European stock indices mixed

US stock indices were lower across the board by Thursday’s close, in a session marked by choppy price action and headline-driven swings. The S&P 500 lost 0.5%, while the Dow fell 0.3%. 

The NASDAQ was hit the hardest, closing down 0.8%, largely due to a 14% plunge in Tesla shares. This followed a very public spat between President Trump and Elon Musk. The fallout weighed heavily on sentiment in the tech space.

Source: TN Trader

Despite the weakness in large-cap indices, the small-cap Russell 2000 remains a bright spot, up 1.5% so far this week and on track for its eighth positive week out of the last nine. This is a signal that broader market breadth continues to hold up even as mega caps wobble.

Asian Pacific stock indices wrapped up the week with mixed results. Hong Kong’s Hang Seng fell 0.5%, continuing its recent soft tone. Japan’s Nikkei 225 bucked the trend, rising 0.5%, while Australia’s ASX 200 edged down 0.3%. The Shanghai Composite was effectively unchanged. 

Investors were relieved that a phone call between Presidents Trump and Xi Jinping appeared to go well. The call lasted 90 minutes, suggesting that both sides came away with something, thereby setting the stage for more substantive talks over the coming weeks. 

The Reserve Bank of India announced an unexpected 50 basis point rate cut, which helped boost the Nifty 50 by 1%.

FX saw increased volatility yesterday in sharp moves, which saw the US dollar on the back foot while the euro rallied. This came as ECB President Lagarde said that the central bank was coming to the end of monetary easing. These moves have effectively reversed this morning. The US dollar recovered overnight while the euro has pulled back.

Source: TN Trader

The Japanese yen has also lost ground. But it seems likely that traders will prove reluctant to add to their FX exposure until they get today’s US Non-Farm Payroll report out of the way.

Gold prices edged higher overnight, regaining some ground after Thursday’s sharp retreat. Gold has struggled to reclaim a foothold above $3,390, although it has found some recent support around $3,360 on a closing basis. Investors appear hesitant to add aggressively to positions ahead of today’s data.

Source: TN Trader

Meanwhile, silver continues to outperform. It pushed further above the $36 level overnight, although it pulled back from its highs early in the European session.

Source: TN Trader

Crude oil saw little overnight movement. Front-month WTI continued to bump up against resistance just south of $63.50 per barrel. This level has held throughout this week, while $60 has held as support for the last four weeks. 

Downside pressure came from concerns about weakening demand, especially as supply-side headlines point to increased pumping by Saudi Arabia.

Natural Gas has also been rangebound. The front-month contract has traded broadly between 3.50 and 3.80 for the past three weeks. This morning it was retesting the top end of the range after prices edged higher.

The current level marks a critical test - a breakout higher could spark fresh momentum, while failure to breach the ceiling may prompt a reversal back toward the lower end of the range.

Cryptocurrency markets staged a strong recovery overnight following a significant risk-off pullback which began yesterday afternoon. Bitcoin dropped below recent support but bounced as it approached $100,000.

Ether also slumped through a band of support that had built over the past month. While it has recovered some ground overnight, it was trading below the key $2,500 level in early European trade on Friday. The overall tone remains cautious ahead of the US payroll data.

The CBOE Volatility Index (VIX) was a touch weaker in early trade on Friday, giving back some of yesterday’s gains. Stock market volatility continues to hold steady at slightly elevated levels. 

The VIX is yet another market which appears to be consolidating, having pulled back from the highly elevated levels hit two months ago. But it has edged higher over the past month, indicating heightened worries amongst investors as they battle with the market implications of trade tariffs and budget deficits. 

All eyes now turn to today’s US Non-Farm Payroll release. Consensus expectations sit at 125,000, following a string of mixed data earlier in the week: strong JOLTS openings, weak ADP hiring, and a rise in weekly jobless claims.

The outcome of today’s report is expected to play a key role in shaping expectations for the Fed’s next move - and could set the tone for markets heading into next week.

While geopolitical tensions continue to swirl, notably the divergent impacts of the Trump-Xi call and the Trump–Musk clash, risk markets remain relatively constructive. US stock index futures were pointing higher in early trade, suggesting that traders are cautiously optimistic heading into the jobs data.