Asian Pacific indices mostly firmer

US stock indices closed lower on Tuesday, although some dip buyers came in to take advantage of the recent pullback in tech. This saw the NASDAQ gain 0.2%, while the Dow, S&P 500 and Russell 2000 posted losses of 0.6%, 0.2% and 0.5% respectively. So much for the ‘Great Rotation’ trade. Investors wrestled with the delayed Non-Farm Payroll report (thanks to the government’s October shutdown), which squished up the numbers for October and November.

Source: TN Trader

Amazingly, the headline Payroll update showed a gain of 64,000 jobs, which was very close to the 50,000-consensus forecast. But the Unemployment Rate ticked up to a four-year high of 4.6%, a touch above the 4.5% expected. Retail Sales were also a mixed bag, while the Flash Manufacturing and Services PMIs both disappointed.

Nevertheless, it’s good to get the government’s economic data updates back, and most of the wrinkles from the October shutdown should be ironed out early next year.

Considering individual S&P sectors, IT outperformed and was up 0.2%, while Energy was down 3% in line with the continued sell-off in crude. Looking at the overnight bounce in oil (see below), it may be a different story by the close of business today.

US stock index futures were firmer in early trade this morning, with tech leading the way. Investors appear to be taking advantage of recent weakness across the sector (which came on concerns over the future returns on AI investment) to reload in anticipation of a rally into the New Year.

Nvidia is among the beneficiaries of ‘buy the dip,’ although it has yet to break above a significant band of resistance between $177 and $181. Meanwhile, Tesla has soared since mid-November and is now trading above its previous all-time intra-day high from this time last year (almost to the very date).

Investors are cheering on the return of Elon Musk. Tesla’s CEO has turned away from DOGE and now concentrates on self-driving cars, with a significant monetary incentive to boot.

Investors will keep an eye on tomorrow’s CPI update. But before that, today sees scheduled remarks from Federal Reserve officials, including Christopher Waller and John Williams. This could help shape expectations around the timing and scale of future rate cuts. Micron Technology reports after tonight’s close. This will be watched closely, especially given how recent reports from fellow AI players, Oracle and Broadcom, rattled the tech sector.

European stock indices were little changed this morning, with a slight downside bias. Investors couldn’t pick up much enthusiasm for European equities, despite an early bounce-back in US stock index futures. But the UK’s FTSE 100 stormed higher, gaining around 1.7%, after data showed that inflation had cooled more than expected.

Source: TN Trader

Headline CPI, which includes food and energy, fell to 3.2% in November. This was below expectations and down from the prior month’s reading of 3.6% previously. Core inflation also came in at 3.2%, down from the 3.4% expected, which was also where it came in previously. This data, combined with a recent uptick in unemployment, has strengthened expectations that the Bank of England will cut rates by 25 basis points at tomorrow’s monetary policy meeting.

The inflation update was particularly good news for homebuilders and financial services, while the resulting drop in sterling helped lift multinationals who make significant sales overseas.

Markets were also pricing in more rate cuts next year. But the Grinch may be tempted to point out that inflation is still far above the Bank’s 2% target, and there’s no guarantee that the downward trend that has started to emerge over the last few months is set to continue. So, as things stand, the path of monetary policy over the next year remains far from clear.

The US dollar bounced sharply this morning. The Dollar Index pushed back above 98.00 in early trade, having fallen to a 10-week low of 97.50 yesterday. The move represented something of a fight-back from a currency which has come under sustained selling pressure for the best part of a month now.

Back in November, the cash Dollar Index made several attempts to push above resistance at 100.00. It failed on every attempt and then went on to fall 2.5% into yesterday’s low. Could this be the beginning of a recovery? Or will this prove to be a bout of short covering before the selloff resumes?

The British pound came under sustained pressure following the softer UK inflation print. Sterling sold off sharply against its major peers, as markets repriced expectations for a more dovish outlook from the Bank of England. The Bank is expected to cut rates by 25 basis points tomorrow. But it’s also worth remembering that sterling has gained close to 3% against the dollar over the past month. So, a pullback was somewhat overdue.

