Global Markets Rally on US-India Trade Deal; AMD Earnings in Focus

The most significant market development on February 3, 2026, was the remarkable rally across Asian equity markets, sparked by President Trump’s announcement that Washington and New Delhi had reached a trade agreement. Under the terms reported, India pledged to reduce tariffs and increase purchases of US products, which markets interpreted as a meaningful de-escalation of global trade tensions that have weighed on investor sentiment in recent months [1][2].

Japan’s Nikkei 225 index closed at 54,720.66, representing a 3.92% gain that pushed the index to record levels. The broader Topix index also advanced 3.10% to 3,645.84. South Korea’s KOSPI performed even more dramatically, closing at 5,288.08 with a 6.84% increase—briefly touching approximately 7% during the session. This extraordinary move was amplified by technical trading factors, including a “sidecar” halt mechanism that triggered when KOSPI 200 futures jumped over 5% [2].

Regional markets showed varied responses to the trade news. India’s Nifty 50 surged approximately 5%, reflecting direct benefit from the agreement. Hong Kong’s Hang Seng gained 0.22%, while China’s CSI 300 advanced 1.18%. Australia’s S&P/ASX 200 rose 0.89%, suggesting the positive sentiment extended across the Asia-Pacific region [2].

Korean semiconductor stocks led the rally, with SK Hynix advancing 9% and Samsung Electronics jumping 11%. These gains reflected both the risk-on sentiment from trade optimism and continued strength in memory chip demand [2].

US markets on February 2, 2026, demonstrated broad-based strength ahead of the Asian rally. The Dow Jones Industrial Average closed at 49,407.67, up 1.29% with trading volume of 632.11 million shares. The S&P 500 advanced 0.86% to 6,976.45, while the NASDAQ Composite gained 0.95% to 23,592.11. Small-cap stocks outperformed, with the Russell 2000 rising 1.37% [0].

The rally’s character was notably broad, with strength across both large-cap and small-cap indices suggesting improved risk appetite rather than sector-specific buying. Trading volumes were elevated across major indices—at 5.77 billion shares for the S&P 500 and 7.45 billion shares for the NASDAQ—indicating genuine conviction behind the move rather than passive index rebalancing [0].

Economic data supported the positive sentiment, with ISM Manufacturing coming in at 52.6, substantially beating estimates of 48.4 and indicating expansion in the manufacturing sector. This data point helped offset concerns about economic growth that had persisted heading into the week [0].

The US dollar weakened against major currencies amid a confluence of factors. The Dollar Index (DXY) slipped as markets focused on political developments affecting Federal Reserve policy expectations. Specifically, uncertainty regarding potential probes into Fed Chair Jerome Powell and challenges to central bank independence created headwinds for the currency [3][4].

Market pricing reflected approximately 87% probability of a 25 basis point rate cut at the next Federal Reserve meeting, with Bank of America forecasting additional dollar weakness stemming from lower US interest rates relative to other developed markets. The currency move was notable in that it accompanied equity market strength—a pattern consistent with risk-on sentiment but complicated by the political uncertainty premium being priced into US assets [3][4].

Advanced Micro Devices (AMD) was a focal point for investors as the company prepared to release fourth-quarter 2025 results after market close. The stock was trading at $246.27, up $9.54 or 4.03% on the day, with shares ranging from $235.00 to $249.97 and volume of 35.67 million shares. The market capitalization stood at approximately $400.94 billion with a P/E ratio of 128.27, reflecting elevated expectations built into the share price [5][6][7].

Wall Street analysts expected revenue of $9.67 billion for Q4 2025, representing a 26.2% increase from $7.66 billion in the prior-year quarter. Earnings per share were estimated at $1.24, up from $1.09 in the prior-year period. Wedbush analyst Matt Bryson maintained an Outperform rating with a $290 price target, noting that AMD’s product strength could help mitigate AI demand uncertainty [5][6].

The company has demonstrated remarkable consistency, having beaten revenue estimates for twelve consecutive quarters—a track record that has contributed to sustained investor confidence despite the high valuation multiple. Key areas of investor focus included data center and PC demand trends, AI chip market share competition with Nvidia, GPU pricing dynamics, and the company’s 2026 outlook for AI infrastructure spending [5][6][7].

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The US-India trade agreement represents a potentially significant development in global trade policy dynamics. The agreement was described as substantially complete by US officials, with India committing to tariff reductions and increased US product purchases. Markets interpreted this as a positive signal that the US administration may be pursuing targeted trade agreements rather than escalating confrontational trade policies broadly. The speed of the announcement—described as coming together in about 48 hours—suggested both sides had strong incentives to reach terms quickly [1][2].

