Dow and SPX extend winning streaks, eyes now on big tech earnings

Currency markets were relatively quiet overnight, with the US dollar showing signs of life following a protracted sell-off. The Japanese yen is on the back foot, losing ground against all the other majors, underperforming as traders weighed ongoing trade talks and rate policy dynamics.

The commodity currencies — the Australian and New Zealand dollars — were noticeably firmer overnight, supported by improving sentiment and a bounce in risk appetite. Sterling held steady, with Bank of America suggesting a return to pre-Brexit levels could be in play next year. 

Some traders have speculated that month-end dollar buying may feature in today’s flows, reversing out profitable shorts against the currency.

Gold and silver pulled back sharply this morning, adding to yesterday’s losses as traders priced in signs of a possible easing in trade tensions. The short-term tone has softened, although both metals remain elevated in broader terms.

Oil extended its recent slide. Front-month WTI has fallen back below $60 per barrel, as sentiment continues to weaken ahead of the weekly inventory data. Last night’s API report showed a surprise build of nearly 4 million barrels, while today’s official release is expected to show a draw of 600,000 barrels. For now, the bears remain in control.

Natural Gas held flat, lacking direction despite recent volatility.

Crypto markets also slipped, though the moves were muted. Bitcoin fell back below $95,000 yet still appears to be consolidating ahead of what the bulls hope will be another attempt to reclaim the key $100,000 level.

The VIX remained flat, holding around the 23.50 level, suggesting that while volatility is still present, markets continue to consolidate ahead of today’s key data releases, along with Friday’s Non-Farm Payroll update. After a stretch of elevated swings tied to trade policy and rate speculation, today’s modest price action suggests a market that is braced but not yet panicked.

Investors are having to wait for further clarity, particularly as today’s economic calendar includes major inflation and labour prints—factors that could easily tilt sentiment. While the VIX hasn’t spiked, it continues to reflect underlying nerves, and even a modest surprise in the data could reignite volatility quickly.

It’s a busy session on the macro front. Today’s docket includes a trio of major US data points — ADP Payrolls, Advance GDP, and Core PCE.  

Meanwhile, Trump is expected to deliver his ‘Investing in America’ speech, though the exact timing remains unconfirmed. Elsewhere, reports suggest Elon Musk is no longer working with the White House, a notable shift in personnel given his previous advisory role.

In the UK, executives have warned that the country risks falling behind global fintech and crypto hubs, highlighting a potential vulnerability as digital finance evolves rapidly.

Overall, momentum appears to favour the bulls as the Dow and SPX extend their impressive winning streaks, underpinned by upbeat trade talk and resilient earnings. However, the modest pullback in stock index futures and the weaker tone after last night’s disappointing corporate results hint that the rally may now be facing its first major test.

With a large slate of economic data due today, including the Fed’s preferred inflation measure, as well as high-profile tech earnings later this evening, investors will be on their toes. As the month draws to a close, investors are watching for confirmation that the recent optimism can hold. Alternatively, disappointing economic data or negative corporate forward guidance could significantly dent the market's newfound confidence.