Japan squeaks to a new record high

US stock index futures were a tad weaker in early trade this morning. This was despite continued strength across the chip sector. Investors reacted positively to yesterday’s news of OpenAI’s massive investment in Advanced Micro Devices (AMD). AMD’s stock price surged 37% initially after ChatGPT’s parent company announced that it was making a multi-billion-dollar investment in the semiconductor designer.

Interestingly, this follows hot on the heels of NVIDIA’s (AMD’s chip designing rival) $100 billion investment in OpenAI. Investors continue to ‘follow the money’ when it comes to anything to do with generative artificial intelligence (AI). This is despite fears that the whole investment thesis looks very circular and increasingly incestuous as money gets pumped around companies within the sector. Stock indices ended Monday’s session mostly higher.

The NASDAQ got a boost from AMD, which ended the session up 24%, helping to lift the tech-heavy index by 0.7%. The S&P 500 and Russell 2000 both added 0.4%, which meant that all three indices posted fresh record closes. Meanwhile, the Dow slipped 0.1% but remains within easy reach of its own all-time high from Friday.

Source: TN Trader

Stock market strength continues to be driven by optimism surrounding potential mergers and acquisitions and expectations of Federal Reserve rate cuts. The S&P 500 has now recorded its 32nd all-time high this year and is up for seven straight sessions, while the Nasdaq has posted its 31st record high of 2025.

Small-cap stocks have also joined the move, with the Russell 2000 crossing 2,500 for the first time last week, and again on Monday. The rally has broadened out recently, which is a positive development, and comes despite the US government shutdown, which is now in its seventh day.

According to Treasury Secretary Scott Bessent, the shutdown could have a negative effect on US economic growth. It also could result in huge job losses if furloughed workers get laid off permanently, as the Trump administration has warned.

On top of this, more economic updates will likely be postponed, following on from last Friday’s September Non-Farm Payroll report. This will cloud the perspective for economic analysts, particularly those at the Federal Reserve who are responsible for monetary policy. But the latest update from the CME’s FedWatch Tool calculates that this has only raised the probability that the Fed will cut rates by 50 basis points before the end of the year.

Attention now turns to the minutes from the last FOMC meeting, due tomorrow, and remarks from several Fed officials this week, including Vice Chair Michelle Bowman, Governor Stephen Miran and Minneapolis Fed President Neel Kashkari. Investors will also be watching the first major corporate earnings of the quarter, with results from PepsiCo and Delta Air Lines due on Thursday.

European stock indices had a relatively quiet open with a slightly weaker tone overall. The French CAC was little-changed in early trade and showed further signs of stabilising following yesterday’s sell-off. This came as investors reacted to the shock news of the sudden resignation of French Prime Minister, Sébastien Lecornu. This came after he had spent less than a month in the job, and just hours after he announced a fresh cabinet line-up.

The latter brought a tsunami of criticism from all political persuasions, including his own. But President Macron has asked M. Lecornu to remain temporarily to conduct urgent talks with political parties to try and reach a framework for stability by tomorrow evening. Lecornu will not continue as prime minister beyond then, and the French political crisis continues with no easy resolution in sight.

In other news, the French Trade Balance came in a touch wider than expected, while German Factory Orders fell for the fourth successive month. Despite all this, the Euro Stoxx 50, German DAX and the UK’s FTSE 100 continue to hover near record highs.

Source: TN Trader

In the Forex market, the US dollar was firmer across the board this morning. The Dollar Index rallied strongly yesterday, pushing above 98.00 in yesterday morning, before profit-taking saw it pull back soon after the US open. It has edged back above 98.00 again today, and the big test will be if it can build on these gains this afternoon and into the evening.

The past six weeks have seen the Dollar Index repeatedly fail to hold above 98.00 on every rally attempt. That is perhaps unsurprising given the expectation of lower US interest rates even as other major central banks go on hold.

In addition, the government shutdown can’t have helped sentiment towards the dollar. Despite this, the market has shown large, short positioning in the greenback for most of this year, so perhaps a turnaround is coming. Today’s price action looks likely to be influenced by a clutch of Fed speakers, including Raphael Bostic, Michelle Bowman, Neel Kashkari and Stephen Miran.

