South Korea's KOSPI comes off the boil

US stock index futures were mixed in early trade this morning with evidence of some mild profit-taking across semiconductors and the tech sector more generally. Yesterday the NASDAQ jumped 1.6% after NVIDIA released another blow-out set of quarterly numbers. This triggered an 8.7% rally in the stock and boosted other semiconductor and tech sector stocks.

The S&P's IT sector was up 3.4%, while the iShares Semiconductor ETF added 2%. In contrast, the Dow could only muster a gain of 0.2% while the small cap Russell 2000 was up a modest 0.3%. But sentiment soured a touch after Marvell Technology announced its own quarterly earnings after last night's close.

The chip developer and manufacturer dropped 14% at one stage after it announced a small miss on its non-GAAP gross margin, and on disappointing forward guidance. While it made back some of those overnight losses this morning, investors had a perfect excuse to lighten up their exposure to chip stocks, and that's exactly what they have been doing. This also makes sense as investors prepare themselves for Fed Chair Kevin Warsh's keynote Jackson Hole speech later today.

As noted above, investors are desperate for clues on the central bank's approach to inflation and interest rates after recent data showed persistent upside pricing pressure. Yet Mr Warsh wants the Fed to step out of the spotlight and cease its running commentary on what may or may not happen at every FOMC meeting. Instead, he wants the markets to provide the signals, so the Fed can react accordingly.

Mr Warsh acknowledged that a recent spike in yields on longer-term Treasury notes and bonds was doing the Fed's work for them, signalling the market's concern over sticky inflation. But this good work is being undermined by recent actions from the US Treasury under Scott Bessent.

Last month he joined Japan's Ministry of Finance to support the yen and weaken the dollar. And he did a similar thing last week when he attempted to drive down government debt yields. This is getting political again, with Mr Trump's influence over Mr Bessent getting embarrassing for the ex-hedge fund manager.

With both the S&P 500 and NASDAQ 100 meandering below significant resistance, while above significant support, it just could be that Mr Warsh's speech triggers a sharp reaction, irrespective of what he says.

Source: TN Trader

European stock indices pushed higher this morning. But gains were kept in check across the continent as participants held back from aggressive risk-taking ahead of Fed Chair Kevin Warsh's keynote speech later today.

Source: TN Trader

A renewed surge in global sovereign bond yields earlier in the week had been a headwind for European equities as borrowing costs across core and peripheral Eurozone countries pushed back up toward multi-month highs. Yields eased slightly mid-week on technical US debt-buyback announcements and softer energy prices. But elevated borrowing costs continue to weigh on valuations.

Hawkish comments from European Central Bank (ECB) Executive Board member Isabel Schnabel added to the cautious tone. Investor focus is squarely on Mr Warsh's inaugural Jackson Hole address. Investors are seeking clarity on whether the Fed will hike rates next month or allow slowing labour-market momentum to justify a pause. But it will be a massive surprise if they get it.

The US dollar was a tad higher this morning against the majors. But investors sat on their hands for the most part ahead of Fed Chair Kevin Warsh's Jackson Hole speech this afternoon. The cash Dollar Index continues to trade shy of 99.00, having tacked on 0.7% from last week's low, which was itself the lowest level for the Index since mid-May.

The cash Dollar Index has been stuck in a narrow range since Wednesday, with 99.00 the high and some minor support at 98.80. Investors are hoping to hear Mr Warsh's views on inflation and interest rates this afternoon. But they're unlikely to get it for reasons explained above. According to the CME's FedWatch Tool, the probability that the Fed leaves interest rates on hold next month remains at 64%.

The Japanese yen weakened for a fifth straight session against the US dollar. The USD/JPY hit its highest level since Tuesday last week, just before US Treasury Secretary Scott Bessent announced increased purchases of longer-dated government debt which sent bond yields and the dollar sharply lower. Overnight, Tokyo's Core CPI rose to 1.8% year-on-year in August from 1.7% previously, beating forecasts and nearing the BoJ's 2% target.

Source: TN Trader

Meanwhile, the unemployment rate unexpectedly fell to 2.4%, its lowest reading in a year. This week Bank of Japan (BoJ) Deputy Governor Ryozo Himino warned of mounting inflation pressure and called for timely rate hikes to avoid the need for more aggressive tightening at a later date.

