Asian Pacific indices cede recent gains

US stock indices had a mixed session on Wednesday. Early strength saw the Dow and S&P 500 hit fresh record intra-day highs. But equities subsequently sold off in a round of profit-taking over the last few hours of the session. The Dow lost 0.9%, while the S&P 500 and Russell 2000 both dropped 0.3%. The NASDAQ eked out a modest 0.2% gain.

Source: TN Trader

Alphabet (parent company of Google and YouTube, amongst others) posted a strong session, ending up 2.4%. The move reinforced Alphabet’s status as last year’s best-performing stock within the ‘Magnificent Seven’, boosted by optimism around its AI strategy, Gemini 3 rollout and rising demand for its Tensor Processing Units. Apple, by contrast, slipped 0.8%. These moves saw Alphabet eclipse Apple in terms of market capitalisation for the first time since 2019.

There were some big moves in stocks across the US Defence Sector. There was an initial selloff after President Trump threatened to limit buybacks, dividends and executive salaries unless US contractors improved their delivery of weapons systems to the military. But there soon followed a sharp recovery after Mr Trump called for the defence budget for next year to be raised to $1.5 trillion, from the $1 trillion already pencilled in.

This morning’s big gainers included Northrop Grumman, up 7.5%, Lockheed Martin (+6.7%), RTX (+4.9%) and General Dynamic, up 4.7%.  Despite this, there’s a softer tone across US stock index futures this morning. Investors appear to be taking some risk off the table once again after a relatively strong start to the new year.

Yesterday’s ADP Payroll report was a tad weaker than expected, while JOLTS Job Openings fell to a fourteen-month low, suggesting a slowdown in labour turnover. On the plus side, there was a stronger-than-expected reading for the ISM Services PMI. 

Later today, there’s the latest update on weekly Unemployment Claims, while tomorrow brings the latest Non-Farm Payroll release. Could this be the reason why investors are taking their foot off the accelerator a touch? Maybe.

European stock indices were weaker across the board mid-morning, with even the German DAX ceding ground after a positive open. Despite the turnaround, the DAX remains above 25,000 (just), having broken above here for the first time yesterday morning.

Source: TN Trader

Meanwhile, the UK’s FTSE 100 briefly dipped back below its own ‘nice round number’ of 10,000 – a level it achieved on the first trading session of 2026. There appear to be some jangling nerves as traders consider geopolitical uncertainty stemming from the Trump administration. The ‘extraordinary rendition’ of Venezuela’s Nicolas Maduro was one surprise, while President Trump’s sudden switch of focus to Greenland is another.

Overall, it feels as if investors have priced in both events, although the future repercussions are far from certain. Among those mentioned is the example it sets for other world powers such as China and Russia.

European defence stocks were early gainers following President Trump’s call to raise the 2027 US defence budget to $1.5 trillion from $1 trillion. In contrast, energy stocks extended losses for a second day, as crude prices have failed to recover after Tuesday’s sharp fall.

Forex markets were notably subdued this morning. Once again, the US dollar was little changed, with the Dollar Index hovering around 98.50. It appears that traders are reluctant to add to their exposure ahead of Friday’s US Nonfarm Payroll report. But it is also worth noting that there’s a lot of market chatter concerning what the dollar may do over the coming year.

There are plenty of commentators who expect the dollar to continue to weaken, just as it did in the first nine months of 2025. Many are calling for a retest of the September lows, which saw the cash Dollar Index drop below 96.00.

Others suggest that this is simply the first target as the dollar goes on to lose more value. They cite interest rate differentials, with the expectation of 50 basis points-worth of US rate cuts priced in by markets even as the European Central Bank goes on hold, and the Bank of Japan continues to tighten.

Source: TN Trader

There is also continued speculation over ‘de-dollarisation’ as economies wean themselves off the US dollar as the world’s reserve currency. Yet this seems a bit fanciful, as the dollar is still the most used currency by miles. So, the counter to this is that the bottom may be in for the greenback, and that it rallies in the face of this constant bearishness. FX may be in the doldrums for now. But it could be shaping up to be an interesting year.

