Asian-Pacific markets under pressure

US stock index futures were mixed in early European trade. This apparent indecision showed up ahead of the latest Non-Farm Payroll report, which will be released later today. There is also some nervousness ahead of the long US holiday weekend, with markets closed tomorrow to mark Independence Day on Saturday, the 4th of July.

There were some noticeable losses for chip stocks overnight. Micron Technologies was down over 10%, adding to yesterday’s 10% fall. And there were falls of between 5 and 10% for Marvell Tech, SMC, AMD, TSMC and Intel as well. SpaceX was also down around 8% in the Asian-Pacific session. But buyers came in soon after the European open, reversing out most of these declines.

Yet trade remains skittish after Wall Street posted losses across the board on the first day of July. But investors expressed some relief that the selloff was contained within the tech sector and concentrated in semiconductors. And there was some better news for the odd ‘Mag 7’ constituent.

Meta Platforms jumped close to 9% after the company said it was launching a cloud business and expected to sell on excess computing power. The news helped to lift Microsoft and Apple by 3% and 2%, respectively. Once again, money raised from selling tech winners was put back to work in overlooked value stocks, including ‘Mag 7’ constituents, which have sold off heavily over the past month.

So, while the NASDAQ 100 dropped 1.5%, the Dow ended Wednesday little changed. This provided further evidence that the bull market was broadening out, and therefore a sign of a healthy market. Yet questions remain, as every time markets push higher, risk increases too. This is particularly the case when there’s significant leverage in the market, as there is now.

Source: TN Trader

Analysts expect today’s official Non-Farm Payroll report to show job gains of around 110,000 in June. If so, this will be significantly below last month’s reading of 172,000. The general feeling is that a stronger number will support the view that the US Federal Reserve will raise interest rates this year.

Bond yields have risen quite sharply, with the yield on the key 10-year Treasury Note up 12 basis points over the past week. The CME’s FedWatch Tool suggests that there’s an 83% probability of at least one 25-basis point rate hike before the end of this year, with a 50% chance of the first hike coming in September.

Yesterday, Fed Chair Kevin Warsh spoke at the European Central Bank Forum in Sintra, Portugal. As anticipated, he gave little away about what to expect from the Fed. But, once again, he noted that inflation was too high, although he was encouraged by the recent easing of inflation expectations.

Despite this, the last PCE inflation update showed Core rising by 3.4% year-on-year, with Headline at 4.1%, more than double the Fed’s 2% target. Two weeks ago, Mr Warsh made it clear that inflation, rather than the labour market, was the Fed’s prime concern. That suggests that investors should be more concerned about a strong payroll update today, as that will boost the probabilities of aggressive Fed rate hikes, rather than the number coming in below expectations.

European stock indices were relatively resilient this morning, despite weakness across Asian and US technology shares. This is an indication of the difference between the three geographic areas. Tech is strongly represented in the US, and some Asian-Pacific indices (looking at you, Kospi), yet it makes up a relatively small contribution to European and UK indices. 

Source: TN Trader

Despite this, investor sentiment was relatively cautious following comments from central bank leaders at the European Central Bank’s (ECB) forum in Sintra, Portugal. ECB President Christine Lagarde and Federal Reserve Chair Kevin Warsh warned about existing inflation risks, saying that expectations for easier monetary policy may be premature.

In contrast, Bank of England Governor Andrew Bailey didn’t mince his words when he said that rate cuts this year were "off the table". He also noted that central bankers were monitoring issues with an uncertain risk profile, which had the potential to trigger financial instability.

He noted that this included a marked increase in leverage in bond and equity markets over the last few months. That should be a concern for everyone. With many markets at or near all-time highs, while investors rush to buy every dip with leveraged funds, the stage is set for a panic should there be even a relatively minor correction.

The US dollar fell sharply overnight. Yesterday, the cash Dollar Index got up to 101.30. But it ran into a wall of sellers in the Asian-Pacific session, which drove it back below 101.00 to retest support around 100.70.

Just over a week ago, it hit a thirteen-month high above 101.50, having barged its way through resistance at 100.00 earlier in the month. So, it’s probably no surprise that it is giving back some of those gains now. It is worth noting that the Japanese yen has been the biggest beneficiary of the weaker dollar.

This week, the USD/JPY hit its highest level in forty years, increasing speculation that Japan’s Ministry of Finance would once again intervene to support its currency. There have been suggestions that the Ministry may hold off from buying yen until tomorrow, when US FX traders will be enjoying their Independence Day holiday.

This, it was thought, would give Japanese finance ministers more bang for their buck, as a lack of liquidity would suggest they could push the yen up further with the same amount of funds in a thin market.

Today’s sharp drop in the USD/JPY looks as if traders have been buying yen to get ahead of such an intervention. Meanwhile, traders are also considering this afternoon’s Non-Farm Payroll release.

