Strong start for Asian Pacific stock indices

US stock indices closed out October with modest gains across the board, led once again by strength in the tech sector. The NASDAQ posted the biggest advance, rising 4.7% for the month, while the Dow added 2.5% and the S&P 500 climbed 2.3%.

Source: TN Trader

Strong corporate earnings and continued enthusiasm over the outlook for artificial general intelligence underpinned the rally. This followed the release of a decent set of third quarter earnings reports last week, as five members of the Magnificent Seven published results.

Nvidia is the only constituent left to report, and it will release its own results in just over a fortnight’s time. Analysis from FactSet shows that out of the 64% of S&P 500 constituents that have reported so far, 83% have beaten expectations on earnings per share, while 79% have posted a positive revenue surprise.

Overall, this has proved to be a solid quarter, which has helped sentiment remain positive. Equities have also been lifted by what looks like a twelve-month ceasefire in the US-China trade war. This followed the much-heralded meeting between Presidents Trump and Xi Jinping last Thursday.

The main positive takeaway was that China has removed its restrictions on the export of rare earths and critical minerals, while resuming its purchase of US soyabeans. But it quickly became apparent that there were some unresolved issues which will no doubt reemerge as bones of contention. TikTok, secondary sanctions on Russian energy and the future of Taiwan being obvious concerns.

Another concern is US monetary policy. The Federal Reserve surprised no one on Wednesday when it announced a 25-basis point rate cut. But investors were taken aback when Fed Chair Jerome Powell stated that a further cut in December was not a foregone conclusion. The news triggered a selloff across US stock indices.

One of the issues for the Fed is the lack of economic data due to the ongoing US government shutdown. This Friday should see the release of the October Non-Farm Payroll number. But that is unlikely to take place for the second month in a row. But there are some private labour market data releases to consider, including tomorrow’s JOLTS Job Openings and Wednesday’s ADP Payroll report.

There’s little doubt that there has been some deterioration in the US labour market, and this has been highlighted by announcements of layoffs from companies including Amazon, Microsoft, ConocoPhillips and Paramount Global.

Despite such concerns, US stock index futures were firmer across the board in early trade this morning. Tailwinds are overwhelming headwinds as far as investors are concerned, and the bull market remains intact.

European stock indices were also stronger across the board this morning. Investors looked across at the positive close across Asian Pacific markets, together with early strength in US stock index futures. European investors are keeping a close eye on the third quarter earnings season on this side of the Atlantic.

Source: TN Trader

To that end, Ryanair reported a solid set of numbers this morning. The stock sold off initially, but then rallied, and was nearly 3% up at the time of writing. Oil giant BP reports tomorrow morning, along with Ferrari and Aramco. BMW and Vestas release their numbers on Wednesday, with Commerzbank, Diageo, Rheinmetall, AstraZeneca, Maersk and Richemont later in the week.

The Bank of England (BoE) holds its latest monetary policy meeting on Thursday. There is still some division amongst economists as to whether the BoE will opt for another rate cut or not. But with inflation still close to double the Bank’s 2% target, and with Chancellor Rachel Reeves still floating some crazy-shaped balloons ahead of her budget later this month, it’s possible that the Bank will hold rates steady this week and go for a growth-boosting cut in December.

Forex markets were relatively quiet overnight. But as the morning progressed, the US dollar resumed its rally, which can trace its origins back to the lows hit in mid-September. This was when the Dollar Index briefly broke below 96.00 to hit its lowest level since February 2022.

Since then, it has rallied steadily, and this morning it hit its highest level since 1st August, coming within sight of the key 100.00 level. Some analysts remain concerned that the dollar may once again turn lower and go on to break under September’s low. But others feel that, following a dreadful first nine months in 2025, the low could now be in. The corollary of this is the weaker euro.

This morning it dropped back towards 1.1500 to hit its lowest point since 1st August. The euro, which accounts for roughly 55% of the Dollar Index’s weighting, continues to exert a dominant influence on dollar direction.

Source: TN Trader

Meanwhile, both the Japanese yen and British pound continued to drift lower against the greenback. The GBP/USD remains near 1.3100 with analysts suggesting a sustained break below that level could invite further weakness. The Japanese yen is also under pressure, with the Bank of Japan still closely monitoring moves in the currency.

