Asian Pacific indices end lower

US stock indices fell on Tuesday, on what looked like some mild profit-taking across the board. The small cap Russell 2000 bore the brunt of the selling pressure and closed down 1.1%. The NASDAQ lost 0.7% while the Dow and S&P 500 fell 0.2% and 0.4% respectively. The pullback was triggered by a sudden selloff in Oracle.

Source: TN Trader

A news outlet reported that the company was making lower-than-expected profit margins in its cloud computing division and was reportedly losing money on certain Nvidia chip rental deals. Bear in mind that the stock surged 43% a month ago.

This happened after Oracle announced a deal with OpenAI valued at around $300 billion, one of the largest cloud contracts ever signed. Oracle has given back around half of those gains since then, and yesterday’s news reinforces concerns over the solidity of the artificial intelligence trade.

The bulk of the selloff came soon after the US open. But it's worth noting that all the US majors bounced off their lows towards the European close, so overall, the daily losses were modest. This seems to have boosted sentiment with US stock index futures firmer across the board this morning. This is despite the government shutdown now entering its eighth day. Traders seem to consider the shutdown no more than a mild inconvenience due to the postponement of certain economic data releases.

Instead, investors continue to expect more upside in US equities, supported by ongoing investment in artificial intelligence (AI), along with the prospect of 50 basis-points-worth of rate cuts before the year-end. Tariff-related concerns have been shoved into the long-term car park for now. 

There’s little in the way of economic data releases due out today. But there are plenty of Fed speakers, along with the publication of the minutes from the FOMC’s last monetary policy meeting last month.

European stock indices were also firmer across the board this morning. Traders were busy playing catch-up with US markets after they staged a late recovery yesterday afternoon. The UK’s FTSE 100 pushed to a new intra-day high above 9,500, while the Euro Stoxx 50 bounced off support around 5,600.

Source: TN Trader

The German DAX appears to be consolidating, with bullish traders looking to push the index over the key 25,000 level. The French CAC has recovered around half of Monday’s losses, which followed the unexpected resignation of French Prime Minister Sébastien Lecornu. President Macron has given him until this evening to agree on some sort of accommodation with other political parties to try and stabilise the situation.

The US dollar was firmer across the board this morning, building on Tuesday’s gains. The Dollar Index surged above 98.00 yesterday and closed near the session highs. It built on those gains this morning to hit its highest level since the beginning of August.

Bear in mind that just three weeks ago it had broken below 96.00 to hit its lowest level in over three and a half years. Investors got busy switching allocations out of the dollar on tariff concerns, the prospect of aggressive rate cuts from the US Federal Reserve, along with the knowledge that the Trump administration wanted a cheaper dollar to help reset the country’s trade deficit. But it now looks as if the greenback may have bottomed, despite the government shutdown.

Where it goes from here depends to some extent on the size of dollar short covering. The other consideration is what may be a viable alternative. The euro has all kinds of problems, which include the uncertain political situations across France and Germany.

Meanwhile, the Japanese yen continues to sell off. Sanae Takaichi’s weekend election victory as the new leader of Japan’s ruling Liberal Democratic Party (LDP) has forced traders to reprice the probability of a rate hike from the Bank of Japan.

This looks as if it has been pushed out too early next year, rather than at the end of this month. The British pound has held up relatively well. But the outlook is uncertain ahead of UK Chancellor Rachel Reeves’s budget next month.

Elsewhere, the Kiwi dollar came under notable pressure after the Reserve Bank of New Zealand’s 50-basis-point rate cut - double what markets had priced in - drove a sharp 1% sell-off against the US dollar. The move underscored how divergent central bank policy paths remain a key driver in FX markets. With gold now above $4,000, it’s perhaps surprising that a commodity currency like the Aussie dollar hasn’t done better.

Source: TN Trader

Gold surged above $4,000 per ounce early in the Asian Pacific session. So far, there has been little obvious profit-taking, and the gold price hovered just below $4,050 ahead of midday, European time. As the chart shows, gold’s rally accelerated in September after it broke above resistance and its old record high of $3,500 from April. But the daily MACD is now even more overbought than it was back then.

Source: TN Trader

Gold has risen in nine of the last ten sessions and set a new all-time high for ten consecutive trading days, an extraordinary stretch that has pushed year-to-date gains to 53%. This week’s rally has occurred even against the backdrop of renewed dollar strength. But as has often been noted, history shows that the negative correlation between the dollar and gold is a bit of a myth.

Safe haven demand has been cited as a key reason for gold’s rally. But with global equities trading at all-time highs, and with no stress visible in the bond markets, gold’s strength is much more likely down to it being out of fashion and overlooked for so many years. Now it is back in the spotlight, but difficult to trade at current levels.

Following the mildest of pullbacks yesterday, silver resumed its rally overnight to touch $49 an ounce briefly this morning. It has pulled back a tad since then and continues to trade just below its record high near $50, from April 2011.

Silver is up around 65% year-to-date. It continues, like gold, to command strong buying from all corners of the market - industrial, institutional and maybe even some retail interest as well. The ongoing surge highlights the scale of demand rather than safe-haven sentiment, as momentum and positioning continue to overpower traditional valuation measures.

Source: TN Trader

Crude oil prices were in full retreat last week, dropping over 7% on concerns of oversupply. These concerns came from two main sources: the reopening after two and a half years of an Iraqi/Kurdish pipeline through Turkey, and the expectation that OPEC+ would announce a large production increase over the weekend. These two factors raised fears that Ukraine’s highly successful attacks on Russia’s energy infrastructure would crimp supply. As an aside, this view goes a long way to demonstrating the uselessness of sanctions on Russian energy.

Anyway, OPEC+ did announce an increase in output, but this was way below expectations. As a result, oil prices have bounced this week, with front-month WTI rallying from just above $60 per barrel to just over $62 this morning.

Despite this, and although front-month WTI has broken back above resistance around $61.50, this doesn’t sound the all-clear for higher prices. Yesterday’s American Petroleum Institute’s report showed a bigger-than-expected US crude inventory build. Traders will keep a close eye on today’s inventory update from the US Energy Information Administration.

Source: TN Trader

Gas prices hovered near a 14-week high this morning. Natural gas has now rallied around 25% in just over a fortnight. It is now testing an area of resistance. The tone remains steady rather than speculative, suggesting the market is searching for equilibrium before its next move.

Bitcoin fell sharply yesterday but now appears to be consolidating after hitting an all-time high at the weekend over $126,000. The move appears to be a natural breather following a strong run. Ether also sold off yesterday, having traded above $4,700. It is now trading either side of $4,500. If it can continue to consolidate around current levels.

Despite the retreat, sentiment remains broadly constructive, with most of the crypto space still holding near recent highs. The broader market tone reflects consolidation rather than correction, suggesting traders are simply recalibrating before the next leg.

Meanwhile, volatility firmed slightly following minor equity weakness on Tuesday. The uptick signals a touch more caution in risk positioning, though far from any sign of panic or flight to safety.

US markets appear to be catching their breath after a long stretch of steady gains. With the Federal Reserve minutes due later today, traders are holding back from making aggressive moves as they hope for greater clarity from the US central bank. The dollar is firm and may continue to solidify in the high 90s, while the yen remains vulnerable after its latest slide.

Gold and silver continue to power higher with remarkable consistency, showing no signs of fatigue despite their overbought status. Oil and gas markets remain steady, suggesting broader risk appetite is still intact. For now, the tone across asset classes points to quiet consolidation rather than any major shift - a market pausing to check its pulse before the next move.