Asian Pacific stock indices end firmer

US stock indices surged on Monday. The small cap, domestically focused Russell 2000 outperformed, closing just shy of 2% higher. The tech-heavy NASDAQ followed, adding 1.4% while the Dow and S&P 500 both closed up 1.1%. Apple was a major contributor to equity market gains. The stock rallied close to 4% to end at a new all-time high following news of strong iPhone 17 sales, in both the US and China, and on an upgrade to ‘buy’ from ‘hold’ from analysts at Loop Capital

Source: TN Trader

Investors have dialled back their fears over a possible breakdown in trade negotiations between the US and China. This came as both parties upped the ante ahead of the Trump administration’s November deadline for a trade deal.

President Trump responded to China’s restrictions on exports of critical minerals by threatening an additional 100% tariff on Chinese exports to the US. Less than a fortnight ago, global equities cratered on news of the escalation. But since then, there’s been a significant softening in the rhetoric, particularly on the US side, and this has helped US stock indices recover most of the original losses.

Also helping to boost sentiment are hopes that the government shutdown, which will enter its fourth week tomorrow, could be over by the end of this week. That’s according to Kevin Hassett, director of the National Economic Council, as well as being a leading candidate to replace Jerome Powell as Chair of the Federal Reserve. This potential good news comes on top of expectations that the Fed will cut rates by 50 basis points by year-end, despite the lack of government-provided economic data due to the shutdown.

Fed Chair Powell has also said that the central bank was coming closer to winding down its quantitative tightening programme, which has reduced its outsized balance sheet significantly. The news is helping to push down yields on longer-term US Treasuries.

In addition, fears of bad loans and steep losses across regional banks following last week’s reports of fraudulent behaviour have faded. This was helped by the release of a strong set of earnings and revenues from Zions Bancorp overnight. This saw the stock rally 3% and helped to offset concerns after the bank announced last week that it had lost around $60 million due to fraudulent activity.

While it is still very early days, the third quarter earnings season is going well so far. Today brings updates from Netflix and Coca-Cola, while Tesla reports after tomorrow’s close. Next week sees earnings from five companies in the ‘Magnificent Seven’, Microsoft, Alphabet, Amazon, Apple and Meta Platforms. This should give investors further insight into ongoing investment in artificial intelligence.

European stock indices had another mixed start on Tuesday. There were no dramatic moves across the majors. Investors reacted to the strong close across Wall Street last night but were also aware of a softer tone across US stock index futures this morning.  Defence stocks continued to find a bid, as investors calculated, following the recent meeting between Presidents Trump and Zelensky, that the US was stepping aside, and that Europe should shoulder the burden when it came to supporting Ukraine with munitions.

Source: TN Trader

Official data in the UK showed public sector borrowing hit £20.2 billion in September. This was the highest month-on-month figure since records began in 1997. Total borrowing for the first half of the fiscal year has now hit £99.8 billion, up 13% year-on-year. This was in line with OBR forecasts and comes ahead of Finance Minister Rachel Reeves’ upcoming Autumn Budget, where fiscal discipline and debt control will take centre stage.

Forex markets had a livelier start than yesterday. The US dollar was stronger across the board in a move which saw the Dollar Index push above 98.50. The euro and sterling were both lower against the dollar, and little changed against each other.

Source: TN Trader

Sterling slipped below 1.3400 against the dollar, pressured by concerns over the UK’s fiscal position following record borrowing figures released earlier this morning. But it was the Japanese yen which was the biggest mover as it weakened broadly. This was a reaction to the appointment of Sanae Takaichi as the new prime minister.

Ms Takaichi is Japan’s first female Prime Minister and is strongly conservative, at least in her social outlook. In this, she is frequently described as Japan’s Margaret Thatcher. But in fiscal and monetary matters, Ms Takaichi favours low tax, high spending and low interest rates as vital for boosting economic growth. In this regard, she’s considered to resemble Liz Truss.

It has been a long time coming, but it looks as if gold is finally having a bit of a downside correction following its record-breaking upside run. Gold had several attempts to push above $4,400, starting last Thursday. But on each occasion, it ran into resistance around $4,380. That is pretty much what happened this morning.

Source: TN Trader

The big question for investors and traders alike is whether this is the start of a much-needed correction which will help the overbought daily MACD reset back to a lower level, thereby setting up a base for a new rally to fresh all-time highs, or the start of something more serious. In other words, could the top be in for gold?

It’s very difficult to know, and analyst speculation will centre around the shape and extent of this sell-off, as well as giving some consideration as to how long this rally has been going on? If you trace it back to the lows hit this time in 2023, then the rally is relatively young. But if you go back to the lows of 2015 as your starting point, it all looks a bit different.

The first major test to the downside comes in around $4,000. But it’s also quite possible that this is all we get from the dip, and that buyers come back in around $4,200. It’s really a question of having some patience to see how the situation progresses from here.

Oil prices steadied this morning and managed to push off multi-month lows hit yesterday. Crude began the week on the back foot, in a move which saw front-month WTI break below $56 per barrel to hit its lowest level since the beginning of May this year.

Prices have come under sustained selling pressure ever since WTI hit a six-week high of $66.30 near the end of September. Back then, prices pushed higher as Ukraine launched a succession of successful attacks on Russia’s energy infrastructure. But since then, traders have focused on the facts of increased supply from other sources.

Source: TN Trader

Analysis from different agencies, while differing in terms of the actual number of barrels, all calculate that supply will continue to outstrip demand this year and next. This was despite the decision from OPEC+, which surprised traders earlier this month when they announced a production increase which was well below market expectations. But after a brief gap higher, oil prices continued their decline.

While there are signs that the US-China trade dispute is cooling down, the Trump administration's tariff programme could lead to a slowdown in economic activity, further weighing on global demand growth. This is already falling as the world pivots to alternative energy sources.

The natural gas market was steadier this morning, but firmer, after the previous session’s sharp 13% surge, which was driven by colder weather forecasts. Traders took a breather following the steep move higher.

The sudden rally underscored the market’s sensitivity to short-term weather patterns. But with conditions stabilising, volatility eased somewhat. Even so, sentiment has turned a bit cautious as participants gauge whether recent price action represents a temporary pause or the beginning of another shift in direction.

Bitcoin and Ether were both sharply lower in early trade this morning. The pullback followed a period of relative strength, as investors moved to book profits amid growing caution across risk assets.

The retreat reflects broader market hesitancy rather than any single catalyst, with traders reassessing exposure after a stretch of gains. Momentum in the crypto space has weakened for now, but price action remains within the broader range established in recent weeks.

Market volatility edged higher this morning. The VIX spiked higher on Friday before pulling back sharply, moving in line with US stock indices. Today’s modest uptick signals a slight rise in investor caution, following recent swings across equities and risk assets.

While the move remains contained, it suggests traders are positioning more defensively as earnings, inflation data, and government shutdown developments continue to shape sentiment. Yet overall volatility levels remain manageable, reflecting a market still finding its footing after last week’s fluctuations.

US stock index futures were slightly weaker this morning after Monday’s strong rally, suggesting a more restrained tone to start the new session. Earnings releases could be a key driver of near-term sentiment, particularly as traders weigh company results against the broader macro uncertainty. Inflation data due Friday remains the focus for the week, while developments around the US government shutdown and US–China trade discussions could set the tone for risk appetite heading into the weekend.