Another Kospi record

US stock indices ended mixed yesterday. The Dow dropped 0.8%, weighed down by some hefty falls across health insurance giants, many of which are major constituents of the old school, price weighted index.

The selloff came after the Trump administration said it would cut back spending on a government-funded scheme for older US citizens. Meanwhile, the NASDAQ added 0.9% as investors positioned themselves ahead of key ‘Mag Seven’ earnings from Microsoft, Tesla and Meta after tonight’s close.

Semiconductor stocks fared well, and many were firmer again this morning, with Micron Technology yet again a standout performer. The S&P 500 added 0.4% yesterday, which was good enough to take it to an all-time closing high. In terms of sectors within the index, IT was a standout, adding 1.4%, while Healthcare was the loser of the day, falling 1.7%.

US stock index futures began on Wednesday in bullish form. Wall Street loves a milestone, so there will be caps in the air if the S&P can maintain the 7,000 level it passed this morning once the US exchanges open later today. The Dow is just 2% below its own mega-milestone of 50,000.

Source: TN Trader

Texas Instruments surged nearly 8% after hours, rallying on stronger-than-expected analogue chip demand despite missing revenue and earnings estimates. The move reinforced the market’s willingness to reward forward-looking guidance even in the face of headline misses, particularly within semiconductor and AI-linked themes.

This encouraged investors and traders to throw caution to the wind as they position themselves ahead of the conclusion of the Federal Reserve’s two-day FOMC meeting later this evening. No one expects a rate change tonight. But all will pay close attention to Fed Chair Jerome Powell’s subsequent press conference.

Mr Powell’s term as Chair ends this May, and many are wondering if he will address concerns about President Trump’s constant interference with the Fed, and the latter’s vitriolic attacks on him personally in his comments.

In addition, there is always hope that these occasions help offer some insight into the FOMC’s thinking over the timing and size of future rate cuts. President Trump is expected to announce his pick to replace Mr Powell, with the odds now favouring Rick Reider, CIO at BlackRock.

If so, there will be more cap flinging on Wall Street as Mr Reider is most certainly ‘one of their own’. A ‘Markets Guy’ rather than a fusty economics theorist.

European stock indices were struggling in early trade on Wednesday. Wall Street has largely brushed off ongoing dollar weakness, at least as far as US equities are concerned. But European and UK investors have expressed greater concern as the euro and sterling both hit their highest levels against the US dollar since 2021. Both regions rely on large multinationals making sales outside of their home bases.

Source: TN Trader

A strong currency is unhelpful as it raises the cost of sales, and buyers look elsewhere, with President Trump expecting US manufacturers to benefit. Geopolitics crept back into focus after news of a landmark free trade agreement between India and the European Union.

The deal aims to gradually reduce tariffs on certain goods. But it has raised eyebrows in Washington, particularly given recent US tariffs on India over Russian oil purchases.

As far as individual corporates were concerned, ASML, the Dutch giant which manufactures the machines which make semiconductors, reported record orders and issued upbeat guidance for 2026, driven by sustained AI demand. Despite missing on earnings, the strength of its forward outlook reinforced confidence in the broader chip supply chain.

Luxury stocks told a different story. LVMH shares plunged more than 7% after reporting mixed full-year earnings. The reaction reflected elevated expectations following stronger results from peers such as Richemont and Burberry, which left little room for disappointment.

The US dollar is back again as the big story. Yesterday evening, the Dollar Index fell to its lowest level since February 2022, as the cash rate hit 95.25. The move was blamed on President Trump, who, when asked about recent weakness in the greenback, responded: ‘Dollar’s doing great.’

It has been no secret that Mr Trump sees a lower dollar as very good for US exports, which ties into his trade policy and tariff threats. But his comment is being dressed up as something akin to malign neglect, which could set the stage for an unstoppable slide as talk of global ‘de-dollarisation, sell America’ grows ever louder. Maybe.

But the dollar has been bumping around these depressed levels for some time now. And it is being blamed for many coincidental happenings, not least the surge of gold and silver to all-time highs.

