Fresh records across Asia Pacific region

US stock indices were mostly higher by Wednesday’s close. The Dow was the only exception, although it ended the session little changed. The small cap Russell 2000 led the pack, closing up 1.0% and at a fresh record close. The NASDAQ added 0.7% while the S&P 500 tacked on 0.4%. All the majors remain within sight of their all-time highs, having recaptured most of the losses from last Friday’s sell-off, which was triggered by President Trump’s Chinese tariff threat.

Source: TN Trader

Despite yesterday’s overall gains, it was an uneven trading session, which saw early strength fade into mid-session weakness before buyers stepped back in a few hours before the close. Investor sentiment was whipsawed by renewed concerns over US-China trade, along with the ongoing US government shutdown, which is now in its third week.

Despite all this, the underlying market tone remained resilient, supported by a decent round of bank earnings that helped offset lingering macro uncertainty. This added to overall positive sentiment, which continues to be driven by expectations of future productivity gains from the development of artificial intelligence (AI), along with the prospect of looser monetary policy from the Federal Reserve. As to the former, market leadership remains narrow.

According to LPL’s Adam Turnquist, much of the rally in the S&P 500 since July has been concentrated in large-cap tech, with just a handful of AI-driven names - Nvidia, Apple, Alphabet, Broadcom, and Tesla - accounting for around 60% of the market’s gains.

US stock index futures were firmer across the board this morning. The general feeling is that last Friday’s tariff tantrum was overdone, and that President Trump’s more conciliatory tone towards China is yet another example of this year’s ‘TACO’ maxim. In other words, and rather unfairly, when push comes to shove, ‘Trump Always Chicken Out.’

European stock indices were firmer across the board this morning, once again taking their lead from early strength in US stock index futures. But they gave up these gains as the morning progressed, as equities continued to oscillate amid fragile sentiment.

In common with their US counterparts, there have been wild swings in European stock indices this week. But this is not to suggest that European indices have moved in concert. While the German DAX and the UK’s FTSE 100 have struggled, the French CAC soared on Tuesday, in a move which completely erased all of Friday’s losses.

Source: TN Trader

This came as investors welcomed Prime Minister Sebastien Lecornu’s pledge to suspend the government’s pension reform until after the 2027 election. The move eased political tensions and gave French equities some breathing room. The CAC then built on these gains and got an additional boost this morning after M. Lecornu survived the first of two ‘no confidence’ votes.

In the UK, GDP came in at a modest +0.1% for August, matching expectations but underscoring slowing growth momentum. Despite this, the data may offer some mild relief to UK Chancellor Rachel Reeves as she prepares for her budget next month.

After all, some growth is better than no growth, which is better than a contraction. But GDP is notoriously fickle and subject to revision, so it’s not worth reading too much into today’s data. Sterling slipped a touch in the immediate aftermath of the release, but overall, the market reaction was muted.

July’s data was revised down slightly, and economists expect third quarter GDP to confirm this downshift. This follows on from the dismal UK jobs data from earlier in the week.

Overall, the Bank of England faces a delicate balancing act heading into its 6th November meeting. Inflation remains sticky at 3.8%, nearly double the Bank’s 2% target rate, but a softening labour market strengthens the case for eventual rate cuts.

Forex markets were relatively quiet this morning. The US dollar was a touch weaker against most other currencies, although the Japanese yen was softer across the board. The Dollar Index continued to trade above 98.00. But it’s becoming increasingly clear that 99.00 remains a significant resistance level.

Source: TN Trader

The Japanese yen eased back again and has yet to make back losses made following the surprise victory of Ms Sanae Takaichi when she was voted in as the new leader of Japan’s ruling LDP party.

Another day, another record high. Gold’s unbroken rally showed no signs of fatigue as prices pushed to yet another all-time high. Having surged above $4,200 yesterday, gold briefly broke above $4,240 overnight. The daily MACD continues to push ever higher into overbought territory. In fact, it looks as if gold’s daily MACD has never been so stretched to the upside.

Despite this, even the shallowest of pullbacks has, so far, been countered by fresh buying, with investors unwilling to bet against the metal’s extraordinary momentum. The calls for the rally to head towards $5,000 are growing louder.

Analysts cite numerous reasons for owning gold, including haven demand against the backdrop of the US-China trade war, the US government shutdown, Federal Reserve rate cut expectations, central bank buying and the de-dollarisation trade. Traders continue to climb the ‘wall of worry’ with the bulls convinced that they will be able to identify the top and get out before a correction begins. Good luck.

Source: TN Trader

Silver has had its own parabolic rise ever since it broke above $40 per ounce in early September. Like gold, its daily MACD suggests that silver is very overbought. But unlike gold, there has been some evidence of some mild profit-taking along the way. Sentiment remains positive, but with a strong element of caution.

Source: TN Trader

Crude oil was little changed in early trade this morning. The market has steadied somewhat, having fallen around 10% since the end of September. Front-month WTI was hovering above $58 per barrel this morning, having dropped below $57.40 on Tuesday.

Source: TN Trader

There has been very little buying pressure as the market continues to digest persistent oversupply concerns, while global demand growth is expected to slow further. This dynamic was emphasised in the International Energy Agency’s October outlook, released early on Tuesday morning.

Of course, the solution to low oil prices is low oil prices. Once oil falls below certain levels, production becomes unprofitable. This will always be the major consideration for producers. But for now, supply continues to grow.

Natural gas prices steadied this morning, managing to hold support after recent weakness. Selling pressure has eased, but conviction for a rebound is still lacking.

The market appears to be consolidating at current levels, with traders hesitant to commit ahead of any fresh catalysts. The overall backdrop for gas reflects the same broader trend of subdued momentum seen across the energy complex.

Once again, Bitcoin tested support around $110,000, and this has held so far. Ether managed to break back above $4,000, but the market remains on the defensive. The recent retreat has tempered some of the enthusiasm built up earlier in the month, with the bulls now looking for signs of renewed upside momentum. For now, both major tokens appear locked in consolidation mode.

The VIX eased slightly but continues to trade at elevated levels, at least when compared to its behaviour earlier this month. This underscores how fragile sentiment remains. Significant intraday swings have been common, reflecting sensitivity to headlines and renewed caution around trade developments and earnings.

While the immediate panic that followed last Friday’s tariff threat from President Trump has cooled, the elevated VIX signals that investors are still bracing for further turbulence ahead.

Investors have been sensitive to shifting rhetoric from Washington after President Trump’s latest escalation of trade threats against China, including comments about a possible “cooking oil” embargo. Treasury Secretary Scott Bessent later said Washington was prepared to set price floors across industries to counter China’s influence.