Europe rebounds on trade hopes

US stocks rise on US-Japan trade breakthrough

US stock indices posted a mixed performance on Tuesday, with key benchmarks showing divergent moves as investors digested earnings and fresh geopolitical developments.

The S&P 500 notched another record close, advancing 0.1% to build on its ongoing bullish trend. The Dow Jones Industrial Average outperformed, ending the session 0.4% higher. But the NASDAQ Composite, which has led for much of the recent rally, took a breather and ended the session slightly lower.

There was some evidence of sector rotation, with healthcare up and IT down. The healthcare sector (along with energy) has underperformed this year as giant tech has led the broader stock market advance.

Yesterday saw evidence of a slight rebalancing, although investors remain wary of the healthcare sector due to uncertainty over the regulatory environment and global trade.

The market’s tone, however, remained constructive, as investor sentiment received a fresh boost. After the US closed last night, President Trump announced via his social media site, Truth Social, that the US had completed a “massive deal” with Japan.

The agreement includes reciprocal 15% tariffs on Japanese exports to the US, marking a significant milestone in ongoing global trade negotiations.

That announcement injected a bullish undertone into overnight sentiment. Early Wednesday saw US stock index futures push higher across the board. The new trade deal is expected to boost certain US sectors and provide clarity for Japan’s exporters, helping extend the broader rally driven by optimism around earnings and the prospect of looser monetary policy.

Source: TN Trader

Japan’s Nikkei soars as autos lead

Asian Pacific stock indices responded swiftly to the US-Japan trade news. The Japanese Nikkei surged higher to close up 3.5% in a powerful rally led by the auto sector. Double-digit gains in key automakers reflected optimism that tariff clarity would unlock pent-up investor demand and improve future export conditions.

The rally came even as Japan faced domestic political turbulence. Reports from local media, including the Mainichi newspaper, indicated that Prime Minister Shigeru Ishiba could resign by August following his coalition’s loss of a majority in the upper house.

Mr Ishiba later denied the resignation claims, aiming to calm speculation. And the settling of a trade deal with the US may have shored up his position for now.

FX safe havens slip

In currency markets, safe-haven flows unwound a touch as global risk appetite strengthened. The Japanese yen and Swiss franc, both typically in demand during periods of uncertainty, weakened overnight, with the yen leading the losses.

The drop follows the trade deal announcement and subsiding fears around a leadership crisis in Tokyo. But it was the euro which came under sustained selling pressure this morning.

Investors appeared to be cutting their exposure to the single currency. This followed a comment on social media from President Trump last night, saying that a trade deal with the EU would be announced on Wednesday.

The euro's pullback also comes ahead of tomorrow’s European Central Bank (ECB) meeting. The ECB is expected to keep interest rates unchanged. The US Dollar Index was little changed in early trade, and FX flows were primarily driven by risk rotation rather than dollar-driven.

Source: TN Trader

Gold and silver consolidate

Precious metals saw a modest pullback overnight following Tuesday’s notable upside moves. Gold, which rallied above $3,400 yesterday to hit a five-week high, slipped slightly during the Asian Pacific session. But prices turned higher on the European open, suggesting that investor demand for safe-haven assets hasn’t completely vanished amid the risk rally.

Gold has now broken above the upper bounds of its trading range, with April’s all-time high of $3,500 back as a target for the bulls.

Source: TN Trader

Silver also eased back in overnight trade early on Wednesday. But it also found its footing once the European session opened and continued to trade comfortably above $39 per ounce, with the bulls hoping to see a breakout above $40.

Source: TN Trader

Oil falls back towards $65 level

Front-month WTI fell back towards $65 per barrel in early trade on Wednesday. Prices had rallied initially after President Trump announced that the US and Japan had come to an agreement on trade and suggested that a deal was also coming with the EU as early as today. But this wasn’t enough to keep a firm bid under oil prices, and it wasn’t long before crude went negative for the day.

Later this afternoon, there is the weekly US inventory update from the Energy Information Administration. Last week’s numbers showed an unexpectedly large drawdown in crude oil of 3.9 million barrels. The consensus expectation is for a smaller drawdown of 1.4 million barrels.

Any evidence of growing US demand should help offset the slowdown elsewhere, particularly China. But overall, crude prices continue to struggle to find a footing as the world remains well supplied and alternatives are more readily available than ever before.

Source: TN Trader

Gas holds line at 320 BTU

Natural Gas prices remained stable around the 320 BTU mark, which now serves as an important technical support zone. After recent volatility, gas markets have entered a quieter phase. Still, traders remain alert for any signs of renewed movement, particularly with seasonal demand fluctuations and geopolitical factors potentially in play.

Bitcoin pulls back from resistance

Bitcoin traded lower overnight, dropping over 1% as it once again failed to hold above the key $120,000 level. The repeated inability to break and sustain gains beyond this psychological barrier has begun to test bullish conviction in the near term, even as the broader uptrend remains intact.

Bitcoin continues to consolidate at higher levels, with support coming in around $117,000 and resistance quite obviously at $120,000.

Meanwhile, Ether has pulled back a touch after hitting a seven-month high on Monday. The daily MACD suggests that it remains overbought. So, it may need to retreat further, or at least consolidate for a period, to reset the MACD to lower levels from which it could form a base for further gains.

VIX - sentiment steady

The VIX continues to decline steadily, in a move which reflects improving market sentiment, if not outright complacency. Concerns over President Trump’s non-stop criticism of Fed Chair Jerome Powell, central bank policy in general, corporate earnings and the trade war have all faded into the background, for now.

The VIX’s recent trend suggests that investors are growing more comfortable navigating the current macro backdrop. With earnings season in full swing and volatility around geopolitical headlines ebbing slightly, the market seems content for now. However, sentiment could quickly shift depending on upcoming data and Fed communication.

Market outlook

Momentum remains firmly on the side of the bulls.

The S&P 500 and Nasdaq continue to post record highs, while the Dow has picked up leadership amid sector rotation.

Investor enthusiasm is being driven by a combination of strong earnings, upbeat trade developments, thanks to the new Japan deal and hopes of an EU one today, and a stable macro backdrop.

As key tech earnings loom and with central banks preparing to meet, this week could provide the next major catalyst for direction.

For now, the market remains firmly in risk-on mode, with dip buyers in control and volatility fading into the background.