-year increase in December (down from 3% in November), which could support expectations for H1 2026 Fed rate cuts and boost risk assets
• Tokyo core-core inflation fell to 2.0% in January from 2.3% in December, tempering expectations for an April Bank of Japan rate hike and causing USD/JPY to rise 0.52% to 153.881

Market Summary: US Futures Decline on AI and Fed Concerns

Key Developments

US stock futures fell sharply during the Friday, January 30, 2026 Asian session, driven by AI spending concerns and Federal Reserve policy uncertainty. The Dow Jones E-mini dropped 259 points, the Nasdaq 100 E-mini declined 217 points, and the S&P 500 E-mini fell 40 points.

Microsoft Triggers Tech Selloff

Microsoft (MSFT) plunged 10% on January 29 after reporting slower-than-expected cloud growth, reigniting investor fears about returns on AI-related investments. The sell-off triggered a broader flight to safety, dragging down tech stocks and spilling over into Asian markets.

Japanese Economic Data

Tokyo's core-core inflation cooled to 2.0% in January from 2.3% in December, hitting the Bank of Japan's target. Headline inflation fell to 1.5% from 2.0%. Japanese retail sales unexpectedly declined in December, tempering expectations for an April BoJ rate hike. USD/JPY advanced 0.52% to 153.881, while the Nikkei fell 0.85%.

Upcoming Catalysts

US December producer prices are expected to show 2.7% year-over-year growth, down from 3% in November. Lower readings would support expectations for multiple Fed rate cuts in 2026, including a potential H1 cut. Key earnings reports from Exxon Mobil (XOM), Chevron (CVX), American Express (AXP), and Verizon (VZ) will also influence sentiment.

Technical Outlook

Despite the pullback, all three major index futures remain above their 50-day and 200-day EMAs, maintaining a bullish medium-term outlook. However, risks include escalating geopolitical tensions, hawkish BoJ policy shifts, and potential yen carry trade unwinding.