Asian Pacific stock indices track US futures

US stock indices ended Tuesday’s session mixed.  But the final ‘scores on the doors’ marked a stunning recovery from earlier in the day. At one stage, the Dow was down more than 1%, before it staged a remarkable comeback to end the day up 0.4%. It was a similar story for the other US majors. The small-cap, domestically focused Russell 2000 outperformed, closing up 1.4%.

But while the S&P 500 and NASDAQ also made back the bulk of their earlier losses, they were unable to get back into positive territory, closing down 0.2% and 0.8% respectively. The reversal caught many off guard and came early in the afternoon (European time) as the US stock exchanges started to open.

Source: TN Trader

Earnings reports from Goldman Sachs, JP Morgan and Johnson & Johnson were mixed, yet all stocks ended the day lower. There’s a feeling that the US-China trade dispute will continue to be the main issue for investors, with the prospect of Fed rate cuts and the ongoing US government shutdown trumping the third quarter earnings season.

That may be the case in the early stages. But it is unlikely to hold water once the tech giants start to report. Netflix and Tesla announce earnings next week. But things really get going in the last week of October when we hear from Amazon, Microsoft, Alphabet, Meta Platforms and Apple.

Aside from the ‘Magnificent Seven’, the semiconductor sector will come under additional scrutiny this quarter, particularly given the ‘circularity’ of promised investment going on between the chip giants and their biggest customers, such as OpenAI.

US stock index futures were firmer across the board this morning. Traders shrugged off the latest of President Trump’s tit-for-tat with China when he threatened to block Chinese cooking oil imports. This follows China’s decision to stop buying US soybeans.

Yesterday evening, Federal Reserve Chair Jerome Powell delivered a speech in which he expressed concern over the recent deterioration in the US labour market. This is now the focus for the Fed, taking over from inflation, which continues to be well above the US central bank’s 2% target rate.

The markets continue to factor in the likelihood of two 25 basis point rate cuts before the year-end. But Mr Powell concentrated on quantitative tightening, whereby the Fed reduces its balance sheet. This grew to unprecedented highs following the Great Financial Crisis, with more added during the COVID panic. The Fed has been gently reducing the balance sheet, thereby tightening monetary policy. Mr Powell suggested that this reduction programme may soon be wound down.

With no major data due Wednesday, attention turns to another wave of corporate earnings, including results from Bank of America, Morgan Stanley, PNC Financial, Abbott Labs and ASML. There’s also a clutch of speeches from Federal Reserve members.

European stock indices were firmer across the board on Wednesday. The rally in the French CAC was particularly noteworthy, as it completely unwound all the losses which followed President Trump’s threat of additional 100% tariffs on US imports from China.

Today’s rally also took the CAC up to its highest levels since March this year. This comes despite all the political troubles faced by the French government and President Macron. The country’s new/old Prime Minister, Sebastien Lecornu, wants to shelve the much-hated, but necessary, pension reform until the next Presidential election in 2027.

The move was welcomed by the Socialists, who pledged support for the government ahead of Thursday’s confidence votes. The improved sentiment comes despite renewed trade concerns between Washington and Beijing.

The UK’s FTSE 100 bucked the positive trend, as there were some notable names trading in negative territory, including AstraZeneca, Unilever, Rolls Royce and GSK.

Source: TN Trader

The US dollar was weaker across the board this morning as traders continued to unwind some of their long positions following the dollar’s recovery since last month’s lows. The Dollar Index once again eased back from 99.00. It poked its nose above here just under a week ago. But so far, this level has held as resistance, with the Index unable to hold above here for any length of time.

The daily MACD is back above the neutral level, having spent most of the year so far in negative territory. The question now is whether the US dollar is simply consolidating before taking another leg higher, or if selling pressure is about to build once again. Sentiment has taken a bit of a knock due to the US-China trade dispute. So, much may depend on how things shape up before the 1st November deadline.

The Japanese yen strengthened a bit against the US dollar but put in a mixed performance against other currencies. The Australian dollar was strong overnight, supported by firmer sentiment across Asian markets. Overall, the Forex space remains relatively calm, with price action largely contained within familiar ranges.

