Europe slips on weakness across US futures

What began as a bullish reaction to a softer-than-expected US inflation update quickly lost momentum yesterday, with US markets closing lower across the board. The S&P 500 snapped its recent winning streak and closed down 0.3%. Despite this, the index is just 2% below its all-time high from February.

Source: TN Trader

But attention quickly shifted from the data to the drama. At precisely 14:55, President Trump publicly rebuked Fed Chair Jerome Powell, demanding an immediate 100 basis point rate cut. The timing, which was less than 90 minutes after the inflation print, underscored the White House’s growing impatience with Mr Powell. This adds to the political pressure being heaped on the Fed Chair, who still has the best part of a year to go before his term expires.

Adding to the confusion, President Trump’s initial post announcing US tariffs on Chinese imports of 55%, with Chinese tariffs on US imports at 10%. Commerce Secretary Lutnick walked back on these numbers, confirming that current tariff levels would remain unchanged under the new US-China deal. Investors were unhappy at this lack of clarity, and confidence ebbed as the session wore on.

One bright spot was Oracle, which surged more than 7% in extended trading after posting a solid earnings beat. The tech giant pointed to strong momentum in its cloud business, forecasting a 70% growth rate in fiscal 2026, up sharply from the 50% growth posted in the prior year.

Asian Pacific stock indices mostly closed lower on Thursday. The only exception was the Shanghai Composite, which was unchanged. But the Australian ASX 200, Japanese Nikkei and Hong Kong’s Hang Seng lost 0.3%, 0.7% and 1.4% respectively. Sentiment was dampened following the volatile US session and lingering uncertainty around trade and inflation.

The main US-China trade negotiations ended on Tuesday. However, the lack of detail kept the risk appetite in check.

The US dollar came under renewed selling pressure on Wednesday following the softer-than-expected CPI print. The weakness carried into the overnight session. The move reinforced recent market positioning, which favours further dollar weakness.

This comes on the back of tariff uncertainty, and a certain investor queasiness over holding US Treasuries. The EUR/USD extended its upward push to trade comfortably above 1.1500. The Japanese yen rallied for a second day on renewed interest amid a cautious global backdrop.

Source: TN Trader

Sterling, however, struggled to add significantly to recent gains versus the US dollar. Cable fell sharply following this morning’s weaker-than-expected UK GDP data. The GBP/USD continues to butt up against resistance around 1.3600.

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Gold has had a good run so far this week, bouncing off intermediate support around $3,300. It had a strong session yesterday and was firmer overnight before selling pressure saw today’s gains evaporate.

Despite this, gold continues to benefit from a softer dollar and simmering geopolitical concerns. However, the area around $3,400 continues to act as a ceiling for prices.

Source: TN Trader

Silver was little changed in early trade. But it suddenly dropped soon after the European open, falling below $35.50 before steadying. On Monday, silver came close to testing $37 per ounce, but it has pulled back ever since.

Given its recent outperformance relative to gold, silver prices may need to correct a touch, or at least consolidate, to rebuild upside momentum. 

Source: TN Trader

Crude oil saw a sharp move higher on Wednesday, rallying 4% following growing tensions with Iran, along with a larger-than-expected US inventory draw. This bullish combination of fundamentals briefly pushed WTI above $68 per barrel, taking it up to its highest level since early April.

Some of these gains were pared in early trade on Thursday. Given the size and speed of yesterday’s rally, traders reassessed the outlook, particularly with uncertainty still lingering around broader supply dynamics.

There’s raised tension ahead of US-Iran nuclear negotiations, which are due to take place on Sunday. President Trump heightened these by announcing the withdrawal of US personnel from across the region.

Natural gas prices posted a modest 1% gain, extending Wednesday’s rebound. The July contract continues to trade within a well-defined range, but recent action suggests a slight bullish tilt.

However, concerns about weather-related demand and supply imbalances continue to cap upside momentum. Traders remain cautious, with both supportive and limiting factors in play. For now, gas sits near the upper end of its channel.

Crypto markets fell overnight, with Bitcoin sliding back towards $107,000 after trading above $110,000 earlier in the week. Today’s pullback marked a pause in what had been an impressive run to the upside.

Ether also dropped back from recent highs. But given its recent strong performance, which saw it rally from under $2,400 last Friday to over $2,800 yesterday, some consolidation seems in order. It remains comfortably above the key $2,500 level.

Traders appear unwilling to push cryptos beyond recent highs until they have more clarity on the macro backdrop.

The Volatility Index (VIX) added 2% overnight, with the July index breaking above 20.00 as market caution increased. Yesterday’s inflation data initially soothed nerves. However, the lack of firm details regarding the US-China trade agreement has reintroduced a measure of risk aversion.

Today’s session brings more key macro data, including US PPI and weekly jobless claims. While yesterday’s softer CPI reading offered a moment of relief, a hotter-than-expected PPI could quickly renew fears over sticky inflation, thereby complicating expectations for the Fed’s next move.

On the geopolitical front, US Treasury Secretary Bessent signalled that tariff suspensions could be extended for those countries negotiating in “good faith,” a potential sign of flexibility. Meanwhile, a new poll suggests that two-thirds of investors still view tariffs as the top market risk.

Adding to the tension, Reuters reported that Israel may be considering a military strike on Iran, while a US envoy is scheduled to meet with Iran’s foreign minister this weekend. That headline risk adds another layer of complexity for already cautious markets.

Initial bullish momentum following Wednesday’s softer inflation data faded by the close, as political pressure on Fed Chair Powell and concerns over tariffs and foreign policy weighed on sentiment.

The bulls still hold the reins, with the S&P 500 just 2% from its record highs. However, US stock index futures were lower this morning, and volatility is edging up. These are signs that investors are approaching the next stretch with more caution. The path forward looks less certain, with key data and central bank decisions looming.