Asian Pacific stock indices mixed

US stock indices fell sharply on Wednesday as renewed concerns over trade and tech exports weighed on sentiment. The Dow lost 0.7%, the S&P 500 shed 0.5%, the Nasdaq fell 0.9% while the small cap Russell 2000 tumbled 1.5%. The selloff followed comments from US Treasury Secretary Scott Bessent, who revealed that the White House is considering plans to restrict exports to China of products made with US software.

Source: TN Trader

The announcement reignited fears of escalating trade tensions and added pressure to already cautious markets. It also came just ahead of Mr Bessent’s planned meetings with Chinese Vice Premier He Lifeng in Malaysia, starting tomorrow.

Should these go well, then it should pave the way for President Trump and Chinese Premier Xi Jinping to hold trade discussions in South Korea next week. With both sides taking an increasingly belligerent approach, the stakes couldn’t be higher.

Meanwhile, the third quarter earnings season continues. After last night’s close, Tesla and IBM both fell following quarterly results that underwhelmed investors, joining Netflix, which had already disappointed earlier in the week.

Tesla fell close to 6% before recovering somewhat. The EV giant reported strong revenues but missed on earnings. Capital expenditures were up, and there was evidence that customers brought forward purchases ahead of the expiring tax credit.

IBM also dropped around 6% after beating expectations on the headline numbers but reporting only in-line software revenue. The news weighed on the tech sector in early trade this morning. But these early losses soon evaporated as the morning session progressed.

This turnaround was reflected across US stock index futures, which had all started to edge higher after a weaker start. Today’s significant earnings releases include Blackstone, Intel, T-Mobile and Newmont, the world’s biggest gold miner. Next week sees five of the ‘Magnificent Seven’ constituents report results. These could be key in helping to understand the depth of big tech’s exposure to the AI trade.

Given the lofty valuations around this sector, investors should prepare for some big price swings. Meanwhile, the US-China trade war is weighing on sentiment, as is the US government shutdown, which is now the second longest in history.

On the positive side of the ledger, investors are looking forward to rate cuts from the Federal Reserve, plus the end of its quantitative tightening programme. This is despite the dearth of US economic data due to the shutdown, although there’s a CPI update tomorrow.

Adding a slight offset to the negativity, President Donald Trump confirmed that his upcoming meeting with Chinese President Xi Jinping is “scheduled,” tempering some fears about deteriorating US-China relations and helping futures trim deeper losses overnight.

European stock indices were mixed in early trade this morning, with traders keeping a close eye on US stock index futures. The German DAX was down a touch while the French CAC made modest gains. German-based software giant SAP reported earnings after last night’s close. Despite a strong performance in its cloud division, revenues came in below expectations, and the stock sold off.

Meanwhile, shares in French fashion giant Kering (owner of Gucci) rose around 10% after it posted better-than-expected sales. The UK’s FTSE 100 was firmer, coming within a few points of the all-time high hit this time a fortnight ago.

Source: TN Trader

Oil giants, BP and Shell, both rose over 3% as crude oil shot up. This came after the US announced fresh sanctions targeting Russian energy giants Rosneft and Lukoil. The banking sector was also up after Lloyds Banking Group rallied on better-than-expected results. Barclays edged higher, adding to gains made yesterday following the unexpected news of a £500 million share buyback.

The US dollar edged up overnight, making broad-based gains. The Dollar Index continues to push higher and is once again within sight of 99.00. The Index has made slow, but steady progress this week, having tacked on around 1% since Friday’s low. But traders are aware that the area just above 99.00 has acted as significant resistance this month, with all attempts to hold above here quickly rejected.

Source: TN Trader

Meanwhile, the Japanese yen weakened again and is closing in on the lows hit earlier this month after Sanae Takaichi became leader of Japan’s ruling Liberal Democratic Party (LDP). Ms Takaichi won a vote to become Japan’s first female prime minister earlier this week. She has made it clear that she favours low interest rates and fiscal stimulus as her preferred methods of stimulating economic growth. This suggests that the Bank of Japan may delay raising rates further until early next year.

Overall, Forex markets remained subdued, with traders largely in a wait-and-see mode as they assess whether global sentiment is set to deteriorate further or begin to stabilise into the weekend.

