Asia Pacific markets retreat

US stock index futures were sharply lower overnight following Thursday’s turbulent session. All the majors sold off sharply yesterday afternoon in a move which saw the S&P 500 hit an intra-day low of 6,870. As is usual, the dip-buyers rushed back in to take advantage of cheaper prices. This left the S&P 500 with a small loss of 0.1% on the day while the Dow and Russell 2000 both eked out a gain of 0.1%.

Source: TN Trader

But the tech-heavy NASDAQ was unable to make back all its earlier losses and ended the session down 0.7%. Microsoft weighed on tech. Investors were spooked by numbers which suggested uncertain returns from the company’s heavy investment in AI.

Shares plunged close to 10% after the company flagged slower Azure cloud growth and softer operating margin guidance, marking its worst one-day decline since March 2020.

There was some better news after the close when Apple released earnings and revenues, which easily surpassed expectations. Sales of iPhones, particularly across China and the iPhone 17, were strong. But after an initial jump, the stock price is little changed in trade this morning.

Earlier this morning, futures on the S&P 500 broke back below 6,900. But they soon bounced back. Oil giants Exxon Mobil and Chevron released decent numbers, despite last quarter’s falling oil price, although Chevron missed slightly on revenues. Investors shrugged, and both corporations were marked modestly lower ahead of the open.

Focus turns back to Washington DC. Last night, President Trump said he would announce his nomination for the next Federal Reserve Chair on Friday morning. And he has. After a late gallop from BlackRock CIO Rick Reider, Kevin Warsh snuck up on the inside rail to secure victory. The initial stock market reaction was positive, although the dollar didn’t like the new,s especially.

Overall, it looks like a good choice that most can get behind. Mr Warsh has promised to bring transparency to the US central bank and is likely to make some fundamental changes. At the same time, he doesn’t sound like a pushover. So, the President may not get all the rate cuts for which he’s so desperate.

Meanwhile, political uncertainty lingers after the Senate failed to pass a procedural vote on government funding, raising the risk of a shutdown. Together, these factors appear to be tempering risk appetite after a strong start to the year.

This could be an extremely important session as we head towards the weekend. After hitting a fresh all-time high above 7,000 earlier in the week, the S&P 500, along with all the other US majors, pulled back sharply. So far, traders have been happy to buy the dip, even as they watch gold and silver crater from their own record highs. Will this continue today, or will it bring evidence of buyers’ remorse?

European stock indices ignored weakness across US stock index futures to stage their own bounce-back. All were firmer in early trade this morning. The German DAX had a very strong comeback following yesterday’s selloff, providing evidence that the ‘buy-the-dip' strategy, such as it is, has survived its voyage across the Atlantic.

Source: TN Trader

Today’s moves suggest that investors continue to diversify their portfolios – happy to increase their exposure to European, UK and emerging market stocks, particularly while the US dollar remains at depressed levels.

Investors continue to balance a busy earnings calendar against persistent geopolitical noise, particularly following renewed warnings from President Trump regarding UK-China relations during Prime Minister Starmer’s visit to Beijing.

Corporate updates provided some support. Spain’s CaixaBank reported stronger-than-expected profits and lifted dividends, while Adidas delivered a robust earnings report showing double-digit revenue growth and record annual sales. These results reinforced the view that European corporates remain resilient despite external uncertainty.

The US dollar continued its recovery this morning, although it dipped after Kevin Warsh was named as Jerome Powell’s successor as Fed Chair. The Dollar Index built on yesterday’s gains, with the cash pushing back above 96.00, having fallen to a four-year low of 95.25 earlier in the week.

This has helped to bring some stability back to FX markets. But it may still be too soon to sound the ‘all clear’ for the greenback. There’s a big sack full of negative sentiment sitting on the US dollar currently. The Trump administration has certainly played its part, and it continues to stir things up geopolitically.

Source: TN Trader

At the same time, nothing has changed in relation to the dollar as far as President Trump is concerned. It is well known that he favours a weaker currency as he sees this as a way to boost US exports.

But others see it as malign neglect and wonder if the current weakness may become permanent, and therefore an existential threat to the dollar as the world’s reserve currency. Maybe. But while another lurch lower can’t be ruled out, some investors are considering whether this could be a buying opportunity. So, traders should look out for any signs of bottoming.

Gold came under renewed liquidation pressure on Friday, extending a volatile pullback after a series of record highs over the past two weeks. An uptick in the US dollar and reduced political uncertainty following progress on US government funding provided the long overdue trigger for investors to lock in gains, particularly after gold’s more than 25% surge since the start of the month. Despite the savagery of the selloff, gold found some support around $5,000. 

Source: TN Trader

Silver saw even sharper moves, halting a seven-day winning streak and retreating aggressively after touching extreme highs earlier in the week. Silver lost as much as 20% from yesterday’s high as it smashed below $100 before buyers stepped in. The pace of recent gains made the metal vulnerable to swift corrections.

Other industrial metals, including copper, also eased back from recent record levels. Silver has pushed back above $100 per ounce. While it was oversold on a short-term basis, there’s still a large risk of further downside.

Source: TN Trader

Crude oil pulled back from four-month highs yesterday but then regained some upside momentum. On Thursday, front-month WTI traded above $66 per barrel before sellers came in to push prices back down. It fell back to $63.50 but then pushed higher.

Source: TN Trader

Oil dropped back from its highs after President Trump said that he would speak to Iran’s leaders, raising hopes that ‘jaw jaw’ would replace ‘war war’, although there are plenty of US warships in the region, and Pete Hegseth, the Secretary of War, has insisted that the US is ready to act.

Technically, crude continues to trade north of the downtrend which began last summer. But it remains below the longer-term downtrend, which developed from the high hit in early 2022 after Russia invaded Ukraine. That suggests that downside risks remain.

Bitcoin extended its risk-off slide overnight, falling to its lowest level since November. It has now broken below the lower end of its recent range and is testing some mild support around $80,000. It’s a similar picture for Ether, which is hovering just above its own November low around $2,600.

Both have suffered amid a broad-based selloff across global risk assets. But the trouble for Bitcoin and Ether is that while they fall sharply when the equity tech sector sells off, they don’t tend to recover when tech bounces back.

The same goes for the US dollar, which has bounced off multi-year lows, yet has failed to offer any support to cryptos. For now, sentiment remains fragile and highly reactive.

The VIX climbed sharply yesterday, reflecting the selloff across equity prices and renewed uncertainty around geopolitics and earnings. After weeks of suppressed volatility, the spike suggests investors are beginning to reassess risk following an extended rally and increasingly crowded positioning.

Financial markets head into the final session of the week with nerves starting to show. President Trump announced that Kevin Warsh would replace Jerome Powell as Fed Chair in May. Mr Warsh should be a popular choice.

But otherwise, investors are preparing for more earnings reports from major corporations and political risks both domestically and abroad, in particular the risk that the US attacks Iran.

Equities have lost some upside momentum while metals are correcting sharply. Oil prices are elevated, and crypto continues to unwind excess optimism. The question now is whether this represents a healthy reset after strong gains, or the early stages of a more meaningful shift in tone.