Source: TN Trader

Earlier this morning, gold pushed above $4,200 to hit a new all-time high. The upside momentum showed little sign of slowing, despite a daily MACD which suggests the metal is very overbought. Yet every minor dip was met with renewed buying, underlining the strength of sentiment currently dominating the gold market.

Source: TN Trader

There are plenty of reasons being offered up to explain the continued strength of gold. These include the prospect of lower US interest rates, haven buying as investors worry about tariffs and the US-China trade war and diversification away from fiat currencies, particularly the US dollar. These may all be true. But the bottom line is that gold is in a bull market. This will eventually end. But picking a top is a dangerous thing to do.

Silver broke back above $53.00 in early trade this morning, but hasn’t, as yet, managed to take out yesterday’s all-time intra-day high just below $53.60. Silver has certainly begun to catch up with gold. Gold first took out its 2011 all-time high five years ago and has been making new records on a fairly regular basis ever since. In contrast, silver’s record from April 2011 had held until last Thursday.

Like gold, silver’s daily MACD shows strong upside momentum, yet continues to stretch into extremely overbought territory. And like gold, it is undoubtedly in a bull market. But silver is likely to become very volatile now, with big intra-day swings in both directions. Not for the faint-hearted.

Source: TN Trader

Crude oil prices were steadier in early trade on Wednesday. This followed the sharp sell-off yesterday, which added to Friday’s losses. Early yesterday morning, the International Energy Agency (IEA) released its monthly oil market report for October. It said that demand growth was set to slow further while supply was plentiful, the latter being due mainly to increased production from OPEC+ countries.

Overall, the IEA wrote that it anticipates continued surplus conditions in the oil market. The news saw front-month WTI fall below $57.50 to trade at its lowest level since early May. Technically, there’s very little in the way of support until WTI approaches $55 per barrel – a level that acted as support in April and May this year.

The daily MACD is negative but not oversold by any means. But given the sharp downside move over the past three weeks, traders should be aware that a corrective bounce could come out of nowhere.

Source: TN Trader

Natural gas prices were weaker again this morning, trading back at levels last seen at the end of September. Gas put in a strong rally, adding around 40% from the end of August until this time last week.

Since then, it has pulled back around 10%. Traders will be watching closely to see if gas can hold and consolidate around current levels, or if prices are set to go lower.

Cryptocurrencies ended lower yesterday. But many managed to recover from the session’s weakest levels, mirroring the rebound in equities. Bitcoin managed to hold on to support around $110,000 before bouncing. It has pulled back from its best levels in early trade this morning.

Meanwhile, Ether broke back above the key $4,000 level over the weekend. It is a touch weaker this morning, and prices have yet to react to the rally in US stock index futures. Overall, the sector continues to mirror broader risk sentiment for the most part, moving in tandem with shifts in confidence across financial markets.

Despite recent softness, traders saw limited panic, with the space remaining active but contained. The broader tone remains cautious but stable for now.

After a sharp upward spike earlier in the week, the VIX pulled back further from the four-month high hit on Friday. The easing reflects a slight calming in market nerves following Tuesday’s volatile session.

However, the VIX remains elevated compared to the subdued levels seen earlier this month. Traders remain alert, aware that conditions could shift quickly with the next major headline.

The moderation offers some relief but doesn’t yet signal a return to stability, leaving markets in a delicate balance between calm and caution.

Tuesday’s session showcased the market’s resilience, as the Dow reversed deep losses to close higher while technology stocks lagged. The question now is whether this pattern reverses again today.

Tariff headlines remain the dominant driver, continuing to push sentiment sharply in either direction. Gold’s rise appears unstoppable, marking new highs daily, while oil remains pressured by persistent supply concerns.

With multiple Fed speakers, key corporate earnings, and ongoing trade uncertainty, markets remain sensitive. One Trump headline could easily send the Dow swinging a thousand points either way - making flexibility and caution the order of the day.