Sector rotation accelerates as the Dow and Russell 2000 outperform the Nasdaq 100, while markets eye US NFP data and geopolitical risks in oil evolve.
Sector rotation lifts US stocks as US dollar firms, oil rally stalls near resistance
Key takeaways
US equity leadership shifting: Sector rotation away from mega-cap tech lifted the Dow Jones and Russell 2000, with small caps hitting a fresh all-time high, while the Nasdaq 100 remains the clear laggard at ~2.6% below its October 2025 peak.
Dollar firm ahead of key US data: The US dollar is holding modest gains below its 50-day moving average, supported by yen weakness, as markets await NFP, unemployment, and consumer sentiment data that could influence Fed policy expectations.
Commodities and Asia mixed: WTI spiked on fresh Russia sanctions risks but stalled near resistance, while Asia-Pacific equities showed uneven performance with rebounds in Japan and China offset by flat moves elsewhere.
Sector rotation away from richly valued mega-cap technology stocks towards industrials, energy, and consumer staples has resumed in yesterday’s US session, which led to the continued outperformance of the Dow Jones Industrial Average and Russell 2000 since the start of 2026 that gained by 0.6% and 1.1% respectively on Thursday, 8 January, surpassing the S&P 500 (0%) and Nasdaq 100 (-0.6%).
Interestingly, the small-cap Russell 2000 has reached a fresh all-time high, leaving the Nasdaq 100 as the sole laggard among major US indices. While the S&P 500 and Dow Jones have also hit new record highs this week, the tech-heavy Nasdaq 100 is still about 2.6% below its late-October 2025 peak.
The US dollar continued to trade steadily ahead of today’s key US non-farm payrolls and unemployment rate data for December 2025, as well as the preliminary reading of the University of Michigan’s consumer sentiment for January 2026, which could shape the decision-making process of the Fed’s monetary policy stance.
The US Dollar Index is now trading marginally higher by 0.1% in today’s Asia session after three days of consecutive gains. It is now positioned right below its 50-day moving average, which is acting as an intermediate resistance at around 99.23, led by weakness seen in the Japanese yen (-3%) against the greenback at the time of writing.
Mixed performances were observed in the Asia-Pacific stock markets today. Japan’s Nikkei 225 and China’s A50 snapped their respective prior two days of consecutive losses and are trading positively today with intraday gains of 1.5% and 0.1%, while Hong Kong’s Hang Seng Index, Australia’s ASX 200, and Singapore’s Straits Times Index are trading almost unchanged at this time of writing.
West Texas crude oil soared by 3.6% on Thursday, 8 January, on an impending US Congress bipartisan Russia sanctions bill that allows US President Trump to punish countries that brought cheap Russian oil.
However, the overnight rally in West Texas crude has failed to gain momentum in today’s Asia session, where it slid by 0.4% intraday to trade lower at US$58.22 per barrel at the time of writing after a retest on a key short-term range resistance zone at US$58.76/$59.18.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
