Japan’s Nikkei recovers

US stock indices closed Thursday with gains across the board. The small cap Russell 2000 led the advance, ending up 1.3% to make back most of the previous day’s losses. The Dow added 0.3%, while the S&P 500 and NASDAQ gained 0.6% and 0.9% respectively. After the close, chip giant Intel reported third-quarter sales that topped analyst estimates.

Source: TN Trader

The stock was up over 8% in early trade. This was the first set of quarterly results since the US government took a 10% stake in the firm. Due to the resulting accounting process, it wasn’t possible to release comparable earnings per share numbers.

Nevertheless, the news helped to lift stocks across the semiconductor sector, both fabricators and designers. Investor optimism was also boosted by news of another corporate partnership in the AI space.

Anthropic and Google inked a deal worth billions of dollars, which will see Google provide up to one million custom Tensor Processing Units, significantly boosting Anthropic’s computing capacity by 2026. Alphabet shares gained modestly in after-hours trading following the news.

There were also reports of worker layoffs. Applied Materials, which makes semiconductor manufacturing equipment, and electric vehicle maker Rivian, both announced job cuts of around 4% of their respective workforces.

Retail giant Target announced an 8% reduction in its corporate workforce, its first major layoff in a decade. These announcements are exacerbating concerns over the US labour market. The Federal Reserve has made it clear that it is far more worried about the labour market than it is about inflation, the other half of its dual mandate.

This followed the recent release of a series of dismal Non-Farm Payroll reports. With the government in shutdown since the beginning of this month, a string of other important job numbers, including September’s Payroll report, have been missing.

This comes as the Fed’s FOMC prepares for next week’s monetary policy meeting, when it is expected to cut rates by 25 basis points. Given the latest news on layoffs, some analysts may be wondering if the central bank should go for a bigger cut, if not this month, then maybe in December.

At least the Fed will get a look at the latest inflation data as the delayed CPI is released later today. But given the central bank’s switch of emphasis to jobs, this may not have a significant impact on rate cut expectations.

Stock index futures were firmer in early trade. The move took the NASDAQ 100 to a fresh all-time high, while the S&P 500 hovered just below its own record from two weeks ago. The ongoing bull run feels relentless. Even though there have been some hefty selloffs so far this month, traders have reacted to these just the same as they have since this rally began three years ago.

They have held their noses and bought the dip. This will work until it doesn’t. But so far, investors have taken both good news and bad news as market positive. President Trump may threaten tariffs, but experience shows that he’s always prepared to de-escalate.

The labour market may be weakening, but so what? Corporations are simply cutting costs and getting leaner. And if the worst comes to the worst, the Fed stands by, ready to ease monetary policy.

European stock indices had another mixed start to the day. It felt as if investors wanted to flatten their long positions as the weekend approached, and there was an initial downside bias. But strength across US stock index futures offset that negative view to some extent. This morning saw the release of Flash Manufacturing and Services PMIs from across the region.

A jump in German Services was a feature, and, despite a sharp drop in French Services, the numbers for the Eurozone overall were encouraging. Eurozone Services expansion picked up, while Manufacturing is no longer contracting. The UK’s numbers, particularly the large jump in Manufacturing, were also positive.

Source: TN Trader

The European Union announced new coordinated sanctions with the US targeting Russia, signalling a rare moment of alignment in what has been a difficult year for Euro/US relations.

Forex markets were relatively quiet again overnight as traders sat on their hands ahead of this afternoon’s US CPI release, delayed from 15th October. This update does have the capacity to boost FX volatility, particularly as it will be the first official US government release since the shutdown began at the beginning of this month.

Headline CPI, which includes food and energy, is expected to rise to 3.1% year-on-year from 2.9% previously. Core CPI is forecast to come in unchanged from last month at 3.1%. Both will therefore remain well above the Fed’s 2% inflation target. Yet the US central bank has made it clear that it is more concerned about a weakening labour market than inflation.

Consequently, the CPI would have to come in way above expectations to have any impact on the Fed’s interest rate decision next week. According to the CME’s FedWatch Tool, the probability of a 25-basis point rate cut is 98.9%. The Dollar Index continues to hover below 99.00, a level which has acted as resistance throughout this month.

Source: TN Trader

Aside from this, the Canadian dollar sold off after President Trump called off trade talks. This followed the broadcast of a ‘misleading’ advert produced by the Canadian province of Ontario, which showed footage of former US President Ronald Reagan criticising tariffs.