Gold has managed to stabilise after a volatile start to the week. Gold traded at a fresh record high on Monday, just above $4,380. But it was unable to make further progress towards $4,400 as sellers rushed into book profits.

Gold had been trading in very overbought territory for an extended period, according to its daily MACD. That has come down along with the gold price but remains elevated. Nevertheless, buyers came in as the gold price approached $4,000 per ounce yesterday morning.

This represented a pullback of over 8%, so not quite the full correction, defined as a 10% decline from recent highs. Shorter-term MACDs suggest that there’s still some upside momentum, despite the sharp recovery off yesterday’s low. But it’s still far from clear if gold can retest its old highs without more of a pullback.

Source: TN Trader

Silver hit an all-time high of $54.60 this time last week. Like gold, it was very overbought according to its daily MACD and had been for some time. It has pulled back sharply since then, but managed to find some support yesterday after prices approached $47.50.

 This represented an overall high-to-low selloff of 13%, in other words, a full-blown correction. Silver bounced sharply yesterday afternoon and has built on those gains this morning. But, as with gold, it feels too early to sound the ‘all clear’. It’s worth noting that gold and silver aren’t tied at the hip, and both are capable of doing their own thing.

Investors may find it helpful to consider what happened back in 2011 when both precious metals concluded a multi-year bull run. Silver peaked in April of that year and went on to retreat sharply. But gold didn’t hit its own peak until September. Could it be that these roles are reversed this time round?

Source: TN Trader

Oil prices exploded higher overnight, and the rally continued this morning. At the time of writing, both WTI and Brent were up around 5% for the day. The catalyst for the move was the announcement from the Trump administration that it was imposing new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil.

Source: TN Trader

The administration cited Russia’s ‘lack of commitment’ to ending its war with Ukraine. At the same time, the US Energy Information Administration reported an unexpected drawdown in US stockpiles.

Adding to the rally in oil prices was news that India may wind down its purchases of Russian oil production. India buys around 1.6 million barrels per day (bpd), while China purchases around 2 million bpd.

As Rosneft and Lukoil produce around 4 million bpd between them, if India were to reduce its purchases, that would severely hamper Russia’s ability to fund its war. The Trump administration has slapped a 50% tariff on US imports of Indian goods. This could drop to around 15% should India comply with President Trump’s request. Technically, front-month WTI is now butting up against resistance (previously support) around $61.70.

Natural gas prices edged higher this morning but struggled to sustain the upside momentum from earlier in the week. The modest gains came as the market tested the limits of the recent cold-weather premium that has supported prices in prior sessions.

Trade remained cautious, with sentiment subdued after recent volatility. While the colder outlook kept a floor under prices, the inability to build on earlier gains has led to some caution. Despite this, gas prices appear to be consolidating, awaiting stronger directional cues before committing to a new trend.

Crypto markets turned higher after a string of recent declines. Bitcoin and Ether each added over 2.5% in early trade. The move reflected a short-term rebound in risk appetite rather than a decisive shift in sentiment, as traders stepped back following a sharp rise in volatility earlier in the week.

Despite the bounce, risk appetite appears fragile, with markets reacting quickly to fluctuations in investor sentiment. Bitcoin’s recovery was driven primarily by short-covering and speculative buying, while Ether mirrored the move as part of the broader market rebound.

The VIX edged up this morning but remains relatively well anchored. This suggests that while surface-level calm has returned, there are signs of some underlying unease. Investors continued to hedge selectively, mindful of lingering risks tied to trade policy, earnings volatility, and tomorrow’s postponed US inflation report.

The subdued volatility readings indicated that the market was still expressing cautious optimism. But any unexpected shock — whether from corporate results, policy announcements or geopolitical developments — could quickly reignite broader swings.

US stock index futures suggest equities could attempt a rebound, though sentiment remains fragile. Tesla and IBM’s weaker results may keep optimism in check, while traders continue to assess if the metals rally represents a sustainable turn or will turn out to be a short-term dip-buying opportunity. With the government shutdown extending into its second-longest stretch in history and key earnings and inflation data on deck, investors are likely to remain cautious.