US markets finish strong after weak open

Asian Pacific stock indices followed the risk-on tone from the US. South Korea’s Kospi added close to 2.7% after local election results boosted confidence in policy continuity. 

Hong Kong’s Hang Seng and Japan’s Nikkei posted gains of 0.6% and 0.8% respectively, while the Shanghai Composite ended 0.4% higher. The indices were buoyed by a sense that political developments could help stabilise domestic economic outlooks.

The underlying message was that, despite mixed regional data and lingering concerns over US-China relations, investors were willing to “buy the dip” as confidence rose following a positive start for risk assets this month.

European stock indices were all firmer in early Wednesday trade, bolstered by strength across US stock index futures. The German DAX was back above 24,000 and close to last week’s all-time intra-day high.

Source: TN Trader

The UK’s FTSE 100 was a touch firmer but lagging most European indices. The index continues to consolidate around the 8,800 area and is just over 1% below its all-time high from March this year.

Source: TN Trader

There’s been some relief for steelmakers and the UK government after the Trump administration levelled a temporary 25% tariff on steel imports from the UK, rather than the 50% tariff that now applies to all other global steel and aluminium producers.

FX markets were largely rangebound overnight. The US dollar was a touch lower against both the euro and sterling, and unchanged against the Japanese yen. The US Dollar Index hovered a touch below 99.00, giving back some of yesterday’s gains. Many investors have positioned themselves against the US dollar, anticipating further weakness. 

President Trump’s trade war and ballooning US debt are cited as reasons to avoid the US currency. Instead, investors have increased their exposure to the Japanese yen, Swiss franc and gold, in an effort to spread risk. The USD/JPY is little-changed this morning following yesterday’s jump.

Source: TN Trader

The Canadian dollar was also flat as investors await the Bank of Canada’s rate decision later today, where policy is expected to remain unchanged.

Overall, FX players appeared to take a cautious stance, preferring to await fresh catalysts - such as today’s US ISM Services PMI and ADP jobs - before committing to larger directional bets.

Gold remained relatively stable overnight. It closed lower yesterday, giving back a proportion of the large gains made on Monday. It continues to hover around $3,350-$3,360 – a price band which has acted as resistance in both April and May. On Monday gold hit a one-month high as risk sentiment wavered and safe-haven demand returned.

But it has struggled to build further upside traction as equity markets regained a foothold and have managed to push higher this week, despite trade and tariff concerns. The failure to hold above $3,400 indicates a degree of hesitation among traders, with price action now consolidating in a tight range.

Source: TN Trader

Silver was steady and little-changed in early trade this morning. Along with gold, silver surged higher on Monday following President Trump’s weekend accusation that China had violated the terms of a temporary trade agreement made last month. 

Investors hoovered up precious metals as an alternative to riskier assets before giving back a significant proportion of those gains yesterday. 

Despite this, silver successfully retested $34 as support before recovering. Its next big upside hurdle is now $35, assuming it can continue to hold above the $34 level.

Source: TN Trader

Oil prices edged up overnight, and front-month WTI is now trading back over $63 per barrel. WTI retested support around $60 on Friday. However, it gapped higher on Monday after OPEC+ announced a smaller-than-expected increase in production of 411,000 barrels per day for July. 

For now, oil remains in a relatively tight range, supported by supply data but constrained by lingering demand concerns and headline risk.

Source: TN Trader

Cryptocurrency markets offered little in the way of movement overnight. Bitcoin remained stuck in a tight range, holding around the 105k mark. Despite its recent rally, there appears to be a pause in momentum as traders await fresh signals from macroeconomic data or regulatory developments.

Ether once again showed relative strength, outperforming modestly. It continues to hold above $2,500 but is currently butting up against the top end of the range that has been developing over the last three weeks. Overall, crypto markets appear to be consolidating as they assess the next leg.

The Volatility Index hovered around 19.00, reflecting a continued state of relative calm in equity markets. Despite persistent noise around US tariffs and geopolitical tensions, volatility has remained subdued, suggesting that traders are not yet bracing for significant downside risk. 

While headline risk remains high, the VIX’s muted reading signals a degree of investor complacency, perhaps better described as confidence that any turbulence will be short-lived.

That said, with key macro data and potential policy moves on the horizon, the VIX may quickly reawaken should the backdrop shift.

Today’s economic calendar is headlined by US ISM Service PMI readings for key regions, offering a snapshot of service‐sector momentum. ADP employment data is due this afternoon in the US, with consensus estimates calling for 111,000 new jobs—up from April’s 62,000. These figures will be closely watched to determine whether labour market strength can offset manufacturing softness.

On the geopolitical front, the main focus has shifted to the expectation of direct talks between President Trump and Chinese Premier Xi. It has been reported that these could take place this Friday.  

Meanwhile, the Bank of Japan’s governor reiterated confidence in the country’s economic resilience despite external headwinds.

Monday’s rebound once again showed the bulls’ ability to absorb negative headlines - whether stemming from soft ISM data or renewed trade tensions. Mega‐cap tech names, led by Nvidia, continue to drive the advance, keeping US indices within striking distance of their all‐time highs. Yet the market’s narrow leadership and light volumes underscore ongoing caution.

Today’s US Services PMI and ADP jobs report could provide much‐needed confirmation that the expansion can persist, but looming tariff deadlines remain a wild card. For now, investors appear willing to look past near‐term headwinds yet remain poised to react swiftly should trade or data disappoint.