Asian Pacific indices lower across the board

US stock index futures were sharply higher overnight. This followed a weak session on Friday with price action suggesting a mix of profit-taking and a continued move away from technology stocks. The NASDAQ led the decline, falling 1.7% on Friday, while the S&P 500 dropped 1.1%. There was no hiding away in small caps, as the Russell 2000 lost 1.5%. But the Dow Jones Industrial Average fared better, posting a modest 0.5% drop, highlighting the ongoing shift toward lower-valuation and less tech-heavy areas of the market.

Source: TN Trader

The weakness followed sharp moves lower in several high-profile tech names. Oracle fell 12.7% over the week, while Broadcom shed more than 7% following quarterly results. The former slumped after it missed revenue expectations.

The latter produced a stunning set of quarterly numbers. But investors bailed on concerns that margins may get squeezed over the coming months. They contributed to the 2.3% loss across the S&P 500 technology sector. The S&P’s telecoms sector also fared poorly, losing 3.2% over the week.

In contrast, investors were buyers of the Finance and Materials sectors, which were up 2.3% and 2.4% respectively. This tech underperformance reinforced concerns that the AI-driven rally shows signs of cooling, at least in the near term, as investors reassess valuations and earnings momentum. Nvidia, the world’s largest chip designer by market capitalisation, continues to trade around the lower end of a band of support (previously resistance) between $181-$177.

Meanwhile, Tesla has rallied 21% over the last four weeks and is once again closing in on all-time highs. Micron reports tomorrow, and this could help set the tech tone for the rest of the year.

Economic releases will be central this week, with Non-Farm Payrolls (covering October and November), weekly ADP Payrolls, Retail Sales and Manufacturing and Services PMIs due tomorrow. Then there’s the November CPI report on Thursday. These releases were delayed by the autumn government shutdown and could inject volatility as markets recalibrate macro expectations.

Finally, Fed governors Stephen Miran and John Williams give separate speeches today. Last week, the Federal Reserve cut rates for its third successive meeting, as expected. The Fed Funds rate now has a range of 3.50-3.75%, down from 5.25-5.50% before September 2024. But the US central bank is forecasting a slowdown in monetary policy reduction, with just one 25 basis point cut expected next year.

European stock indices opened higher on Monday, rebounding after a weak performance on Friday. Investors took their cue from US stock index futures, while a pick-up in Eurozone Industrial Production was also helpful.

Source: TN Trader

In addition to movements across US equities, European investors will be keeping a close eye on central banks this week. The European Central Bank (ECB) is set to hold its final policy meeting of the year on Thursday. It is expected to keep rates unchanged even though growth has been tepid this year, while inflation is very close to the ECB’s 2% target. Comments from ECB President Christine Lagarde may suggest growth forecasts could be revised up. If so, this could help to support the single currency.

The Bank of England will also announce its rate decision on Thursday.  The Bank is expected to cut rates by 25 basis points, even though inflation remains well above target. Given the truly pathetic economic growth this year, most analysts believe that MPC officials will point to recent data to claim that inflation has topped, giving them the excuse to ease up on monetary policy. Let’s hope so. Ahead of these two meetings, inflation data for both the Eurozone and the UK will be released on Wednesday.

Geopolitics also looms large, as European leaders prepare for a Brussels summit focused on Ukraine funding, including proposals to use frozen Russian assets to support Kyiv. Markets will be watching closely for any developments that could influence risk sentiment.

It was a quiet start to the week for most Forex markets this morning. The cash Dollar Index was a tad softer, but trading either side of 98.00. That meant that it was smack bang in the middle between significant resistance at 100.00 and September’s multi-year low of 96.00.

This week’s heavy economic calendar may lead to a break in one or other direction. Otherwise, the dollar looks likely to consolidate in a relatively narrow range.

The Japanese yen showed early strength following the release of a better-than-expected business confidence survey. The Tankan survey came in at its highest level in four years. In addition, investors expect the Bank of Japan to announce another 25-basis-point rate hike after its monetary policy meeting on Friday.