For the past week, gold has struggled to hold any break above $4,600. This has pulled the reins on its breakout advance from Wednesday last week when a slump in the US dollar saw gold push upwards from $4,400 where it had been stuck for over a week. This Wednesday's Core PCE reading held steady at 3.3% year-on-year, in line with expectations.

Despite this, the CME FedWatch Tool still assigns a 64% probability that the US central bank will leave rates unchanged at next month's meeting. This may help to cap the dollar's advance, which should help support the price of gold.

For all that, gold may have to pull back from current levels or at least consolidate for a while to rebuild energy for another push higher. It is a tad overbought currently, although that's not to say it can't rally further under these conditions, as it certainly did earlier this year. But for now, investors are sitting back and waiting to hear what Fed Chair Kevin Warsh says at Jackson Hole later today.

Source: TN Trader

As noted yesterday, silver has spent the past week repeatedly knocking its head up against resistance at $70 per ounce. Yesterday it suddenly took off to the upside, rallying 3% over the afternoon and into early evening. That wasn't enough to push it above $70. But as Europe opened this morning it surged over 3% again, taking it to within a few cents of $71 per ounce.

It has pulled back since but remains above $70. This looks like a textbook breakout test, and while the daily MACD is elevated, it isn't particularly overbought. It looks as if silver has now caught up with gold as the latter has led the August rally. The question now is whether precious metals can build on these gains.

Source: TN Trader

Oil prices were firmer again this morning. Yesterday the Wall Street Journal reported that President Trump has no interest in reviving the terms of the memorandum of understanding agreed and signed with Iran back in June.

Oil has now made back more than half of Tuesday's decline which came on reports that the US and Iran were getting close to some kind of deal. This was despite, or because of, the fresh sanctions announced by US Treasury Secretary Scott Bessent on Monday.

Source: TN Trader

These included threats of secondary sanctions on any country doing any business with Tehran. But given the build-up from the Trump administration ahead of the announcement, Mr Bessent's statement was light on detail and a bit of a damp squib.

Mr Bessent has been in the news a lot this month, having been sent out to bat for Team Trump on several notable occasions. In two instances Mr Bessent intervened to weaken the dollar and put a lid on long-term Treasury yields. Unfortunately, they sent him out without pads, or a box, and the US Treasury Secretary is looking uncomfortably exposed.

In the meantime, the US-Iran 'war' stumbles along with no obvious end in sight. On top of this, Russia has warned that it could strike UK military targets in response to Kyiv's use of British-supplied long-range missiles against Russian territory. President Trump said he does not believe Russia would attack a NATO member and downplayed reports that CIA Director John Ratcliffe had separately warned Russian officials against such a move.

In the early hours of this morning bitcoin topped $81,400 to hit a fresh fifteen-week high. It has drifted back since then and was a touch lower on the day in early European trade, although it appears to have found some support around $79,500 to $79,600.

In common with most other financial markets this morning, there seems to be a reluctance amongst investors to take a view ahead of today's main scheduled event, Federal Reserve Chair Kevin Warsh's keynote speech at the Jackson Hole Economic Symposium at 15:00 BST.

Investors are hoping that Mr Warsh will offer up some insights into the Fed's thinking on inflation and the likelihood of a change in the fed funds rate at its next FOMC meeting in a few weeks' time. This follows the disappointingly 'sticky' Core PCE inflation release on Wednesday, which came after the US Treasury announced that it was doubling its purchases of longer-term government debt, which in turn, followed the Treasury's intervention along with Japan's Ministry of Finance, to support the yen, and weaken the dollar, at the end of last month.

Bitcoin surged and broke out of a frustratingly tight trading range as investors rushed for dollar alternatives. Gold and silver reacted positively as well. That surge has left bitcoin looking rather overbought. But there hasn't been a wild rush to cash in on its rally, so far.

Maybe Mr Warsh will say something to shift sentiment later today. If he does, it will go against everything he has been saying about the US central bank taking itself out of the spotlight and letting the markets do what they do best, enabling price discovery by themselves.

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