Asian Pacific markets follow US lower

US markets ended Tuesday in negative territory as tariff worries, rising bond yields, and sluggish economic data weighed on sentiment. The NASDAQ led the decline, closing down 0.8%. Nvidia, the world’s biggest company by market capitalisation, ended over 2% lower on the day. The S&P 500 lost 0.7%, while the Dow and Russell 2000 both lost 0.6%. But it’s worth pointing out that all the major indices managed to bounce off their respective lows, which were hit soon after the European close.

Source: TN Trader

US stock index futures were mixed in early Wednesday trade. Both the Dow and Russell were modestly lower mid-morning, while the NASDAQ and S&P were sharply higher as traders piled in to hoover up marked down technology stocks. The sector also got a boost after a federal judge ruled that Google (part of Alphabet) may keep its Chrome browser, although it cannot strike exclusive search deals and must share its search data.

The outcome avoided the worst-case scenario for the tech giant, as structural changes were not imposed. The ruling also highlighted how artificial intelligence has increased consumer choice, which worked in Alphabet’s favour. The stock was up close to 6% overnight, while Apple rose 3%. The ruling means that Apple can continue its lucrative arrangement of preloading Google Search onto iPhones.

Overall, investors saw the outcome as supportive for big tech, showing that while regulatory scrutiny is ongoing, the business models of major players remain largely intact.

European stock indices were sharply higher on Wednesday, bouncing back after yesterday’s ugly selloff. On Tuesday, US equities found a floor and recovered a significant chunk of earlier losses soon after the European close. That meant that European equities played catch-up in early trade.

Source: TN Trader

Yesterday’s pull-back was triggered by the US sell-off. Yet domestic issues were also a reason why investors sought to cut their exposure to risk assets. Rising regional bond yields have been a serious concern. In France, 30-year yields rose to levels last seen in 2009, as political risks grew in the lead-up to a no-confidence vote, due to take place early next week.

There are also significant worries in the UK, where the yield on the 30-year Gilt hit its highest level since 1998. This is heaping even more pressure on the Labour Government and its Chancellor, Rachel Reeves, ahead of a contentious Autumn Budget, set to take place on 26th November.

Globally, bond yields have been climbing amid concerns over tariffs and mounting national debt levels. US Treasury yields rose on Tuesday after a federal court ruled that many of President Trump’s trade tariffs are illegal, raising the prospect of repayments and further fiscal stress. Yet this decision is likely to be appealed, pushing any final judgement into next year.

The US dollar weakened a touch as this morning's trade progressed, having pushed higher overnight, building on yesterday’s gains. The Dollar Index broke back above 98.00 during the Asian Pacific session before sellers came in to book profits.

The dollar flew higher yesterday and was particularly strong against both the British pound and Japanese yen. Investors rushed to cut their exposure to the yen and sterling as long-term bond yields hit muti-year highs on a mixture of political and fiscal concerns.

The euro was also making back some of yesterday’s losses. Yet the EUR/USD remains well below 1.1700, having plunged below here during Tuesday’s sell-off.

Source: TN Trader

Gold shot above $3,500 yesterday and ended the session at a new all-time closing high of $3,530. It inched up again in early trade today to make a fresh all-time intra-day high of $3,548. The current price resilience suggests that safe-haven demand remains strong, with traders choosing to hold gold as protection against a host of uncertainties, including President Trump’s tariffs, fiscal policy across major economies and rising bond yields, which keeps upside pressure on borrowing costs.

Source: TN Trader

It is worth noting that yesterday’s strong gains were made and sustained even as the US dollar soared. This is a stark reminder that correlations are often little more than coincidences, and that markets can move to the beat of their own drums. It will be interesting to see if $3,500 holds as support on any pullback. Although $3,450 is a far more technically significant number.  

Silver has put in a strong performance so far this week, having hit a fresh fourteen-year high overnight. Pullbacks have been bought into, and investors are considering if the rally has legs, with $41 the next upside target.

The strong upside momentum of recent weeks has seen the daily MACD surge higher. But it has yet to reach the ‘overbought’ levels seen earlier in the summer. Traders continue to speculate that, should the uptrend hold, silver could take out its record high just below $50 per ounce from April 2011.

Source: TN Trader

Crude oil prices were sharply lower this morning. The sell-off saw front-month WTI give back all of yesterday’s gains, and more. It also led to WTI breaking back below $65 per barrel, taking it back into the top of the range as seen in the 4-hour chart below. Yesterday’s rally came after the US announced a new set of sanctions, this time targeting shipping owners and specific tankers. But in the absence of fresh drivers, oil has pulled back this morning.

Source: TN Trader

The American Petroleum Institute will release its weekly bulletin after tonight’s close, while the US Energy Information Administration will update the market on crude stockpiles tomorrow, with the report delayed due to Monday’s holiday. But the biggest focus for investors is this weekend’s OPEC+ meetings. This is when the group is expected to announce its latest decision on reversing previous production cuts.

Natural gas prices continued to consolidate this morning following a recovery off the lows hit it towards the end of August. Buyers are attempting to re-establish momentum and push decisively higher. But so far, they keep running into determined sellers.

This back-and-forth has kept gas prices in a tight range, with neither side able to take control. The stalemate reflects market uncertainty, with traders reluctant to make strong directional bets until clearer signals emerge.

Bitcoin and Ether were both a tad firmer in early trade this morning, building on yesterday’s gains. Yesterday, Bitcoin broke back above $110,000 while Ether steadied above $4,200. It was interesting to see the crypto market rally sharply along with gold and the US dollar, amid the most significant pullback in equity prices since the beginning of August. It appears that cryptos were benefiting from safe-haven flows as some investors cut their exposure to equities during Tuesday’s risk-off session.

The VIX jumped yesterday, reflecting a sharp rise in volatility. At its peak, the index was nearly 10% higher on Tuesday as sharp moves across both equities and bond markets pushed investors toward hedging instruments.

Yesterday’s spike in volatility underscores how quickly sentiment can shift, with traders showing a heightened sensitivity to developments across asset classes. While the index eased back from its highs, the move served as a reminder that markets remain vulnerable to sudden bursts of risk aversion.

Markets are in a pause-for-thought mode, as multiple headwinds converge. Concerns over rising yields, trade disputes, political uncertainties and upcoming inflation and employment data are all weighing on sentiment. September has a reputation for volatility, particularly in the latter half of the month, and traders appear mindful of that seasonal pattern.

The focus now shifts to Friday’s US jobs report and how it may influence the Federal Reserve’s policy path. For Wednesday, the bulls may attempt to ‘buy the dip’ and drive equities higher, though the uphill climb looks challenging given the crowded list of market risks.