A shift in rhetoric from Governor Kazuo Ueda has reinforced bets for an imminent rate hike, helping the yen attract safe-haven demand amid slightly weaker global risk sentiment.

Source: TN Trader

Gold sold off sharply on Friday afternoon but recovered its composure and rallied into the close. It continued to push up again this morning, rallying around 1% to hit $4,350, a seven-week high which took it within striking distance of its $4,380 record from seven weeks ago.

The move reflects renewed demand for the metal as expectations build for another Federal Reserve rate cut next year. This helps to reduce the opportunity cost of holding non-yielding assets, like gold. Safe-haven demand also played a role, with lingering uncertainty and a mildly risk-off tone supporting flows into gold.

Meanwhile, recent US dollar weakness has also helped to support prices. Gold demand looks likely to increase should the dollar come under further downside pressure. But gold could also turn lower should the dollar start to pick up again, particularly if the Dollar Index were to retest resistance around 100.00 on a cash basis.

Source: TN Trader

Silver, meanwhile, remained volatile. After a sharp retreat from fresh record highs on Friday, the metal staged a strong rebound overnight, climbing roughly 2% and restoring bullish momentum. The price action highlights silver’s heightened sensitivity to positioning and sentiment, with sharp swings likely to persist after its recent explosive run.

Source: TN Trader

Oil prices drifted lower again this morning as front-month WTI broke below $57.00 per barrel. This represented a decline of 5% from the highs hit this time last week and took oil to its lowest level in close to two months.

Oil continues to come under selling pressure, and most rally attempts are snuffed out quickly. Since late October, the daily MACD has picked up and closed in on neutral levels. But it has tracked sideways for the last six weeks and now appears to be dipping downwards. This suggests that downside momentum is picking up. For front-month WTI, the most immediate area of resistance comes in at $60.

The first significant line of support comes in at $56 per barrel, the October low. But if WTI were to break below here, then the probability of a retest of this year’s April low, just under $55, increases. Oversupply fears continue to dominate the longer-term narrative while global demand growth continues to slow. It’s worth pointing out that lower oil prices have the potential to wreck Russia’s economy.

Source: TN Trader

Natural gas prices were a touch weaker in early trade, taking it back down to lows last seen at the end of October. Gas prices have fallen 27% over the last ten days, having traded up to their highest levels in three years.

Despite this morning’s weakness, gas showed signs of stabilising following its recent slump. The pause suggests some consolidation following recent volatility, as weather expectations and supply dynamics remain the dominant drivers. For now, gas appears to be searching for balance rather than committing to a fresh directional move.

Bitcoin and Ether were firmer in early trade this week, recovering modestly after a sharp pullback on Friday. The rebound mirrors broader risk sentiment, with digital assets tracking an uptick in US stock index futures rather than generating independent momentum.

Despite the early lift, price action remains tentative, suggesting traders are still cautious after last week’s volatility. For now, crypto markets appear to be stabilising rather than breaking higher, with conviction likely dependent on incoming macro data and broader market direction.

S&P 500 volatility as measured by the VIX steadied this morning, pulling back after Friday’s spike higher. The calm reading suggests investors are not yet pricing in major disruption, despite a packed calendar that includes jobs data, inflation figures and several central bank interest rate decisions.

This subdued volatility may prove fragile. With December futures expiry approaching and key macro catalysts lined up, the lack of hedging demand could quickly reverse if data surprises or policy signals shift sentiment. For now, however, markets remain composed despite the potential for sharp moves.

Stock index futures across the US and Europe point to a steadier start after last week’s selloff, but confidence remains fragile. This week’s economic data, covering US inflation, Retail Sales and the labour market, may prove critical in determining whether bulls can regain control.

With central bank meetings, key earnings from Micron, Nike, and FedEx and December futures expiry all converging, markets are likely to remain volatile and reactive. This setup points to a potentially wild and choppy week, even if the broader trend attempts to stabilise.