US markets bounce back as downgrade fears eased

Asian Pacific stock indices were higher across the board overnight. Both the Reserve Bank of Australia (RBA) and the People’s Bank of China (PBOC) cut key interest rates, offering fresh support amid ongoing trade and growth concerns.

Even though the rate cuts were expected, markets responded positively. Hong Kong led regional gains, closing up 1.5%. The region’s positive bias helped set the tone for early trade in Europe.

European stock indices were firmer across the board in early trade, responding to yesterday’s recovery on Wall Street and the firmer close for Asian Pacific indices. The German DAX looks to extend its record-setting run, having already notched gains in seven of the last eight sessions. While sentiment remains upbeat, investors continue to monitor macro developments closely.

Source: TN Trader

Vodafone and Greggs are among the major names reporting earnings today, adding a layer of corporate focus to the session.

The Australian dollar is the big overnight laggard in FX, falling sharply in response to the RBA’s rate cut. The move, while anticipated, has renewed pressure on the Aussie, particularly against stronger G10 counterparts.

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Meanwhile, the US dollar has taken another leg lower overnight. The Japanese yen and the euro are both notable gainers, benefiting from a modest shift in sentiment and positioning. The yen’s strength is notable as it adds to those made yesterday, while the EUR/USD is holding firm north of 1.1200, suggesting traders remain cautious but engaged as they await further policy signals.

Source: TN Trader

Gold lost ground overnight, sliding back toward the $3,200 level. It failed, yet again, to break above resistance at $3,250. The yellow metal continues to exhibit choppy price action, reflecting conflicting signals across the risk and rate landscape.

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Silver followed a similar path, weakening alongside gold. Both metals remain sensitive to shifts in sentiment and USD moves, with traders watching closely for signs of renewed haven demand.

Crude prices eased slightly, with front-month WTI trading around the $62/barrel level. The pullback follows recent strength and appears to reflect a mix of profit-taking and uncertainty around supply dynamics. Ongoing discussions between the US and Iran and potential headlines around ceasefire developments between Ukraine and Russia are key factors being weighed.

Source: TN Trader

For now, the oil market remains finely balanced as prices continue to consolidate.

Gas prices moved higher overnight, but the rally remains fragile. Hovering near the 3 BTU level, the market shows signs of fatigue after recent gains. Bulls will need to see stronger momentum soon, or downside risks may reassert themselves.

For now, the trend is positive, but conviction appears limited.

Overnight, the crypto space offered little direction. Bitcoin remained stuck near the $105,000 area, showing signs of listlessness after its recent gains.

In contrast, Ether continued to outperform, building on its recent relative strength within the sector. While the broader crypto market has pulled back from last week’s highs, sentiment remains tentatively optimistic.

Volatility edged higher once more, with the VIX up 3% overnight. The move came after a steep pullback on Monday, suggesting that while tensions have eased, they have not disappeared. The May futures sit around 18, a level that still implies heightened sensitivity to headlines and rapid shifts in sentiment. Risk appetite is intact, but there’s plenty of caution.

Source: TN Trader

The data slate is relatively light today, but markets will be watching Canadian CPI closely for inflation signals. In the US, multiple Fed speakers are expected to hit the wires, potentially offering fresh insight into the central bank’s thinking as traders digest recent developments. Beyond that, it’s a quiet calendar for now.

Traders and investors will closely watch upcoming earnings reports from major retailers like Home Depot (reporting Tuesday), Lowe’s and Target later in the week to gauge the impact of tariffs on consumer prices and spending.

Walmart recently warned that tariffs are driving price increases, which could affect consumer behaviour.

The early wobble yesterday was quickly brushed aside, with bulls firmly reasserting control. The S&P’s 20% rally over the past 27 sessions highlights just how sharp the turnaround has been from prior oversold conditions. Leading the charge are the so-called ‘Magnificent Seven,’ up approximately 13% month-to-date, reaffirming their dominance.