Asian Pacific equities rally

US stock indices made broad-based gains yesterday, led by the small-cap, domestically focused Russell 2000 and the tech-heavy NASDAQ, which closed up 1.2% and 1.0%, respectively. 

The Dow and S&P 500 weren’t far behind, with both indices adding 0.8% for the session. The rally helped undo much of Monday’s damage, where fears over AI-driven disruption and tariff uncertainty led to a steep selloff as investors derisked.

Source: TN Trader

Software and cybersecurity stocks staged a relief rally yesterday after Anthropic launched new connectors for its Claude Cowork platform. This helped to reduce fears that the tool could be used to disrupt and displace existing software providers. Instead, it pointed to a more collaborative approach, which could streamline operations and reduce inefficiencies.

In addition, cybersecurity CEOs have insisted that Anthropic’s Claude Code Security, which was released last week, cannot replace their existing products, although it may complement them. In other news, Advanced Micro Devices finished close to 9% higher after Meta Platforms announced a multi-year partnership.

Last night, AI-powered workplace platform Workday fell around 10% on a slight revenue miss, together with some relatively downbeat forward guidance. This saw the stock trade at its lowest level in close to six years. Investor focus is likely to stay on tech and AI today, as NVIDIA reports after tonight’s close, as do Salesforce and Snowflake. Nvidia’s stock has rebounded recently.

Overnight, it retested resistance around the $195 region to trade at highs last seen in November. Tonight’s results will focus initially on revenues and earnings. In prior quarters, Nvidia has often surprised investors with bullish forward guidance, and if there’s good news here, then that should underpin the share price.

But data centre revenue, chip demand and hyperscale cloud spending are all important elements, while competition (another recent issue) and margins will also be poured over by analysts.

Meanwhile, all the US majors remain rangebound for now. The big question is whether the bulls can grab back the reins and drive equities to new all-time highs, or whether the top is in and the bears take control.

Traders are looking for a catalyst for the next big move. Could that come from NVIDIA’s earnings report? That seems unlikely given that the biggest uncertainty is whether the US is going to go to war with Iran.

European stock indices were firmer across the board on Wednesday. Investors responded to yesterday’s bounce-back across Wall Street, together with firmer US stock index futures this morning.

Adding to the positive sentiment was a good set of results from banking giant HSBC, plus the added bonus that President Trump’s worldwide tariff came in at 10%, rather than the 15% threatened over the weekend. This morning’s gains saw the Euro Stoxx 50, French CAC and the UK’s FTSE 100 all push to fresh all-time intra-day highs.

Source: TN Trader

The Spanish IBEX was also within a few points of its own record high from Monday, while the German DAX continues to drag its feet somewhat. The German GfK Consumer Climate survey indicated that respondents remain pessimistic over the economic outlook.

Meanwhile, investors digested President Trump’s State of the Union address, where he reiterated his belief that tariffs could eventually replace income tax. This should continue to contribute to ongoing concerns over trade.

The US dollar was mixed this morning when measured against other majors, but the Dollar Index managed to make back all its losses from yesterday. The cash Dollar Index appears to be quite well supported above 97.00, but there’s little evidence that it is close to breaking back above 98.00 for now.

Several FOMC members delivered speeches yesterday, with Susan Collins and Thomas Barkin both sounding relatively hawkish. Most noticeably, Raphael Bostic, who is stepping down from his role as President at the Atlanta Fed, argued that a rate hike may be warranted, rather than a further cut.

He pointed out the resilience of the US economy, despite last year’s tariff turmoil, while adding that AI should provide a significant economic tailwind. He also noted that inflation remains well above the Fed’s 2% target, and there was a danger that it could once again turn higher.

The Japanese yen was weaker across the board this morning. This follows comments from former Governor at the Bank of Japan, Haruhiko Kuroda, who questioned the wisdom of Prime Minister Sanae Takaichi’s tax and spending plans, while saying that interest rates should rise to take account of increased inflation.

Source: TN Trader

Gold was a touch firmer this morning, but only managed to make back a modest chunk of Tuesday’s losses. On Monday, gold rallied to $5,250 to trade at its best level since the end of January. But it gave back all these gains, and more, yesterday as it fell back below $5,200 once again.

Source: TN Trader

Geopolitical tensions and uncertainty over tariffs and trade were the triggers for Monday’s rally. It was also helped along by the US dollar, which has struggled to make significant gains recently versus the other majors. Demand for safe-haven assets has been boosted by the failure of the US and Iran to reach an agreement over curbing the latter’s nuclear ambitions.

Both sides are expected to meet for their third round of talks in Geneva this week amid a buildup of American forces in the region. However, a broadly positive tone across equity markets limited aggressive upside, keeping price action choppy rather than directional heading into the European half-way stage.

Silver has experienced another bout of elevated volatility over the last few sessions. Earlier this morning, it topped $91 per ounce to hit its highest level in three weeks. It subsequently pulled back, although the daily MACD continues to curl upwards off oversold levels.

Source: TN Trader

This is no guarantee that prices will head higher, as silver remains vulnerable to pullbacks given that it continues to trade at elevated levels, certainly when compared to where it was just three months ago. There appears to be a modest area of support building around $85. But a protracted break below $83 could be a sign that silver could be ready to pull back further.

Crude oil, as with the dollar and US stock indices, appears to be undecided about where it goes next. Just under a week ago, front-month WTI broke and held above $66 for the first time since last summer. But it repeatedly failed to push up beyond $67 as it ran into a long-term line of resistance. This has been building ever since crude oil hit the highs, which came soon after Russia’s second invasion of Ukraine four years ago.

WTI dipped back below $66 this morning, and time will tell if this is a touch of consolidation ahead of another attempt to rally and take out overhead resistance, or a precursor to the continuation of the four-year downtrend.

Source: TN Trader

Oil prices contain a premium said to be anything between $7 and $10 due to ongoing US–Iran tensions. Both sides are expected to hold a third set of meetings in Geneva this week to reach an accommodation over Iran’s nuclear ambitions. If these prove successful, then that premium could quickly evaporate.

If unsuccessful, then this premium may prove woefully inadequate, should Iran go ‘all in’ and target crude oil supply routes. In the meantime, data released last night from the American Petroleum Institute showed a significant build in US crude inventories.

Bitcoin rebounded modestly after recent selling pressure. This morning, it traded above $66,000, having broken below $63,000 yesterday afternoon. Bitcoin is attempting to rally, having approached significant support around $60,000 earlier this month. The daily MACD has turned up from oversold levels. But there’s little to suggest that any upside momentum has returned.

A sustained break below $62,000 would once again expose the psychological $60,000 level. A significant break below here could trigger a bout of panic selling and open up the risk of a deeper pullback. Conversely, a push above $70,000 would reinvigorate bullishness and suggest some short-term recovery potential, though liquidity conditions remain fragile.

The VIX remained just above 20, signalling persistent caution despite the rebound in equities. While volatility has not spiked meaningfully, markets continue to price in headline risk around trade policy, geopolitics, and earnings.

Nvidia earnings dominate the agenda. US stock index futures pushed higher after President Trump’s lengthy State of the Union address. Precious metals continue to shine, silver in particular, while the US dollar consolidates. It remains a two-way market. For now, bulls have regained some footing, but conviction remains thin, and headlines continue to dictate the next move.