Asian Pacific investors wait for clarity from US-China talks

Wall Street futures rise

US stock index futures moved higher early Monday as traders prepared for one of the most event-packed weeks of the year. This morning's rally built on gains made last week, and it came after President Trump announced on Sunday that the US had reached a trade agreement with the European Union.

This trade deal has led to tariffs of 15%, halving the original reciprocal levy of 30%, and comes ahead of the tariff deadline on Friday. Last week saw decent gains across all the US majors.

The S&P 500 added 1.5%, the Dow rose 1.3%, and the NASDAQ and Russell 2000 were up 1.0% and 0.9%, respectively. All 11 sectors within the S&P 500 were up, with healthcare the major beneficiary of a rotation out of tech.

Source: TN Trader

For the week, healthcare, which has underperformed so far this year, rose 3.4%, while tech was up a more modest 0.7%.

This week also features earnings updates from four ‘Magnificent Seven’ constituents: Microsoft and Meta Platforms on Wednesday and Apple and Amazon on Thursday.

In addition, there are rate decisions from the Federal Reserve and Bank of Japan (both are expected to leave rates unchanged). On the data front, there’s US Advanced GDP, Core PCE (the Fed’s preferred inflation measure) and Non-Farm Payrolls. President Trump’s tariff deadline is on Friday, and US-China trade talks are taking place today.

Europe trade optimism lifts autos

European stock indices followed Wall Street’s lead higher, with early gains across the board.

Investors reacted positively to news that the US and EU had come to an agreement over trade and that US imports from the region would attract a 15% levy, rather than the 30% originally threatened by President Trump. European carmakers were among the biggest beneficiaries, rallying sharply in early trading.

The Stoxx Europe autos index rose more than 1.5% after President Trump said the agreement would be “great for cars.” Overall, the deal sparked optimism across Europe, taking the Euro Stoxx 50, German DAX and the UK’s FTSE 100 back up towards their respective all-time highs.

Source: TN Trader

US dollar strengthens

Across FX, the US dollar began the week on the front foot, making gains versus all the majors. This followed the news of a trade breakthrough between the US and the EU on Sunday, with a 15% tariff on EU exports to the US, rather than the 30% previously threatened by the Trump administration.

Interestingly, the US dollar should be the major beneficiary from the breakthrough, rather than the euro. Could this signal that the bottom is in for the greenback after the Dollar Index hit a multi-year low at the beginning of the month?  

Meanwhile, the Japanese yen weakened further and found itself at the bottom of the G10 pack as traders shifted away from safe havens amid improving global risk sentiment.

Source: TN Trader

Elsewhere, movements in major pairs such as the euro and sterling were modest, as traders positioned cautiously ahead of a week packed with central bank meetings and economic data releases.

Source: TN Trader

Precious metals were little changed

Gold began the week on the back foot, dropping towards $3,320 to trade at its lowest level since Thursday. Traders hit the ‘sell’ button as they watched the US dollar soar following news that the US and EU had reached an agreement on trade and tariffs.

Gold soon found a floor and had recovered off its lows in mid-morning trading. But it ran into some mild resistance around $3,340, and the next question is whether gold has pulled back enough to reset the daily MACD and prepare for another leg higher, or if it must fall further first.

For now, it continues to be rangebound, while the MACD meanders around the neutral level, so it is unable to provide clues as to gold’s next move.

Source: TN Trader

Meanwhile, silver has steadied following Friday’s sharp pullback. It found some support around $38 per ounce. But as with gold, silver may have to pull back further to find a base before it has a chance to push higher.

Source: TN Trader

Both metals have retreated from recent highs, and the week’s upcoming central bank meetings and inflation data are expected to be key in determining their next directional move.

Oil gains on demand optimism

Crude was a touch firmer in early trade on Monday. Prices had fallen sharply on Friday, but investor sentiment received a boost from the weekend’s trade developments.

Yesterday, it was announced that the US and EU had reached a deal on tariffs. Later today, US Treasury Secretary Scott Bessent is set to meet Chinese Vice Premier He Lifeng in Stockholm. It is thought that the two sides will agree to extend the Trump administration’s 12th August deadline by ninety days to give both sides time to complete negotiations without the threat of damaging trade levies coming into force.

Investors have responded positively to the latest tariff news and seem relieved that US imports will settle with levies around 15%. President Trump will undoubtedly point to the billions of dollars worth of tariffs that will flow into federal coffers.

But the big question is who pays the extra tax, and how will that affect future trade and consumer spending? In the meantime, investors expect that reduced tariffs will support global growth and, in turn, lift energy demand.

Source: TN Trader

Natural Gas flat but at risk of breakdown

Natural gas prices were lower in early Monday trade, and the tone remains fragile. The September contract is lagging other commodities and continues to hover near the lower end of its recent range.

The $3 BTU level now appears to be a critical support area. If it fails to hold, prices could break to the downside, especially in the absence of any weather-related catalysts or unexpected changes in supply.

BTC eyes 120K, Ether builds momentum

Cryptocurrencies have had a positive start to the week, with Bitcoin once again testing resistance around $120,000. Despite failing to break through convincingly, the price action signals continued underlying demand as Bitcoin continues to trade at elevated levels, despite being rangebound.

Ether traded at highs last seen in December last year and continues to push up towards $4,000. The positive tone in crypto markets is being driven by broader risk-on sentiment in equities, as well as hopes of an even easier regulatory environment.

VIX gaps lower as risk appetite strengthens

The VIX Index continued to ease on Monday, gapping lower. The decline reflects increased investor confidence following multiple record closes across US stock indices and signs of progress on trade. While the VIX remains subdued for now, traders will be watching closely for any spike in volatility later in the week as earnings, central bank decisions and macroeconomic data unfold.

Market outlook

The backdrop for risk assets remains broadly constructive as markets enter a week packed with high-impact events. Record closes in the US, improved trade relations and continued corporate deal-making all point to a bullish narrative.

However, with the Federal Reserve, Bank of Canada and Bank of Japan meetings scheduled, along with key jobs data and inflation prints, the stakes are high. Earnings from mega-cap tech names such as Meta, Microsoft, Apple and Amazon could also shape the broader tone.

The dollar will face important tests, gold may find direction on rates and inflation data, and Bitcoin continues to respond to sentiment shifts. Overall, bulls remain in charge for now, but the calendar suggests volatility could return quickly.