ASML’s guidance upsets Europe

US stock index futures struggled for direction in early trade this morning. Yesterday, the US majors were generally weaker, with the Dow, S&P 500, and Russell 2000 losing 1.0%, 0.4%, and 2.0%, respectively.

In contrast, the NASDAQ Composite eked out a modest 0.2% gain, which took it to a fresh record closing high. The outperformance came courtesy of Nvidia, which rallied 4% after signalling it may resume sales of its H20 AI chip to China “soon.” Other chipmakers also made notable gains, and these moves helped lift tech broadly.

Source: TN Trader

Elsewhere, however, the bears had the upper hand. The June CPI report showed a 0.3% monthly gain, which aligned with forecasts.

But the year-on-year Headline CPI reading came in at 2.7% which was at the upper end of analysts’ forecasts. It was also a significant increase from the prior reading of 2.4%. Core CPI was a touch above May’s reading, but a tad below expectations. This helped to offset investor concerns.

However, looking into the underlying data, it was apparent that tariffs were not to blame for the inflation uptick. Instead, it was the services side of the US economy that saw the biggest cost increases. That would suggest that tariffs could add even more to inflation, making the Federal Reserve less likely to cut interest rates further, thereby stoking President Trump’s anger as he continues to express his ire at Fed Chair Jerome Powell. 

Asian Pacific stock indices were fairly subdued overnight in a session marked by low volume and limited conviction. Australia’s ASX 200 came under downside pressure, ending down 0.8%. Investors were net sellers as they considered the uncertainty around the outlook for global growth and what that may mean for commodities in general. Japan’s Nikkei 225 and Hong Kong’s Hang Seng both closed up 0.1%, while the Shanghai Composite dropped 0.2%.

Forex markets were largely rangebound this morning, but sterling stood out after another upside surprise in UK inflation data. Headline CPI, which includes food and energy, rose 3.6% year-on-year, which was above both expectations and last month’s reading of 3.4%.

Obviously, this remains way above the Bank of England’s 2% inflation target. But what may be of more concern is that Headline CPI has been trending upwards since last October. This is a problem for the Bank as stubbornly high inflation makes it much harder for them to cut rates, even as the UK’s economic growth is virtually non-existent. Some analysts now expect only two rate cuts this year, with a cut next month dropping in probability.

Source: TN Trader

The US dollar was little changed this morning. The Dollar Index hovered around 98.00, consolidating after its recent rally off multi-year lows. The dollar was supported by the stronger-than-expected US CPI update yesterday. Traders now await today’s PPI release for an update into US wholesale inflation.

Precious metals built on recent gains overnight, with both gold and silver edging higher in early trade. Gold was supported by lingering inflation concerns and cautious sentiment following Tuesday’s CPI release. But prices stalled before clearing any key technical levels. The daily MACD continues to move sideways along the neutral zone, so offering few clues to the likely direction of gold’s next move.

Source: TN Trader

Silver followed a similar trajectory. After a sharp spike on Monday morning that briefly took it above $39 per ounce, some profit-taking crept in to keep prices in check. The lack of follow-through has left silver bulls frustrated, especially as broader risk assets remain well bid. Both metals are now stuck in relatively well-defined ranges, awaiting a clearer catalyst to break out.

Source: TN Trader

Crude oil drifted lower on Wednesday, pulling back further after a sharp sell-off at the beginning of the week. Yesterday, crude ended little changed. Prices continue to trade sideways, broadly consolidating ever since they spiked higher, and then reversed sharply, following US airstrikes on Iran’s nuclear facilities and the sudden ceasefire.

Aside from geopolitics, there has been an uptick in investor optimism around demand. This was helped by comments from OPEC earlier this week suggesting a stronger second half for energy consumption. However, traders remain cautious ahead of today’s latest US inventory report from the Energy Information Administration (EIA), which could offer some insight into short-term supply trends.

Crude has also found support as attention turned to reports of increased demand as the US driving season continues.

Source: TN Trader

Natural Gas prices ticked higher again in early trade, continuing the mild rebound seen over the past few sessions. While the move keeps prices comfortably mid-range, there’s been little appetite to push beyond the wide 3-4 btu channel that’s defined recent trading.

Volatility has eased somewhat, but uncertainty remains over demand and weather patterns that could quickly shift sentiment. Despite the bounce, the market continues to lack strong conviction, with most traders opting to play the range until a more decisive fundamental trigger emerges.

Cryptocurrencies built on their recent strength overnight. Ether led the charge as it pushed back above $3,150 to trade at highs last seen in early February. Bitcoin’s volatility has certainly picked up of late. Having surged to a fresh all-time high above $123,000 on Monday, yesterday it tumbled back to hit $116,000. But it has steadied overnight, trading around $119,000 in the European session.

The market received a boost after President Trump indicated that crypto-related legislation - previously stalled - now appears to have the votes needed to advance. That news has helped sentiment recover, though traders remain cautious, watching for both political developments and price confirmation at key technical levels.

Looking ahead, all eyes are on the Producer Price Index (PPI), the next major US inflation read following Tuesday’s CPI. If today’s data echoes yesterday’s strength, it could reignite concerns that inflation remains too sticky for the Fed’s comfort, potentially influencing rate expectations going into the August break.

In addition to inflation data, there are also speeches from several Federal Reserve members along with the release of the Beige Book.

Earnings also remain a focal point, with Goldman Sachs, Morgan Stanley, Bank of America and Johnson & Johnson among today’s headline names. After a mixed start to earnings season, Goldman’s report, as a key Dow component and barometer for financials, may contribute to setting the tone for broader risk sentiment.

The bears took the lead on Tuesday, dragging the broader market lower despite the NASDAQ’s narrow record close. A hot CPI print and tariff concerns removed the “buy-the-dip” safety net, at least temporarily.

Today’s PPI release will be key for confirming inflation trends. Watch Goldman Sachs’s earnings, as they could shape broader financial sector sentiment.

Crypto, meanwhile, is bubbling away and could become a bigger part of the narrative if technical levels give way.