Source: TN Trader

Analysts forecast the US economy to have created around 110,000 jobs in June, down from 172,000 in May, while the unemployment rate is projected to remain steady at 4.3%. A stronger-than-expected jobs report would likely trigger fresh dollar buying, as it would increase the likelihood of future rate hikes from the Federal Reserve. This would be bad news for Japan, as it would also see the yen weaken.

Conversely, a weak payroll number could weigh on the dollar and provide some welcome relief for the Japanese yen. Whether this would be enough to stall intervention is unclear.

Gold has ground higher overnight after a volatile session yesterday. Wednesday saw gold break back below $4,000, hitting $3,960 in early European trade. But it then reversed direction and headed higher, topping $4,100 in early afternoon for the first time in a week. But it couldn’t hold above there and went on to pare its daily gains.

Gold’s rally was helped by a pullback in the US dollar, although it’s fair to say that there's some support beginning to build around $3,960 and all the way up to $4,000. Nevertheless, the dollar remains key for now, which means that today’s US Non-Farm Payroll report will be watched as closely by gold traders as FX ones.

Gold bulls will be hoping for a weak number, perhaps 100,000 or below, as this would (slightly) reduce the pressure on the Federal Reserve to raise rates aggressively this year. But if payrolls were to come in above, say, 130,000 (revisions excepted), then it’s likely that the dollar will strengthen on rate hike expectations, and this would weigh on the precious metal. If so, then the $3,960-$4,000 support band will come back into sharp relief.

Source: TN Trader

Silver has continued to grind higher ever since it dropped to within a few cents of $55.50 just over a week ago. This was its lowest level since the end of November, continuing a correction which has lasted five months now, and which has seen silver drop 54% from its record high of over $121 from the end of January.

Silver appears to be consolidating now, and this view is supported by its daily MACD, which has just started to curl higher off very oversold levels. While this could suggest that silver may recover from here, there’s always the danger that it takes another leg lower. There’s some support around $53, but then very little between there and $40 per ounce.

As with gold, silver is getting support from the recent drop in the US dollar. Consequently, traders will be keeping a very close eye on today’s Non-Farm Payroll release ahead of tomorrow’s US holiday.

Source: TN Trader

Crude oil drifted lower this morning, adding to yesterday’s sharp drop. Front-month (September) Brent came close to hitting $70 per barrel, a level last seen the day before the US and Israel launched their first attack on Iran.

Source: TN Trader

A ceasefire between the US and Iran, which includes a demand that Israel cease its war with Hezbollah in Lebanon, has been in place since April. Yet there have been numerous tit-for-tat attacks, the latest taking place last weekend. Despite this, traders have chosen to look through these issues and assume that hostilities are effectively over.

News that some shipping has transited the Strait of Hormuz has also helped to push oil prices down. Over the past six weeks or so, Brent crude has dropped around 30%. For all oil contracts, not just Brent, their respective daily MACDs are at extremely oversold levels. This has increased the possibility that oil may suddenly snap higher, so traders should exercise more caution than ever.

Despite this, with the oil price back to pre-war levels, traders are looking ahead to a market where demand growth continues to slow while production increases. Tehran’s control of the Strait of Hormuz has been a huge wake-up call to the market. Traders expect Gulf countries to spend more time and money developing alternative routes. 

Bitcoin pushed back above $60,000 on Thursday. The recovery came after it dropped below $58,000 in the early hours of yesterday’s trade, to hit its lowest level since September 2024. This was just six weeks before Donald Trump won his second term as president, ushering in the most crypto-friendly US administration in history.

Despite these overnight gains, sentiment still appears fragile. Bitcoin had a poor first half of 2026, dropping 30%, and contributing further to its losses since early October when it traded at an all-time high above $126,000.

Bullish traders will be hoping that $60,000 develops into a solid support area. If not, then a drop to $40,000 can’t be ruled out. But bitcoin is struggling to deal with a background of rising real interest rates, as measured by bond yields minus inflation expectations.

The bulls have also been hurt by the news that Strategy, the original bitcoin treasury company, was selling bitcoin, something that company founder, Michael Saylor, said would never happen.

Markets are entering a critical period with the June Nonfarm Payrolls report set to dominate attention ahead of the US Independence Day holiday on Friday.

Weekly Jobless Claims and payroll data will provide fresh insight into labour market conditions and could significantly influence expectations for Federal Reserve policy. Consensus forecasts point to approximately 110,000 new jobs and an unemployment rate of 4.3%.

Technology stocks remain in focus after the sharp semiconductor selloff, creating uncertainty for broader equity markets heading into the long weekend. At the same time, investors continue to monitor developments surrounding US-Iran negotiations, currency movements in Japan and ongoing geopolitical risks.

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