Asian Pacific markets mixed

Yesterday saw further evidence of rotation and a broadening out of exposure, from tech to other equity sectors. The gains were led by the small cap Russell 2000, which ended the session 1.1% higher. The old school Dow gained 0.6%, while the S&P was effectively unchanged.

The NASDAQ lost 0.4%. Moves across S&P sectors provided a starker demonstration of the shift. IT fell 1.5% while Energy gained an impressive 3.2%. The latter came as crude oil bounced back to recover all of Tuesday’s losses. But once again, front-month WTI ran into resistance around $58 per barrel, thereby limiting gains.

Source: TN Trader

Defence stocks were also in demand. This followed President Trump’s call for next year’s US defence budget to be raised to $1.5 trillion from the $1 trillion currently in place.

US stock index futures were a tad firmer in early trade this morning. But it’s fair to say that investors are wary of leaning too far over their skis in the current environment. They are factoring in some significant geopolitical twists and turns, such as the Trump administration’s actions in Venezuela (with reference to the roles that China and Russia play in the region) and its rhetoric over Greenland, not to mention the civil unrest in Iran.

All this is playing out against Russia’s war with Ukraine. But of more immediate concern, as far as markets are concerned, are today’s latest Non-Farm Payroll update for December, and a potential Supreme Court ruling on the legality of President Trump’s tariffs. Expectations are for a modest improvement in payrolls, with the consensus expectation coming in around 70,000 jobs added, compared to last month’s 64,000.

The Unemployment Rate is forecast to slip to 4.5% from 4.6%. But investors are mindful that payroll data from the last quarter of 2025 was skewed by the government shutdown in October. It’s not completely clear if today’s release will mark a return to normality.

Meanwhile, the US Supreme Court is expected to announce its ruling on the legality, or otherwise, of the Trump administration’s tariffs. US ‘prediction’ (betting) markets suggest that there’s a 70%-plus probability that the SCOTUS will rule against Trump, suggesting that this result may be factored into equity prices already. But there’s no guarantee of that, and traders would be wise to expect some extra volatility heading into the weekend.

But another thing seems highly likely. If the Administration loses today, it will simply announce a change in the rationale for tariffs, suggesting that there may be no rush to unwind levies, even if the SCOTUS rules them illegal.

European stock indices followed US stock index futures higher in early trade. This saw major indices such as the Euro Stoxx 50, German DAX, French CAC (and the UK’s FTSE 100) continue to trade at, or hover around, all-time highs.

The standout story across Europe, but with a firm focus on the FTSE 100 index, was news of the renewed merger discussions between two of the world’s mining giants, Rio Tinto and Glencore. Confirmation that talks are back on the table sent Glencore shares sharply higher, while Rio Tinto lagged.

Source: TN Trader

The deal is valued at $260 billion, and, if successful, would create the world’s biggest mining conglomerate. UK retailers were also in focus after Tesco and Marks & Spencer reported strong Christmas trading, with Tesco upgrading its profit guidance. Defence stocks continued their strong run, extending gains for a fifth straight session. This followed President Trump’s call for higher US military spending.

The US dollar strengthened overnight at the expense of the other majors. The euro’s dismal run since before Christmas continued. The EUR/USD slipped below 1.1650 this morning, having traded above 1.1800 on Christmas Eve, an overall decline of 1.7%. This comes even as the European Central Bank is likely to leave interest rates unchanged this year, while the Federal Reserve is forecast to cut by 50 basis points.

Source: TN Trader

Earlier today, some mixed German data highlighted ongoing economic challenges across the Eurozone. Industrial Production surprised to the upside. But weaker exports and a narrowing trade surplus revived concerns about growth.

The cash Dollar Index hit its best level since 10th December and was pushing up towards 99.00 in early trade. But overall, Forex markets were relatively subdued, with most major pairs trading in tight ranges ahead of the US jobs report later today.

While gold hasn’t gone into hibernation, it is yet to make clear the likely direction of its next big move. There have been some decent intra-day price swings, offering up some short-term trading opportunities. But so far this week, it has gone nowhere, while trading in a $100 range between $4,400 and $4,500.

Source: TN Trader

Traders have largely stepped back as they prepare for the latest US Non-Farm Payroll release due out early this afternoon. This could help to firm up interest rate projections for the first half of this year. Recent dollar strength may have helped to cap gold’s upside in the short term, yet underlying support remains in place.

Expectations for further Fed rate cuts later this year, combined with persistent geopolitical uncertainty, should help to underpin demand for the metal. It’s also possible that today’s Supreme Court ruling over the legality of the Trump administration’s tariffs may knock gold prices out of their current range.

Silver pushed higher during the overnight Asian Pacific session, building on a recovery from the lows seen early yesterday afternoon. This has helped to stabilise prices, which had fallen sharply since Wednesday. But silver began to give back these early gains as the European trading session progressed.

The next big test for the bulls is whether silver can continue to build some support around $75 per ounce. There are plenty of observers who believe that silver can make further gains this year and push up to higher highs. Prices are certainly climbing the ‘wall of worry’.

But others expect a bigger downside correction before this can happen, suggesting that silver may revisit the mid-$60s first. Others say the best is over, now that silver has put in a ‘double top’.  

Source: TN Trader

Crude oil prices pushed higher this morning in a move which saw front-month WTI trade above resistance around $58. Crude rallied sharply yesterday, effectively mirroring its selloff on Tuesday. In both cases, prices found support at $56 and resistance at $58.

Could today’s break above $58 signal a bigger upside move for crude?  It’s certainly possible. There are plenty of short sellers out there anticipating sharply lower future prices. And they may be forced to cover by buying back their shorts should momentum build to the upside.

Source: TN Trader

But as things stand, it’s too early to say that today’s break of resistance is significantly large enough and will eventually be protracted enough to trigger a bigger rally. Much will depend on tonight’s close and any follow-through on Sunday. Today’s rebound follows heightened geopolitical risk, including renewed US threats toward Iran and continued efforts by the Trump administration to exert control over Venezuela’s energy sector.

Markets are also factoring in the potential impact of new sanctions targeting buyers of Russian oil, alongside expectations that commodity index rebalancing could bring fresh inflows into crude. Despite the recent rally, sentiment remains cautious, with expectations for a sizable surplus of crude oil later in the year continuing to hang over the market.

Natural gas prices dropped again this morning, trading at lows last seen in September. Mild weather forecasts have offset a larger-than-expected inventory draw. The current selloff has lasted over a month and has been relentless. Can it continue to decline?  Sure. But gas is now the most oversold it's been in three years, according to the daily MACD. But as things stand, buyers would be attempting to catch a falling knife.

Bitcoin and Ether began a rally in mid-December, which appeared to be building some upside momentum. That stalled this week, and both have pulled back to key levels - around $90,000 for Bitcoin and $3,000 for Ether.

Is the rally over, or is this simply a healthy pullback ahead of further gains? For now, trading activity is constrained by large options expiries, leaving prices pinned near key “max pain” levels. Both Bitcoin and Ethereum appear locked in a near-term stalemate as traders await macro catalysts.

The January VIX remains subdued in the mid-16s, reflecting a market that is cautious but far from stressed. Despite geopolitical noise and upcoming event risk, volatility continues to signal confidence that markets can absorb near-term uncertainty.

Attention now turns squarely to Friday’s US jobs report and the Supreme Court’s decision on tariffs. Earnings season begins next week, but for now, macro data and policy headlines are in focus. The Dow continues to lead as rotation plays out. Gold edges closer to record territory but is yet to break out. FX markets wait for a catalyst. It looks like a classic wait-and-see session ahead of a potentially market-moving day.