Gold pulled back from recent highs but has managed to hold above the $4,400 level for now. Price action still appears to be constructive from a bullish perspective, despite short-term softness.

Gold has slipped for a second straight session as investors took profits following the earlier surge towards $4,500. Fundamental support remains intact, with expectations for additional Fed rate cuts this year appearing to limit upside in the US dollar. Rising geopolitical tensions and a slight deterioration in global risk sentiment also provide some support.

That said, gold bulls appear content to wait for clearer signals from upcoming US data, particularly Friday’s Non-Farm Payroll report.

Source: TN Trader

Silver sold off sharply for a second day after it pushed up towards $83 per ounce on Monday. Chart-wise, it looks as if silver may have formed a double top, and this may have persuaded many traders to cut their long side exposure and book profits. The next significant support level comes in around $70, and a significant break below here could trigger further selling.

Yet, silver is unpredictable, and it may still be too early to expect the top to be in. Volatility remains elevated, with recent price action underscoring how quickly momentum can turn.

Source: TN Trader

So far, crude oil has been unable to capitalise on its sharp bounce at the beginning of this week. Front-month WTI hasn’t made much headway above $58 per barrel, as sellers soon emerged to drive prices lower. Despite this, there’s some evidence that support is building around $56, suggesting that the bull-bear battleground is now in a relatively tight $2 range.

Source: TN Trader

Oil prices have been volatile since the Trump administration authorised the extraction of Nicolas Maduro from Venezuela to face criminal charges in the US. Following an unexpected rally, prices fell after President Trump said Venezuela’s interim authorities would hand over up to 50 million barrels of oil to the US.

Valero and Marathon Petroleum, which have the facilities to refine the heavy crude found in Venezuela, rallied on expectations that Venezuelan barrels could be shipped to the US indefinitely. But Canadian oil producers fell on speculation that their heavy crude would be less in demand.

Yesterday’s inventory update from the US Energy Information Administration (EIA) reported a 3.8-million-barrel decline in US stockpiles, far exceeding expectations. But the data failed to offset broader supply concerns. The prospect of increased supply continues to outweigh near-term inventory signals, even though it may take many years and billions of dollars of investment to rebuild Venezuela’s energy infrastructure.

Natural gas pushed higher yesterday, in a move which saw the January contract break and close above 3.60 BTU. But it gave back all those gains in early trade on Thursday. Price action remains erratic, with wide intraday ranges reflecting ongoing uncertainty and short-term positioning. Volatility continues to dominate this market, keeping it firmly in trader territory rather than longer-term conviction plays.

Bitcoin fell back this morning, compounding yesterday’s losses, to break below $90,000. Price action remains choppy, closely tied to swings in broader risk sentiment. While equity strength has provided intermittent support, rallies continue to be sold into quickly, reinforcing the lack of clear directional commitment.

The VIX edged higher this morning, adding to yesterday’s gains, which came on the back of a late-session equity sell-off. The January VIX began the week below 15.0. But it is now hovering just below 17.0 for an overall gain of 13% so far this week. The move reflects mild hedging activity rather than outright fear, suggesting complacency has eased slightly.

There are no major corporate results on today’s calendar, with the fourth quarter earnings season set to begin next week. Focus today sits on US weekly Unemployment Claims following yesterday’s softer ADP print. But Friday’s Nonfarm Payrolls and the Supreme Court’s decision on tariffs loom large.

German factory orders posted a sharp rebound, while geopolitical developments continue to simmer in the background. Trump’s comments on Greenland and Venezuela keep political risk elevated, though markets have so far shown little inclination to react meaningfully.

Equities have pulled back modestly after a strong run, though it remains unclear whether this marks the start of rotation or simple profit-taking. Gold and silver have pulled back sharply from recent highs, while crude oil remains under pressure.

FX markets are largely dormant, and crypto remains unpredictable. All eyes now turn to jobs data and policy signals to determine whether recent complacency is justified — or about to be tested.