Asian Pacific indices mostly firmer

US stock indices wrapped up Wednesday’s session with gains across the board, recovering from a sharp intraday selloff sparked by unexpected political headlines. 

The S&P 500 and the Nasdaq Composite both added 0.3%, the Dow Jones Industrial Average closed up 0.5%, and the Russell 2000 added 1.0%. But the positive close belied the market volatility that took place earlier in the session.

Source: TN Trader

The turbulence began after a White House official told reporters that President Trump was “likely to soon” fire Fed Chair Jerome Powell. The report, echoed by The New York Times, claimed Mr Trump had even drafted a resignation letter to force Powell out. Markets swiftly reacted, with the Dow plunging more than 260 points at its session low.

Then came the reversal. Within 15 minutes, Trump had downplayed the reports, telling the media he wasn’t planning on firing Powell while refusing to rule it out entirely. The clarification was enough to ease investor nerves, triggering a rebound that erased earlier losses and restored calm going into the close.

European stock indices were firmer across the board this morning, with the UK’s FTSE 100 and the German DAX back within sight of their recent all-time highs. Banking stocks continue their strong run, even as EasyJet shares are under pressure following a disappointing update.

Source: TN Trader

There’s still an element of uncertainty out there, with investors watching for the ​​fallout from Trump’s proposed 30% tariff on EU goods, scheduled to take effect on August 1st. EU negotiators have reiterated their desire to reach a deal before that date, but time is quickly running out.

There are also certain EU members who want to confront President Trump over tariffs with restrictions of their own, including blocking US access to certain European markets. Traders are balancing optimism over earnings and economic resilience with geopolitical risk and the lingering possibility of a US-EU trade rift.

Sterling is under pressure this morning following a disappointing UK labour market report. The Unemployment Rate came in above expectations to hit 4.7% - its highest level in two-and-a-half years.

The weak data follows last week’s dismal economic growth and yesterday’s high inflation numbers, posing a fresh dilemma for the Bank of England.

Governor Andrew Bailey appears fairly desperate to loosen monetary policy, and who can blame him, given the poor GDP and unemployment data. But with inflation almost double the Bank’s 2% target and rising, a hike at next month’s meeting could prove disastrous and yet another misstep for the hapless institution.

Source: TN Trader

On the other side of the Atlantic, the US dollar continues to find support, extending gains from earlier in the week. Following this week's benign inflation prints, the Dollar Index continues to hold comfortably above 98.00. 

Yesterday, the dollar plunged following the report that President Trump was preparing to fire Fed Chair Jerome Powell. But it soon made back its losses after Mr Trump backed away from the story, to some extent.

Meanwhile, market chatter around Fed rate cuts continues. This week’s inflation data has firmed up expectations that any easing may be delayed, certainly beyond this month’s meeting, helping the greenback maintain its edge across major pairs.

Overall, Forex markets remain focused on central bank divergences. Sterling is clearly on the defensive, while the dollar’s resilience underscores the relative strength of the US economy, at least for now.

Gold and silver were both on the back foot this morning. The precious metals edged lower, effectively giving back yesterday’s gains. Gold remains rangebound, unable to break meaningfully higher despite the geopolitical noise and softening jobs outlook in the US. The rebound in the US dollar is also weighing on prices.

Source: TN Trader

Similarly, silver bulls were left frustrated. At the end of last week, silver soared yet again, taking out $38 per ounce and going on to break briefly above $39 before pulling back. Silver has hit its best levels in nearly fourteen years, and it appears to be consolidating again, this time just below $38.

Today’s Retail Sales and Fed speak could spark further volatility. But absent a clear directional shift in rates or risk appetite, gold and silver may continue to churn sideways.

Source: TN Trader

Oil was little changed in early trade this morning. The energy market continues to digest a host of conflicting signals, from OPEC commentary and US inventory trends to broader concerns about demand resilience and geopolitical disruptions. 

Tuesday’s US inventory report, showing a draw of nearly 4 million barrels, was largely ignored by the market. While the data confirmed stronger-than-expected demand, likely linked to the US driving season, the market response has been muted, suggesting traders remain cautious.

OPEC’s update on Tuesday about a more optimistic demand outlook for the second half of this year has helped to support prices. But lingering concerns over slowing global growth and the potential impact of Trump’s tariffs could cap the upside over the near term.

Source: TN Trader

Natural Gas prices were little changed overnight, continuing to hold within their recent broad range. While yesterday saw a strong rally, today’s price action has been subdued.

There’s been little fresh news to drive a breakout in either direction. Seasonal factors, including weather forecasts and storage data, remain the dominant drivers, but so far haven’t provided enough punch to move the needle materially.

Without a strong supply-side shock or a notable shift in demand, gas looks content to consolidate.

Cryptocurrencies saw mixed action overnight, with Bitcoin showing signs of consolidating. It has failed once again to clear and hold above the key $120,000 level, frustrating bulls and raising questions about whether momentum can sustain without a fresh catalyst.

Meanwhile, Ether led gains across major tokens. Sentiment has been constructive, particularly as policymakers in Washington consider various pieces of legislation which should support the crypto sector. Earlier today, Ether added to gains made over the past few weeks to hit its highest level since January this year.

The VIX eased slightly overnight. Despite the back-and-forth headlines concerning the possible sacking of Fed Chair Powell and President Trump’s trade wars, market participants aren’t particularly concerned, with implied volatility apparently well anchored. The muted reaction to yesterday’s events suggests that traders remain focused on earnings and macro data rather than political theatre, at least for now.

A busy session lies ahead with US weekly Jobless Claims and Retail Sales being the early focus. Later, multiple Fed speakers will be on the tape, hopefully providing more insight into the central bank’s thinking following this week’s CPI and PPI releases.

Earnings remain in focus, with Travelers Corp, Citizens Financial and US Bancorp reporting before the bell. Netflix will headline after hours, offering a tech-sector litmus test amid rising subscriber growth expectations.

Markets continue to navigate a highly reactive landscape, driven largely by shifting political headlines and a steady stream of economic data. Wednesday’s session was a textbook case of volatility tied to news flow, with equity indices initially dipping on rumours of Fed Chair Powell’s potential dismissal, only to rebound once President Trump denied any immediate action. 

While the short-term damage was quickly repaired, the episode highlights how sensitive markets remain to leadership uncertainty and policymaker credibility.

Inflation also remains in focus. A slightly softer-than-expected PPI print offered some relief, suggesting that wholesale price pressures may be stabilising. But with both CPI and PPI figures now in, the takeaway for investors is mixed. 

Inflation isn’t reaccelerating, but it’s not falling fast enough to cement near-term rate cuts either. This leaves the Fed in a tough spot, and market participants are on edge ahead of upcoming commentary from central bank officials.