Source: TN Trader

Once again, there are a lot of investors crowded over on one side of the boat, all expecting further losses for the dollar. Is it conceivable that the Dollar Index has hit a cycle low and that it may be about to strengthen from here? Stranger things have (are) happening.  

Overall, investors remain cautious ahead of the conclusion of the Federal Reserve’s monetary policy meeting this evening. Traders are increasingly focused on the post-meeting press conference, particularly amid speculation that President Trump’s eventual replacement for Fed Chair Jerome Powell could favour a faster pace of rate cuts.

Gold surged to fresh all-time highs this morning, briefly breaking above $5,300 in early European trade, and marking its eighth consecutive day of gains. Gold's advance since the beginning of this year has been relatively measured and steady, at least when compared to silver. But it is now looking very stretched to the upside, with the daily MACD well into overbought territory.

Gold is well and truly back in the headlines, having been largely ignored during last year’s run to a succession of all-time highs. Well, it’s got the headlines it deserves now. But these may be coming a bit too late for new investors jumping on the bandwagon.

There is plenty of talk about ‘new paradigms’, ‘Sell America’ and how gold is on its way to $10,000 per ounce. Maybe. But it’s unlikely to get there without a significant pullback first. When that may come is anybody’s guess.

Source: TN Trader

Yet again, what goes for gold applies to silver, but multiplied up by several factors. Silver spiked to another record high above $117.70 at the beginning of this week. It then pulled back, but it remains within easy reach of Monday’s record. 

As with gold, there’s talk of new paradigms, massive industry demand and stock shortages leading to dislocations within the silver market.

That’s all fine and dandy. But silver is in the process of a blow-off top, which can precede a sudden reversal. That hasn’t happened yet. And it’s also not to suggest that silver can’t reach $200 per ounce or whatever certain analysts are currently predicting. But this market is stuffed full of risk, whether buying for further gains or selling on hopes of a pullback. Be careful.

Source: TN Trader

Crude oil slipped back a touch in early trade this morning. But that only blew off some froth following its recent run-up. Front-month WTI came close to $63 per barrel in early trade this morning to mark a four-month high. It is currently testing some mild resistance from back in October.

It does feel as if oil is benefiting from a big turnaround in sentiment. It has certainly broken out of the downtrend which had built since last summer. And it looks as if it could be quite comfortable trading above $60 per barrel.

Yet it was only three weeks ago that it looked as if it could break below $55 and take out the cycle lows from April last year. But taking a longer-term view suggests that there are still technical hurdles to overcome for further upside.

Crude oil is some way from breaking out above the longer-term downward trend, which has been building from the highs which followed Russia’s invasion of Ukraine in February 2023. And while the daily MACD is signalling that momentum is building to the upside, recent history warns traders against getting too comfortable holding long positions in crude oil.

Source: TN Trader

This recent push higher was driven by supply concerns after a severe winter storm across the east of the US, which knocked out roughly 15% of national output and halted crude and LNG exports from Gulf Coast ports. Traders now await the latest US EIA crude inventory report, with a larger-than-expected draw likely to reinforce the bullish tone, while a surprise build could cap further gains.

The VIX has picked up a touch since Monday. This reflects heightened sensitivity across markets as investors weigh record equity valuations against upcoming macro and policy risks. While volatility remains contained, the combination of a pivotal Fed decision, heavyweight earnings, and ongoing US dollar weakness continues to underpin demand for hedging.

Markets head into the Fed decision with rates expected to remain unchanged in a range of 3.50-3.75%. But all eyes are firmly on Chair Powell’s guidance. Earnings from Tesla, Meta Platforms and Microsoft are the next major tests for the rally, particularly given stretched valuations in parts of the tech sector.

The dollar remains on the back foot. Precious metals continue to shine and oil is stabilising on renewed supply risks. With equities at record levels, the balance between optimism and complacency is becoming increasingly delicate as traders await the next catalyst for a big move.