Asian-Pacific markets recover

US stock index futures were sharply higher in early trade this morning. Semiconductor stocks, led by Micron Tech, Marvell, SMC and AMD, continued their rebound. This helped to lift the iShares Semiconductor ETF (SOXX) by over 4% following a 0.5% gain yesterday.

Source: TN Trader

All suffered from a sharp uptick in volatility at the end of last week as investors started to worry about how they may perform during the earnings season. Last week brought results from ASML, TSMC and IBM.

The latter brought forward their announcement from this week and issued a profits warning, which wiped 25% off its share price in a single day. The former two non-US AI-related companies provided solid results and upbeat forward guidance. This was met with complete indifference from investors, making one wonder just how good results will have to be to trigger a strong, positive market reaction.

Another market-related development which was met with a shrug was the 50% tariff that President Trump has just slapped on Canadian goods. This could come into effect within 30 days, although the investor reaction suggests that no one really believes it will happen.

Meanwhile, SpaceX dropped below $120 yesterday to hit its lowest price since its IPO at $135 five weeks ago. US Treasury yields were also higher, which means that investors have an interesting choice between high-risk growth stocks or guaranteed income of close to 4.6% for ten years, and over 5% for 30.

Meanwhile, the US military completed its tenth consecutive night of strikes against Iran after President Donald Trump declared the previous ceasefire agreement over. Iran has continued retaliatory attacks across the region and has, despite anything the Trump administration may say, effectively closed the Strait of Hormuz once again.

On top of that, Yemeni Houthis have declared a maritime embargo on Saudi Arabia. The Houthis also said that they may disrupt the Bab al-Mandab Strait, which connects the Red Sea to the Gulf of Aden, thereby blocking millions of barrels of oil from Saudi Arabia.

All this has boosted the oil price once again after it dropped yesterday on reports that US/Iranian negotiations can still proceed despite the continued hostilities. The second quarter earnings season cracks on.

Today sees reports from General Motors, 3M and Halliburton, amongst others. But tomorrow could provide more of an insight into AI infrastructure spending plans when Alphabet reports after the close. Investors are also keen to hear if corporate executives are becoming more cautious about economic conditions during the second half of the year.

European stock indices were modestly higher across the board this morning. Investors kept a close eye on US stock index futures as a rebound in semiconductor and AI-adjacent stocks helped to lift all the majors. They were also balancing the risks of a serious energy supply disruption against hopes that further diplomacy may prevail as the US and Iran continue their relatively low-level attacks on each other.

Despite these tit-for-tat military actions being low-level, they have led to fatalities, and the obvious danger is that they escalate further. Yemen’s Houthis announced a new maritime blockade targeting Saudi Arabia. The move raises concerns about shipping disruptions through key trade routes and introduces additional uncertainty into global energy markets.

Earlier today, Swiss pharmaceutical giant Novartis reported second-quarter sales that exceeded expectations. The stock rose 3% following the news. Meanwhile, there was a strong recovery in both the German and Eurozone ZEW Economic Sentiment surveys. This follows a collapse in confidence after the US and Israel attacked Iran at the end of February.

Andy Burnham is officially the UK's Prime Minister, and to welcome his arrival, this morning's UK labour statistics came in better than anticipated, as did Public Sector Net Borrowing.

Source: TN Trader

There was relatively little movement across global Forex for a second successive morning. The US dollar was mixed against the majors, but moves were modest. The cash Dollar Index remains well north of last week's low when it dropped towards 100.00 following softer-than-forecast inflation numbers.

In fact, it continues to find support around 100.30-100.50, boosted by ongoing geopolitical uncertainty and expectations that the Federal Reserve may need to keep monetary policy restrictive for longer.

Meanwhile, the Japanese yen remained relatively stable against the US dollar. Investors assessed conflicting signals from geopolitical developments and monetary policy expectations. But the USD/JPY continues to trade at elevated levels, and the yen carry-trade carries on. The pair has hovered below 163.00 since the end of last month and remains close to a forty-year high.

