European markets open on a quieter note

US stock indices kicked off the week on a strong note, with both the US 500 Index and US Tech 100 surging to fresh all-time highs. Monday’s advance was fuelled by progress on trade negotiations, some upbeat corporate earnings and continued signs of economic resilience, reinforcing optimism that economic growth remains decent even in the face of geopolitical uncertainty.

The S&P 500 and tech-heavy NASDAQ both closed 0.5% up. The Dow Jones outpaced them, closing 0.6% higher, while the mid-cap Russell 2000 eked out a modest gain of 0.1%.

Source: TN Trader

Meta Platforms led the rally across tech, hitting a record high as CEO Mark Zuckerberg announced a major AI hiring spree. The move signals continued investment in next-generation technology and further underscores investor appetite for high-growth names.

Asian Pacific stock indices largely tracked the strength across Wall Street on Monday. But these were capped by a pullback in Japanese equities. The Nikkei fell 1.2%, giving back all of yesterday’s gains, and more, while dropping back from an eleven-month high.

President Trump took to Truth Social to criticise Japan for refusing to import US-grown rice, despite an apparent domestic shortage. He called Japan “spoiled” and warned that a fresh round of tariffs would soon be announced. The sharp rhetoric weighed heavily on Japanese equities, highlighting the lingering risk of trade-related volatility.

While a marginally better confidence print offered some support, the Tankan survey also showed that both small and large business owners were less sanguine about the future, with trade and tariff threats a major concern.

Elsewhere, China’s Shanghai Composite rose 0.2% while Hong Kong markets were closed for a public holiday. Australia’s ASX 200 was unchanged.

With President Trump’s 9th July tariff deadline fast approaching, global markets remain highly sensitive to trade developments. Over the weekend and into Monday, signals from the White House remained mixed. 

While some officials hinted at flexibility over the deadline, others suggested the President may proceed unilaterally - including a plan to send letters to foreign governments, bypassing ongoing negotiations.

The European Union (EU) is now scrambling to secure quota-based exemptions on autos, steel, and aluminium, hoping to blunt the impact of higher duties. Traders are cautiously optimistic that deals will materialise in time, especially after Canada reversed its digital services tax in an effort to keep trade talks alive.

Canada’s climbdown came soon after President Trump announced a full halt to trade discussions on Friday. The move highlights how reactive markets are to the President’s tariff agenda.

The MSCI Asia Pacific Index (MXAP) just wrapped up its best quarter since 2022, reflecting the breadth of this year’s equity rally. Emerging market shares posted their strongest first half in eight years, while US indices also delivered impressive returns.

The US 500 surged 9% over the quarter, its best performance since 2023. The quarter began with a sharp sell-off as President Trump announced his reciprocal tariffs. But stock indices subsequently roared back to life as investors noted that the President was quite open to backing away from his initial position to ensure that deals could be made. 

In stark contrast, the Dollar Index suffered its worst first-half performance since 1973, underscoring the impact of political and monetary policy crosscurrents on the greenback.

Currency markets were active overnight with the euro extending its rally to break above 1.1800 against the US dollar. The single currency continues to push higher amid broad dollar weakness and ongoing concerns over trade, tariffs, national debt and central bank independence. 

Sterling was also strong, with the GBP/USD hitting its highest level since November 2021 and rallying towards 1.3800. The dollar index continued to drift lower, reflecting uncertainty surrounding Trump’s repeated calls to replace Fed Chair Powell later this year.

Source: TN Trader

Gold added to yesterday’s gains. On Monday, gold broke back above $3,300 to close near its daily high. It retested $3,300 this morning, and the level held as support. Gold saw increased investor demand during the Asian Pacific session overnight, due to lingering inflation concerns. 

Despite the rebound, gold remains well off its all-time high of $3,500 hit back in April. Traders appear cautious ahead of US data, particularly as inflation and Fed policy remain central to the metal’s near-term direction.

Source: TN Trader

Oil prices continue to stabilise, with tight intra-day trading ranges. Front-month WTI was back below $65 per barrel this morning, apparently content to consolidate around levels pertaining before Israel launched airstrikes against Iran.

Source: TN Trader

Market participants remain focused on broader geopolitical developments, particularly around tariffs and potential Middle East disruptions. However, the lack of a clear catalyst has kept oil in a holding pattern for now, with traders awaiting fresh signals to determine the next move. Many may be content to sit on their hands ahead of the OPEC+ meetings this weekend.

It was another record-setting day for US equities, with the bulls firmly in control. Headlines from Meta Platforms, progress on trade, and the dialling down of hostilities between Israel and Iran earnings helped to offset last week’s downward revision to US GDP and an above-target inflation print.

The week ahead holds plenty of potentially market-moving catalysts. Today, they include comments from the world’s major central bankers who meet in Portugal for the ECB’s annual forum. 

There’s also the US ISM Manufacturing PMI and JOLTS Job Openings data, with any updates on tariff negotiations also thrown into the mix ahead of President Trump’s 9th July deadline. Overall, the trend remains up for US stock indices. But with global politics back in focus, volatility could return just as quickly.