Asia cautious ahead of key US jobs data

The Trump administration has lifted key restrictions on semiconductor design software sales in a fresh sign of de-escalation between the US and China. Software providers Synopsys and Cadence confirmed early Thursday that under the new terms, companies will no longer need government licenses to supply leading chip design tools to Chinese firms.

The move, part of the broader trade truce between the two nations, was well received by markets and marks a significant step toward easing tech tensions. It also signals a more pragmatic phase in trade negotiations - one that could have implications for broader supply chain dynamics and cross-border tech investment flows.

European stock indices opened in positive territory on Thursday, with investors turning their attention to the release of a raft of Services PMIs releases from across the Eurozone and the UK. These were a bit of a mixed bag for individual European countries. However, there were better-than-expected numbers for the Eurozone as a whole, while the UK data was also good and indicated continued expansion across the services sector.

Source: TN Trader

Yields on UK 10-year gilts edged lower in early trade, pulling back slightly from Wednesday’s spike as fixed-income markets absorbed the week’s macro and central bank signals. With a heavy data slate and global trade developments in focus, traders may adopt a watchful stance ahead of US economic prints later today.

US stock indices finished Wednesday on a strong note. Both the S&P 500 and NASDAQ closed at fresh all-time highs, having risen 0.5% and 0.9% respectively. The mid-cap, domestically focused Russell 2000 jumped 1.3%, while the Dow Jones Industrial Average was the outlier, ending effectively unchanged.

Source: TN Trader

The rally was primarily driven by optimism following President Trump’s announcement of the US-Vietnam trade deal. The upbeat tone helped offset concerns from a disappointing ADP Private Payroll report. This showed private sector hiring fell by 33,000 last month, the first negative reading since February 2022, and well below the 99,000 gain expected. 

The data has raised fresh questions about underlying labour market momentum, and this reinforces the importance of today’s official payroll release.

Tesla and Nike shares gained traction on Wednesday, with the latter benefiting from improved trade terms between the US and Vietnam, which is a key production hub for the brand.

Tesla also rebounded despite reporting a second consecutive year of declining vehicle deliveries, highlighting investor resilience and a broader market appetite for risk. The tech sector’s strength helped both the S&P 500 and NASDAQ 100 push to fresh record highs, confirming bullish sentiment heading into the second half of the year.

Gold prices were steady in early trade this morning. Gold hovered above $3,350, having started the week on the back foot when it broke below $3,250 on Sunday’s open. Gold has bounced off $3,250 on a couple of occasions now, although $3,200 appears to be a more significant level.

Gold continues to attract buyers who are driven by ongoing geopolitical concerns and the weaker US dollar backdrop. The daily MACD has pulled back from seriously overbought levels seen in April and has dropped below the neutral line.

This week’s rally has even seen the MACD curl higher, suggesting an uptick in upside momentum. Investors now await the upcoming US Non-Farm Payrolls report, and how that may affect risk appetite.

Source: TN Trader

Silver outperformed this morning, as buyers emerged to push prices above $37 per ounce. This morning’s rally has taken silver up to the top end of a trading range which has been building over the past month. This has helped silver consolidate following its sharp gains at the beginning of last month.

It remains to be seen if it can build sufficient upside momentum from current levels to break above the top of this range. If it can and thereby take out the $37.31 high from last month, that would take silver back up to levels last seen in February 2012. But a failure now would suggest that silver may need to consolidate further to build enough bullish energy to aim for these highs.

Source: TN Trader

Oil was a touch softer in early trade this morning. This followed a strong session on Wednesday, which saw front-month WTI come within a couple of cents of $67 per barrel. Yesterday’s move meant that crude managed to break out of the tight range which had been building over the past week.

Traders must balance the recent release of mixed economic indicators with evolving expectations around global supply and demand. Despite longstanding concerns about slowing global demand growth, the oil market has managed to stabilise and rebound when front-month WTI breaks below $60 per barrel. The big question is if these levels can hold in futures, or if oil will break below $50 once again.

On the flip side, if front-month WTI continues to hold above $60, with drops to $55 met with strong buying pressure, oil prices will likely get set for a larger and more protracted rally. With Non-Farm Payrolls today and the OPEC+ meetings over the weekend, there’s plenty of risk in both directions.

Source: TN Trader

Volatility remains contained, with the VIX July contract comfortably south of 20.00. Despite lingering geopolitical concerns and tariff uncertainties, market participants seem remarkably unruffled and happy to increase their exposure to US equities. Now they await today’s US Non-Farm Payrolls update.

This is expected to offer crucial insight into labour market health and, by extension, the Federal Reserve’s next steps. Until then, traders are keeping a close eye on implied volatility, which could spike should the data diverge significantly from expectations.

For now, the subdued VIX signals a market still comfortable with the current risk landscape - though that could shift quickly.

Markets are tightly coiled around the upcoming US employment report, and today’s Non-Farm Payrolls release could provide the next big catalyst. This view has been strengthened following yesterday’s unexpectedly weak ADP data.

Trade headlines remain in the background, but the Vietnam deal and chip software relief for China are reminders that deals can still be completed ahead of next week’s deadline. For now, risk sentiment is holding up, but data will decide whether the rally has further to go or finally meets resistance.