Source: TN Trader

The Japanese authorities are known to be unhappy about this, warning on several occasions that they stand ready to intervene to support the yen. But the abject failure of their last intervention back in April may be holding them back. Yet traders should remain on guard as an unexpected intervention has dramatic effects which ripple out over many markets, not just FX.

Gold spent most of yesterday's session trading above $4,000 per ounce. Last Thursday afternoon, it crashed below there and went on to break briefly below $3,960 on Friday afternoon. In the early hours of this morning, it retested $4,000 as support and then took off to the upside, breaking above $4,080 as Europe opened.

There was no particular trigger for the reversal. The US dollar was flat overnight and stuck in a narrow trading range. Instead, it looks as if gold's resilience as it repeatedly held support just south of $4,000 was enough to bring the buyers back, while short sellers simply melted away. The next question: Is this rally sustainable? Gold has some big levels to break on the upside, with $4,200 an obvious and significant resistance level.

As things stand, the daily MACD looks a bit tired, suggesting that there's not much upside momentum. So, it could be that prices consolidate for a bit now, which could help improve the picture for the bulls. But if prices did retreat to $4,000 once again, that would really weigh on bullish sentiment.

Source: TN Trader

Silver posted strong gains on Tuesday, jumping over 4% to trade above $59 per ounce. Like gold, there wasn't an identifiable trigger for the move. Instead, it looks as if some pent-up buying returned after five and a half months of downside corrections.

At the end of last week, silver dropped below $55 per ounce to hit its lowest level since the end of November last year. Will that prove to be silver's cycle low, or will it once again break down in price? Today's rally may have taken out a fair number of short sellers.

Meanwhile, the daily MACD remains in negative territory, although it is nowhere near as oversold as it was at the end of June. This all looks quite positive from a bullish perspective. But silver has a long history of putting in strong counter-cycle moves. So, it may need watching over the next few days to get a better idea of what its next big move may be.

Source: TN Trader

Crude oil prices rallied this morning, making back all its losses from Monday. Yesterday, Esmail Baghaei, spokesman for Iran's foreign ministry, said that negotiations between the US and Tehran could take place despite ongoing hostilities. Then it was reported that mediators had proposed a 10-day ceasefire to Iranian officials, with the aim of ending the war for good.

The news saw oil drop sharply. But it has rebounded this morning on concerns of further supply disruptions. This follows news that Houthis in Yemen have initiated a maritime blockade targeting Saudi Arabia.

Source: TN Trader

There is also talk that the Houthis may attack shipping passing through the Bab al-Mandeb Strait, a key route linking the Red Sea and the Gulf of Aden. If so, this could block millions of barrels of Saudi Arabian oil exports, which, together with the ongoing blockade of shipping through the Strait of Hormuz, could create serious supply shortages, particularly for countries across the Asia-Pacific region.

Bitcoin finally managed to break above the resistance which was forming around $65,000. Overnight, it broke above here and went on to hit levels last seen just over a month ago. The move was supported by renewed institutional demand, with spot bitcoin exchange-traded funds recording two consecutive weeks of net inflows.

Bitcoin began this month trading at lows last seen in September 2024. But it has made steady upside progress so far in July, shrugging off the escalation in hostilities between the US and Iran, and largely ignoring the volatility currently affecting semiconductors and other AI-adjacent stocks. $70,000 is the next big upside target, while the bulls will be hoping that $65,000 now holds as support on any pullback.

Markets remain caught between improving risk sentiment and persistent geopolitical uncertainty. Precious metals are attracting renewed interest, and Asian-Pacific tech stocks have staged a meaningful rebound. However, investors remain highly sensitive to developments in the Middle East and any signs that energy supply disruptions could worsen.

Corporate earnings are likely to be the primary market driver over the coming days. Results from Alphabet, Tesla and Intel will provide important insights into the health of the technology sector and the sustainability of AI-related spending.

At the same time, traders will continue monitoring diplomatic efforts between Washington and Tehran, developments in global shipping routes, and upcoming economic data releases that could influence interest rate expectations.

For now, markets appear willing to embrace cautious optimism, but volatility remains elevated, and confidence remains fragile.

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