The Japanese yen was weaker again in early trade this morning. Investors reacted to the likelihood that the Bank of Japan could leave its loose monetary stance in place until the beginning of next year. This follows conservative politician Sanae Takaichi’s election victory over the weekend. The USD/JPY pushed further above 150.00 this morning, to retest resistance from late July just below 151.00.

Source: TN Trader

Gold was little changed in early trade this morning, but still within sight of the key $4,000 per ounce target. But it suddenly lost ground as trade switched to Europe from the Asia Pacific, losing around $35 in a few hours.

It has managed to stabilise since then, but this looks as if it is yet another sign that some skittishness is creeping into the market. Gold has had a spectacular run so far this year. It began 2025 trading around $2,600, which means that it is up over 50% since then. And it has gained around 150% over the past three years.

So, it is understandable that some traders will look to book profits, particularly given that gold looks quite overbought at current levels. However, there are plenty of true believers out there who remain convinced that this is nearer the beginning of gold’s rally than its end. They could be correct. But it’s also worth remembering that the current rally began with lows hit in 2015, so it’s already quite long in the tooth.

Source: TN Trader

Silver also held steady in early trade this morning, holding on at multi-year highs and sitting just over a dollar away from its own record high from April 2011. Silver is still playing catch-up with gold, and, like gold, it also had a sudden lurch lower soon after the European open.

Source: TN Trader

Both precious metals have shown remarkable resilience, supported by a mix of safe-haven flows, speculative demand and optimism that the Fed’s next move will favour looser policy. Momentum remains positive. But the respective daily MACDs show the two metals trading in overbought territory. The pace of recent gains suggests the market may be primed for a period of consolidation, although that has been the case for quite a while now.

Oil was a touch weaker in early trade this morning. Yesterday, prices gapped higher from Friday’s close after OPEC+ announced an output increase, which was way lower than expected. This saw buyers rush in to take advantage of last week’s sell-off.

A combination of new supply, growing inventories in the US, evidence of Chinese stockpiling and the expectation of a large OPEC+ production increase weighed on prices throughout last week. This saw front-month WTI fall over 7%, dropping below support around $61.50 and coming within easy reach of $60 per barrel.

Prices recovered yesterday in a move which saw WTI get close to $62. But ultimately crude couldn’t hold on to these gains, and front-month WTI dropped back below $61.50 in a move which has encouraged fresh selling. The market looks finely balanced. The bulls will want to have another go at taking prices through $61.50, while the bears will try to drive WTI back below $60.

Source: TN Trader

Gas prices retreated slightly from the fourteen-week high hit on Monday, easing some of the momentum from recent sharp gains. The pullback was modest and largely viewed as technical, with traders locking in profits after an extended move higher.

Despite the dip, underlying sentiment in the gas market remains constructive, with prices still holding comfortably above key recent support levels. The recent strength has highlighted renewed buying interest, but the latest pause suggests that participants may be waiting for fresh catalysts to drive the next move.

Bitcoin pulled back a touch overnight, after hitting a fresh record high above $126,000 yesterday. Ether pushed above $4,700 to hit a three-week high, with investors now eyeing up the next big significant target of $5,000. Both assets have enjoyed a strong upward run, supported by risk-on sentiment and enthusiasm surrounding technological innovation in the AI and blockchain spaces. 

The latest pullback appears to be a natural pause after several consecutive sessions of gains. Traders remain broadly optimistic, though near-term profit-taking is keeping prices in check. The underlying tone across digital assets remains positive, suggesting the market could stabilise before attempting another push higher.

The VIX continues to move sideways, underscoring a market that remains remarkably calm despite ongoing political uncertainty and the extended government shutdown. Traders continue to interpret the lack of new economic data as a temporary tailwind for equities, reducing near-term volatility and encouraging risk-taking.

While the low volatility environment has persisted for several weeks, some market watchers caution that any surprise from Fed speakers or geopolitical developments could spark an uptick. For now, however, complacency dominates, reflecting strong investor confidence in the ongoing rally.

Equity markets remain seemingly unstoppable, with record highs across major U.S. indices and growing global optimism. The question now is what could realistically stop the current momentum. The Dollar Index looks to be stabilising around the high 90s, while the yen remains vulnerable after its recent sharp slide.