Japanese equities lead regional gains

US stock index futures pointed to a strong open on Monday, continuing last week’s rally as investors prepare for a critical round of economic data. US stock indices closed on a positive note on Friday, led by a 1.0% rally in the Dow Jones Industrial Average. It also proved to be a strong week for all four of the majors with the Dow, S&P 500, NASDAQ and Russell 2000 adding 3.8%, 3.4%, 4.4% and 3.0% respectively. 

Source: TN Trader

Investors are looking ahead to this Thursday’s June Non-Farm Payrolls report​​. This key employment metric could provide more clarity on the health of the US labour market. It also comes a day earlier than usual due to US Independence Day on Friday, 4th July.

The consensus expectation for Payrolls suggests a gain of around 120,000 jobs added. Investors remain laser-focused on how employment data could impact inflation expectations and, ultimately, Federal Reserve policy.

Political developments in Washington are also drawing investor attention. President Trump’s much-publicised “one, big, beautiful” economic package faces its key test in the US Senate. The bill narrowly passed a procedural vote on Saturday night, paving the way for a full vote in the coming hours.

While the Trump administration is optimistic, the legislation’s path through the House of Representatives is less certain, with some GOP lawmakers pushing back against revisions in the latest version. A successful passage would mark a major policy milestone for the Trump administration, though the road ahead appears complex.

On the international front, Canada announced it would suspend the implementation of its digital services tax just one day before payments were due. Ottawa’s decision comes “in anticipation” of a broader, mutually beneficial trade deal with the US, signalling a step toward de-escalation in tensions.

The move followed a sharp warning from President Trump, who, over the weekend, threatened to end all trade discussions with Canada over the proposed tax on American tech firms. With talks back on the table, both countries appear poised to revisit terms under more constructive conditions. Last week’s trade agreement with China has boosted investor confidence that more trade deals are coming.

European stock indices were mixed on the open, before all the major indices began to drift lower. This was despite a strong start across US stock index futures. There was a clutch of second order UK and Eurozone data out this morning, which veered towards the negative when compared to expectations.

Source: TN Trader

This morning marked the start of the UK-US trade deal agreed last month. There’s a baseline 10% tariff on UK exports to the US, including UK car exports, which were set to come in at 27.5%. Certain goods related to aerospace can be exported tariff-free. A look at the charts of the UK and European majors shows a continuation of the sideways consolidation that began in May.

This morning also saw a relatively muted tone, reflecting investor caution ahead of key economic releases later in the week, particularly US Non-Farm Payrolls. While sentiment remains positive, trading volumes are likely to be light as traders wait for more decisive market-moving catalysts.

Crude oil was little changed in overnight trade. Prices sold off into Friday’s close but remain rangebound. Front-month WTI spent the first few hours of Monday’s European trade just below $65 per barrel. This means that oil prices are back where they were earlier this month, prior to the Israeli airstrikes on Iran.

Source: TN Trader

After last week’s pullback, investors are looking for the next directional cue - whether from geopolitical developments, inventory data, or broader demand signals. For now, oil appears to be stabilising, but sentiment remains cautious.

Gold prices edged higher on Monday in a move which took it up towards $3,300. This remains a key level for gold, despite it looking like a relatively unimportant support price.

Source: TN Trader

The modest uptick reflects lingering investor interest in safe-haven assets, even as broader markets lean risk-on. While the rally has lost some steam, gold continues to attract buying interest on dips, with traders watching closely for a confirmed breakout.

In the currency markets, the US dollar began the week under selling pressure yet again. The Dollar Index continues to trade around lows last seen in February 2022, below 97.00. The Index has fallen 12% since January this year. Back then, it was trading at multi-year highs just short of 110.00. But Trump’s tariffs, along with concerns over US national debt, have seen the dollar fall out of favour. Some analysts are now pondering if it has further to fall or could be about to recover.

Meanwhile, the yen strengthened across the board this morning, adding to gains seen in Asian trading. Sterling, which touched a four-year high of 1.3770 against the US dollar last week, has pulled back a touch, retesting 1.3700.

Source: TN Trader

Market participants are digesting recent comments from President Trump indicating he plans to name his replacement for Fed Chair Powell by September or October, which has added another layer of political risk to the dollar’s outlook.

Markets are holding up quite well this morning, with the bullish tone intact across major indices. Political risk - while present - seems to be getting priced in constructively. Gold and oil are both showing signs of stabilisation after recent swings, while the dollar’s weakness remains a consistent theme. All eyes now shift to Thursday’s jobs report and ongoing fiscal headlines out of Washington.