Source: TN Trader

Silver once again dominated the metals complex, surging by close to 3.5% in overnight trade. This took it to fresh record levels in the mid-66 region before sellers came in to book profits, hopefully. Upside momentum remains strong, with the daily MACD pushing even further up into seriously overbought territory.

That is undoubtedly a danger sign. But it’s one that everyone can see, and, as said before, markets can remain overbought or oversold for seemingly ridiculous periods of time. Nowhere is that truer than during a silver bull run. Silver is a relatively small market, so prices get squeezed when everyone wants to get in on the action.

Source: TN Trader

Gold also pushed higher, although prices have so far topped out below Friday’s recent high of $4,350. Today’s move was supported by a softer dollar and increased confidence that US interest rates are likely to trend lower in 2026, reducing the opportunity cost of holding non-yielding assets.

Yesterday’s uptick in the Unemployment Rate slightly raised the probability of two 25-basis-point cuts from the Fed next year, rather than just one. Tomorrow’s US inflation update will be monitored closely.

Source: TN Trader

Copper also remains firmly bid, with prices at record highs as tariff concerns and US stockpiling add to its appeal as a bellwether for global economic activity.

Oil bounced sharply overnight and continued to rally this morning. The catalyst for the move was an order from President Trump for a complete blockade of all sanctioned oil tankers entering and leaving Venezuela. This takes recent hostile action by the US against Venezuela up a step and increases geopolitical uncertainty. This is particularly the case as Venezuela’s largest buyer of its oil is China.

Recent reports suggest that while Chinese oil imports have been strong, the country has been stockpiling resources rather than using them in manufacturing or anything else. Yesterday, front-month WTI fell below $55 per barrel, hitting its lowest level since April. So far, today’s bounce has taken prices back up to yesterday's open, so not a particularly significant move in the scheme of things.

Back in April, front-month WTI surged around 12% off its sub-$55 low that day to close over $61 per barrel. That move was exaggerated by short-sellers who were forced to cover as prices rose. However, that move was preceded by a 24% slump in the oil price in just one week. This time round, the decline in oil has been relatively slow and steady. Even so, will history repeat? We’ll know by the end of today.

Source: TN Trader

Natural gas showed early signs of stabilisation after an aggressive sell-off, which led to a 29% price slump in less than a fortnight. The steep decline was driven by earlier oversupply concerns. Now the selloff appears to be slowing as downside momentum slows.

January Gas appears to have found some support around the 3.95 level. That said, the recovery remains tentative. Gas continues to trade well below recent highs, and the market remains cautious as traders assess whether this support level can hold.

For now, price action points to consolidation rather than a meaningful rebound, with sentiment still fragile following the sharp reversal seen in recent sessions.

Cryptocurrency markets remained under pressure, with prices failing to build on earlier rebounds as broader risk appetite softened. After a brief recovery attempt, crypto assets slipped back as investors reassessed their exposure risks amid mixed macro signals and renewed caution across global markets.

The lack of follow-through to the upside highlighted ongoing uncertainty and sensitivity to shifts in sentiment. While crypto remains closely tied to risk trends, recent price action suggests investors are hesitant to commit aggressively, opting instead to wait for clearer direction from macro drivers.

S&P volatility eased back after a brief uptick, with the December VIX retreating by around 2.5% to trade just north of 16.00. The pullback suggests that investors are in no mood to hedge as markets digest recent data and await the next wave of catalysts. Despite ongoing uncertainty, there is little sign of panic or disorderly positioning, as investors remain in a wait-and-see mode.

Investors remain wary as they attempt to interpret backwards-looking jobs data and conflicting economic signals. Tech has found some tentative support, but conviction remains low ahead of key earnings and macro releases.

UK inflation has delivered another boost to rate-cut expectations ahead of the Bank of England meeting tomorrow. Silver and Tesla continue to dominate headlines, and with US CPI, central bank decisions, and Micron Tech earnings still ahead, volatility may yet have its moment.