US markets steady as investors await US-China trade breakthrough

Asian Pacific stock indices ended Tuesday’s session mixed as investors waited for news on the US-China trade talks. Hong Kong’s Hang Seng and the Shanghai Composite closed down 0.1% and 0.4%, respectively. 

The Japanese Nikkei ended 0.3% higher. Investors felt that the fact that the negotiations had entered a second day suggested progress was being made.

European stock indices also had a mixed start to Tuesday’s session. With little in the way of fresh data, European indices are likely to take their cue from overseas headlines, particularly any news out of London regarding trade talks. 

The German DAX pulled back further from last week’s record high, led by selling across the defence sector. The UK’s FTSE 100 made gains, helped by a 2% jump in Rolls-Royce after being backed by the UK government to build a fleet of small modular nuclear reactors.

Source: TN Trader

The US dollar found support overnight, rebounding across the board after recent weakness. The Dollar Index pushed up towards 99.00 before giving back early gains.

The British pound came under selling pressure after a weaker-than-expected UK jobs report and a drop in Average Earnings. The latter could make the Bank of England’s life easier as it considers the timing of its next rate cut.

Source: TN Trader

Gold edged marginally higher overnight, holding above key support around $3,300 as it continues to consolidate following recent gains. The metal remains in a relatively tight range with the upside capped by resistance around $3,400.

Source: TN Trader

Silver, which had been outperforming, pulled back slightly after it pushed up towards $37 per ounce, and fresh thirteen-year highs overnight. The broader precious metals space remains supported by lingering macro risks, but upward momentum appears to have stalled for now.

Source: TN Trader

Crude oil prices held steady in overnight trade. Front-month WTI came within a few cents of $65, to trade at its best level in over two months. Despite recent strength, oil appears to be pausing as it awaits a fresh catalyst.

Source: TN Trader

This seems likely to come from supply commentary or trade developments, particularly any news from US-China trade talks. Traders remain alert to any shifts in tone from OPEC producers or broader risk sentiment that might push prices out of the current holding pattern.

Natural gas saw a slight rebound after Monday’s retreat. Gas prices continue to hold within their broader channel, and traders will be watching to see whether the following push tests the upper boundary of that recent range. Volumes remain light as the focus shifts to upcoming storage data and broader energy sentiment.

Cryptocurrencies posted gains overnight. Bitcoin briefly broke above $110,000 to hit a two-week high before drifting lower. Ether was up over 4% in early trade, catapulting the cryptocurrency back above the key $2,500 level. These moves came as crypto markets continue to indicate growing risk appetite despite the stall in equity market gains.

The Volatility Index (VIX) remains anchored just above 19.00, having dropped around 2% yesterday. Despite headline risk and ongoing uncertainty around trade and geopolitics, volatility continues to drift lower, indicating a relatively calm market backdrop.

The relatively subdued VIX reading reflects investor confidence, or complacency, heading into the middle of the week.

With US-China trade talks set to continue in London and futures trading flat, markets appear to be in a holding pattern as investors await clarity on the global trade narrative.

Despite stronger crypto action and a rebound in the US dollar, traditional markets are showing signs of fatigue after recent rallies. Gold and oil remain rangebound, and silver’s pullback hints at a pause in recent upside momentum. Sentiment across equities remains positive overall, but with some additional caution sprinkled in.

Expect volatility to stay muted unless a major shift emerges from today’s headlines. With no top-tier economic figures on deck (and key US inflation data tomorrow), attention will remain fixed on political developments and Trump’s running commentary.