The market reaction was particularly pronounced in Korea, where the KOSPI’s nearly 7% gain was amplified by technical factors including short-covering from earlier-week losses and the trigger of trading halt mechanisms. This technical amplification created an outsized single-day move that may not fully reflect fundamental valuation changes but demonstrated the depth of sentiment improvement from the trade news [2].

The strong performance of Korean semiconductor stocks—SK Hynix up 9% and Samsung Electronics up 11%—combined with AMD’s pre-earnings rally indicated sustained investor optimism regarding the AI and semiconductor cycle. These gains occurred despite ongoing questions about enterprise AI spending returns, suggesting the market continues to price in long-term semiconductor demand growth rather than near-term demand uncertainty [2][5].

The semiconductor sector’s strength was notable given that it occurred across both US and Asian markets, indicating a global rather than regional sentiment shift. This coordination suggested the trade news benefited risk assets broadly rather than creating country-specific winners and losers.

The simultaneous dollar weakness and equity strength presented an interesting dynamic for market participants. Historically, dollar weakness has supported US multinational earnings through currency translation benefits, which may partially explain the equity market’s resilience despite political uncertainty regarding Fed independence. However, the underlying uncertainty about central bank independence represented a structural risk factor that could increase volatility in both currency and equity markets going forward [3][4].

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AMD’s elevated P/E ratio of 128.27 reflects high expectations for continued growth, particularly in AI-related segments. Any guidance shortfall or indication of competitive pressure from Nvidia could trigger significant price volatility given the premium valuation multiple. Investors should be aware that such elevated multiples create asymmetric risk profiles where negative surprises tend to generate larger price reactions than positive surprises [5].

The dollar’s weakness reflects genuine market concerns about challenges to Federal Reserve independence. Continued political pressure on monetary policy could increase volatility in US assets and potentially lead to reassessment of US asset allocations by foreign investors. This represents an ongoing risk factor rather than a one-time event [3][4].

The sharp single-day gains in Korean and Japanese markets—particularly the KOSPI’s nearly 7% move—may include short-covering and technical trading dynamics that could reverse if follow-through buying does not materialize. The triggering of trading halt mechanisms in Korea suggests the move exceeded normal market functioning parameters [2].

The full terms of the US-India agreement were not disclosed at the time of the announcement. Markets may need confirmation of the specific tariff reductions and purchase commitments to sustain the positive sentiment. Any perception that the agreement is less comprehensive than initially hoped could trigger disappointment-driven selling [2].

AMD’s after-market earnings release represented a potential catalyst for continued semiconductor sector momentum. Given the company’s track record of beating estimates and the positive pre-earnings move, traders were positioned for a continued upside reaction if results met or exceeded expectations. The data center and AI chip segments were particular areas of focus [5][6][7].

The Asian market rally could generate continued buying pressure in subsequent sessions if the US-India trade deal leads to tangible economic benefits. Markets that lagged the initial reaction—such as Hong Kong and China—could see catch-up gains if the trade optimism proves sustainable [2].

Dollar weakness combined with elevated Fed rate cut expectations could create opportunities for currency hedging strategies or international diversification. The approximately 87% probability priced in for a 25bps rate cut represents a market-consensus view that could be reassessed based on upcoming economic data [3][4].

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The February 3, 2026 market session was characterized by a significant sentiment shift driven by the US-India trade agreement announcement. Asian markets led global gains, with Japan’s Nikkei 225 reaching record highs and South Korea’s KOSPI posting its largest single-day gain in recent memory. US markets indicated a positive open following broad-based strength in the prior session.

AMD shares were elevated in anticipation of quarterly earnings, with the company expected to report 26% revenue growth year-over-year. The semiconductor sector emerged as a particular beneficiary of risk-on sentiment, with Korean chip stocks and US semiconductor equities both advancing.

The dollar weakened amid political uncertainty regarding Federal Reserve policy independence, with markets pricing in high probability of an upcoming rate cut. This currency dynamics combined with trade optimism to support equity valuations.

Key information gaps included the complete terms of the US-India trade agreement, AMD’s specific AI revenue breakdown and competitive positioning versus Nvidia, details regarding potential political pressure on the Fed, and China’s potential response to the trade developments. These gaps represent areas requiring monitoring in subsequent sessions.

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[0] Ginlix InfoFlow Analytical Database - Market indices and technical analysis

[1] Wall Street Journal - Stock Market Today: Dow Futures Inch Up; Dollar Slips

[2] CNBC - Japan stocks jump over 3% to record high as Asia markets rebound

[3] ActionForex - US Dollar Index (DXY) Slips as Rate Cut Bets Remain Unchanged

[4] Seeking Alpha - U.S. Dollar slips amid political developments putting focus on Fed

[5] Benzinga - AMD Q4 Earnings Preview: Analyst Says CPU Demand Could Help

[6] MarketWatch - AMD’s stock rises ahead of earnings

[7] Yahoo Finance - AMD to report Q4 earnings amid AI spending concerns