Gold pushed higher overnight but gave back early gains soon after the European open. It proceeded to trade either side of $4,000 per ounce, well below its record high of $4,381 hit two weeks ago, but also reasonably above last week’s low of $3,886.

The daily MACD has pulled back significantly from seriously overbought levels and is within sight of neutrality. The question is whether it can reset through a period of consolidation around current levels, or if gold has further to fall.

If the latter, then the most obvious downside target comes in around $3,800. That would almost certainly take the MACD into negative territory. But if prices found support around here, then it could set the stage for another move higher. Otherwise, investors may conclude that gold is no longer an attractive haven, particularly if the US dollar were to rally further.

Source: TN Trader

Silver was also firmer in overnight trade. But it too gave back early gains and broke below $49 per ounce. Silver hit its own record high in mid-October when it traded at $54.60. But it subsequently sold off sharply, trading down to a low of $45.55 last Tuesday.

That move helped to bring its daily MACD down from seriously overbought levels. After a very steep fall, the MACD has started to flatten out just above the neutral level. That could indicate that silver has corrected enough for another leg in its rally to begin. But it could still be too early to sound the ‘all clear’ for the bulls. It’s a bit of a concern that silver has been unable to hold above $49 recently.

Source: TN Trader

It may need to consolidate for longer around current levels, at the very least. If not, it could have further to fall. Recent moves suggest that precious metals are caught between competing forces.

On one side, safe-haven demand remains steady, while on the other, investor appetite for risk assets has limited the scale of any upside breakout. For now, both precious metals appear to be consolidating as traders await a catalyst for the next big move.

Crude oil gapped higher overnight from Friday’s close, in a move that took front-month WTI above $61 per barrel. The move came after OPEC+ decided over the weekend to postpone plans for further production increases in the first quarter of next year. The group cited concerns over a market which is already significantly oversupplied, with energy agencies forecasting that this will only get worse next year.

Source: TN Trader

At the beginning of October, OPEC+ announced a smaller-than-expected production increase of 137,000 barrels per day for November, and yesterday they matched that for December as well. But there’s still plenty of uncertainty around Russia’s output. Last week, the US announced sanctions on Russia’s two biggest oil conglomerates, Rosneft and Lukoil.

The Trump administration is also putting pressure on India to halt its purchases of Russian oil. President Trump met China’s Xi Jinping last week and managed to come to a temporary accommodation over trade. But it is unclear if the US asked China to stop buying Russian oil. If they did, then it appears that China said: ‘No’.

Crude pulled back from overnight highs. Front-month WTI was holding above $60 per barrel and continues to consolidate.

Natural gas continued to rally today as weather-driven demand expectations supported prices. The advance marks another leg higher following a steady rally over recent weeks. Prices are up 28% since mid-October and just under 60% since late August. This morning, Natural Gas hit its highest level since early March this year.

Traders continue to respond to forecasts suggesting stronger seasonal consumption, with the market finding consistent support from cooler weather outlooks.

Cryptocurrencies started the week on a softer note. Overnight, Bitcoin broke below $110,000 and went on to fall under $107,000. Price action has now calmed down a bit as traders await new catalysts for the next move.

The Volatility Index (VIX) pulled back a touch from Friday’s close, reflecting a relatively calm market backdrop despite some upcoming macro events. The subdued reading underscores investor confidence following a strong October for equities, though it also hints at some complacency.

The third quarter earnings season has helped underpin US equities, and traders reacted positively to the outcomes of the Trump-Xi Jinping trade meeting. But one headwind came from Fed Chair Jerome Powell, who warned that another rate cut next month was far from being a certainty.

With key economic data delayed by the US government shutdown, traders remain alert for any sudden swings in volatility. For now, the index’s stability aligns with the broader market’s measured tone.

October’s stock market gains set a strong foundation for the new month, and historically, November has a reputation for rewarding the bulls. The dollar remains firm in otherwise quiet FX markets; gold is no longer a one-way bet, and crypto faces pressure as sentiment cools.

As the week unfolds, investors will navigate central bank meetings, including the RBA and BoE, alongside key data releases like ISM and final PMI readings. With Wall Street’s seasonal tailwinds at play, the path of least resistance still points upwards. But traders remain mindful of the potential for short-term pullbacks in what has become a richly valued market.