Meanwhile, the Japanese yen came under further selling pressure as Japan’s National CPI ticked up towards 3%. The USD/JPY is now closing in on highs seen earlier this month around 153.00, soon after Sanae Takaichi’s unexpected win to become leader of Japan’s ruling LPD party. She has just become the country’s first female Prime Minister.

Precious metals extended their retreat this morning. Gold pulled back towards $4,050, having traded at an all-time high of $4,381 at the beginning of this week. Despite this, there are some signs that it may be trying to consolidate.

Yesterday, prices steadied, having fallen to within a few dollars of $4,000. But the situation is far from clear. The daily MACD has dropped from the severely overbought conditions seen on Monday, but remains elevated. This leaves the door open for another test of support around $4,000.

Source: TN Trader

Yet there’s still an opportunity for buyers to increase their exposure at better prices than were available over the past week. With the weekend approaching, along with today’s CPI release, it’s difficult to second-guess what traders will want to do. Some may want to flatten their exposure ahead of the weekend. But no doubt many will wait to see how the dollar reacts to today’s delayed inflation update.  

Silver was also down this morning, giving back all of yesterday’s relatively modest gains and more. Silver has had an even more dramatic selloff from recent record highs than gold. Its high-to-low pullback notched up a 13% loss.

Taking the accepted definition of a correction as a 10%-plus fall from recent highs, then it’s right to say that silver has corrected. But that doesn’t sound like the ‘all clear’ for the metal, and there could easily be more of a drop to come.

Despite this, silver is showing some early signs of consolidating, with prices managing to hold above $48 per ounce. The longer it can maintain this position, the more the daily MACD will be able to pull back and reset at more neutral levels.

If this is the case, then silver may be able to find a base from which it can attempt another rally. But if support fails, and buying pressure builds, the more likely it is that silver tests sturdier support at lower levels.

Source: TN Trader

Oil prices steadied this morning with front-month WTI trading just south of $62 per barrel. A look at the hourly chart shows clearly that this level has become a significant area of resistance. WTI has repeatedly tried, and failed, to break above here since midday yesterday. Crude prices have surged higher this week.

On Monday, front month WTI briefly traded below $56 to trade at its lowest level since early May. It looked as if it was about to retest the double bottom at $55 made back in the Spring. Certainly, it wasn’t getting any favours from the fundamentals. These repeatedly showed a market with a glut of supply, which was drowning out existing demand.

Source: TN Trader

Multiple agencies have been forecasting an ongoing slowdown in global demand growth. Then prices got a lift following confirmation from the US Department of Energy that it would purchase one million barrels for delivery to the Strategic Petroleum Reserve, a move made possible by lower prices.

The advance was also helped along after the latest weekly update from the American Petroleum Institute (API) showed a decline in US inventories. Taken together, this was just the kind of catalyst needed to trigger a wave of short covering. But the real damage to the shorts came after the Trump administration imposed new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil.

The administration cited Russia’s ‘lack of commitment’ to ending its war with Ukraine. The US is also pushing India to stop buying Russian oil. It has slapped a 50% tariff on US imports of Indian goods. But this could drop to around 15% should India comply with President Trump’s request. India is working towards weaning itself off Russian supply.

Natural gas prices were little changed in early trade this morning, with prices holding comfortably within their recent range. Yet looking at the wider picture, the market continues to react to the sharp rally which began this time last week.

Prices jumped on expectations of colder temperatures leading to higher demand for gas. That rally has lost some upside momentum since the middle of the week, but prices appear to be consolidating. For now, the gas market sits in a state of balance — steady, but without clear momentum in either direction.

Bitcoin and Ether rallied overnight. The move reflected renewed buying interest following several subdued sessions earlier in the week. Traders appeared to re-engage with digital assets as stock market volatility eased and appetite for higher-risk instruments returned. The sector continues to mirror shifts in broader market tone, moving higher when sentiment improves, and retracing when caution dominates.

The Volatility Index (VIX) drifted lower yesterday as the S&P 500 rallied and closed in on all-time highs. After sharp fluctuations earlier in the month, volatility has now stabilised, suggesting traders are positioning for measured rather than aggressive moves ahead of key economic data.

The subdued reading reflected a market that, despite anticipation of Friday’s CPI release, remains confident that any surprise will likely be contained within manageable bounds. For now, complacency seems to rule, with the VIX hovering near its monthly lows, an indication of calm even as major catalysts approach.

Looking ahead, US stock index futures continue to point to a firmer open, helped by optimism surrounding next week’s scheduled meeting between President Trump and China’s President Xi. Meanwhile, gold and silver are consolidating near recent lows. Traders now turn to the long-awaited CPI report for clues on inflation and interest rates.