Asian Pacific markets slip

US stock exchanges were closed on Monday for the Labor Day holiday. But stock index futures were open and fell sharply in this morning’s early European trade. The sell-off was linked to a jump in bond yields and a corresponding fall in US Treasuries. This weakness was widespread, with bonds sharply lower across Europe and the UK as well.

Source: TN Trader

The moves may be setting the tone for what could be a tricky September. With no cash market trading to anchor sentiment, futures activity served as the first indicator of positioning for the week.

Investors are increasingly concerned about President Trump’s interference with the running of the US Federal Reserve. He has made repeated attacks on the Chair, Jerome Powell, and has ‘fired’ Governor Lisa Cook following alleged charges of mortgage fraud. On top of this, he sacked the head of the Bureau of Labor Statistics, accusing her of fiddling the jobs numbers to make him look bad.

Another story weighing on sentiment was the federal appeals court ruling on Friday. In a 7-4 decision, the US Court of Appeals for the Federal Circuit declared that most of President Trump’s global tariffs are illegal. The court argued that only Congress has the authority to implement broad-based levies. Mr Trump rejected the ruling as “Highly Partisan” and vowed to appeal to the US Supreme Court.

At the same time, investors are grappling with uncertainty over the Federal Reserve’s independence. The Trump administration has attempted to remove officials, raising concerns about political influence over monetary policy.

A court hearing that aimed to block Mr Trump from firing Fed Governor Lisa Cook ended Friday without a ruling. In addition, Trump’s nominee for Fed Governor, Stephen Miran, is scheduled to appear before the Senate Banking Committee on 4th September.

Overlaying these political and legal developments is the seasonal backdrop. September is historically the weakest month for equities, with the S&P 500 averaging a 4.2% decline over the last five years and falling more than 2% on average over the last decade. This combination of tariff uncertainty, Fed concerns, and seasonal weakness left markets on edge as the month began.

European stock indices were generally weaker in early trade, taking their lead from weakness across US stock index futures.

Source: TN Trader

European indices had found early strength at the start of the week, with the defence and health-care sectors buoyed by corporate headlines. However, momentum subsequently faded, with traders cautious ahead of fresh data today, including Euro zone inflation numbers.

In Forex, the Japanese yen fell sharply overnight, taking the USDJPY to its highest level in a month. The US dollar was stronger across the board as investors reacted to a sell-off in sovereign debt. US Treasuries, UK gilts and European bonds all fell as yields rose. Investors flooded back into the US dollar, leading to big losses for the British pound.

The EURUSD fell below 1.1700 as traders awaited key CPI data from the euro zone. European Central Bank governor Gediminas Simkus suggested that another rate cut could come before the year-end.

Source: TN Trader

Gold made a strong push higher, breaking above $3,500 and briefly touching a new record just below $3,510. The advance underscored continued demand for safe-haven assets, particularly against a backdrop of tariff disputes and Fed uncertainty. But prices pulled back from their best levels as the US dollar rallied on the back of stronger bond yields.

Source: TN Trader

It was a similar story for silver, which hit $40.85 overnight, its highest level in fourteen years. The strength reflected renewed investor interest in precious metals, with silver benefiting from its dual role as both a safe-haven and an industrial asset. Silver pulled back sharply in early European trade as profit-taking emerged, triggered by the rally in the US dollar.

Source: TN Trader

Crude oil was sharply higher this morning, building on gains from yesterday. Overnight, front-month WTI traded at its highest levels since early August. WTI appears to have found support just south of the $62 level. The next big test will be its ability to hold above $65 on any pullbacks.

Source: TN Trader

Geopolitical tensions, particularly around Russia and Ukraine, continue to support crude, preventing deeper declines. While volumes remain light, the price action suggests that crude may be consolidating after recent swings.

Natural gas prices retreated once again, falling below $3 per btu. The market has struggled to hold momentum, with prices swinging back and forth around this key level.

The latest pullback reinforced the sense of volatility in the gas market, where traders continue to react quickly to shifts in sentiment and short-term supply-demand dynamics.

Cryptocurrencies showed signs of stabilisation after recent weakness. Bitcoin pushed back above $110,000, with the level now acting as a focal point for traders attempting to defend support. The daily MACD indicates that Bitcoin is very oversold at current levels. Time will tell if it can establish support around here and form a base for another rally.

The VIX rallied in early trade, signalling some early investor nervousness. Despite trade disputes, political noise and the seasonal risks of September, volatility has remained relatively subdued so far. Traders appear to be waiting for more decisive catalysts before adjusting positions aggressively.