Asian Pacific stock indices fall

S&P 500 and Nasdaq extend records

US equity markets ended Thursday mixed as the major indexes diverged. The Dow Jones Industrial Average lost 0.7% as profit-taking and sector rotation took hold, particularly in industrials and tariff-sensitive names. In contrast, the S&P 500 edged up 0.1%, while the Nasdaq Composite rose 0.2%, both setting new all-time intraday and closing highs.

The performance marked the S&P 500’s 13th record close of the year, with four of those records notched just this week. The Nasdaq Composite continued its impressive streak, logging its third record close in a week after breaking above the 21,000 level on Wednesday. 

Tech stocks' gains were supported by the glowing outlook for AI and optimism around earnings, even as the broader market showed signs of fatigue.

Looking ahead to Friday, US stock index futures point to a mildly positive start. While enthusiasm surrounding corporate earnings continues to lend support, investors are keeping a close eye on global trade tensions, particularly in light of profit warnings tied to US tariffs, such as that from auto giant Volkswagen.

Source: TN Trader

With equity benchmarks hovering at, or near, record territory and tariff-related headlines swirling, the tone heading into the week's final session is one of cautious optimism. Investors continue to balance strong index-level performance against growing geopolitical and sector-specific headwinds.

Tariff tensions weigh on European markets

European stock indices were drifting lower in the last session of the week. The German DAX led the declines, closely followed by the UK’s FTSE 100. Much of the weakness is being driven by renewed concerns over US-EU trade relations, with investors reacting to warnings from key sectors, particularly autos.

Source: TN Trader

Volkswagen, Europe’s largest carmaker, released a downbeat earnings report. It blamed US tariffs for a 29% decline in second-quarter operating profit from the same period last year and also cut its full-year guidance, stoking further concerns about the long-term profitability of European exporters in the face of mounting tariff headwinds. 

The auto sector, which is particularly sensitive to trade developments, was driving the losses across the region. The ECB’s decision to hold rates at 2% yesterday did little to improve sentiment. 

The German Ifo Business Climate survey came in a touch lower than expected, and it looks as if investors are likely to stay cautious heading into the weekend.

UK Retail Sales rise

The economic data offered a modestly positive tone in the UK, though short of expectations. Retail Sales rose by 0.9% in June, a notable rebound from May’s sharp 2.7% decline, but still fell short of the forecasted 1.2% gain. This was yet another piece of disappointing UK data. 

While Retail Sales have bounced back from last month’s dismal reading, the recovery was weaker than hoped. Sterling fell on the news as the numbers boosted the argument that the Bank of England should cut interest rates further. Unfortunately, despite a steady stream of weak economic data, inflation looks far too high for the Bank to justify easing monetary policy.

US dollar makes gains

In early trade on Friday, the US dollar was firmer against all the other majors. The Dollar Index pushed back above the key 97.00 level, building on yesterday’s gains. 

The dollar has drawn some support from steady US Treasury yields, a decent start to the US earnings season, and increased clarity around tariffs, thanks to the trade deals announced this week.

Gold retreats as risk sentiment improves

Gold fell again this morning and continues to pull back from Wednesday’s five-week high amid waning demand for safe-haven assets. As investor optimism picked up this week, thanks to increased clarity over trade tariffs with the US, demand for ‘safe haven’ assets has diminished. The uptick in the US dollar has also weighed on precious metals.

Source: TN Trader

Silver was also weaker in early trade, with prices pulling back below $39 per ounce. On Wednesday, it poked its head above $39.50, hitting its highest level since September 2011. 

Unlike gold, silver’s daily MACD suggests that prices are heading into overbought territory, which may provide a bit of a headwind for the bulls. This could be a sign that prices need to correct lower to help reset the MACD. But it’s worth remembering that a reset can come about through a period of sideways consolidation, just like gold. 

In addition, sometimes prices can continue to rally when overbought, just as they can fall further when oversold.

Source: TN Trader

Crude consolidates

Oil prices were a touch firmer in early trade heading into the weekend. This week’s US inventory data, which showed a larger-than-expected drawdown, has helped put a floor under prices, as has the recent optimism surrounding trade developments. 

Traders are also factoring in the possibility that improving trade dynamics, particularly between the US and Japan, could help sustain energy demand heading into the second half of the year. Despite this, the chart shows a market that continues to consolidate, with no clues as to short-term direction.

Source: TN Trader

Bitcoin retreats

Cryptocurrency markets experienced a bit of a cooling-off period. Bitcoin fell below $115,000 overnight, having broken above $120,000 on Wednesday. The pullback reflects profit-taking after recent gains. Other major cryptos are following suit and contributing to broader consolidation in the space.

While momentum had been strong in recent sessions, Friday’s softer tone highlights the volatility and sentiment-driven nature of the crypto market. Traders will be watching to see whether Bitcoin can re-establish upward momentum or if this marks the beginning of a deeper consolidation phase.

VIX contained

The VIX Index continued to drift downwards on Friday morning. The index, often seen as a gauge of investor anxiety, continues to indicate that investors anticipate a stable risk environment as the week draws to a close.

With the S&P 500 and Nasdaq at record highs, market participants appear comfortable maintaining, or even adding to, their equity exposure heading into the weekend. 

Still, upcoming data, including today’s US Durable Goods data and further earnings updates, could change the mood if results surprise to the downside. Overall, this week’s trade deals have provided some clarity over US tariffs. This, along with a fairly robust earnings season so far, is helping to calm investor concerns.

Market outlook

UK Retail Sales showed improvement but missed expectations, setting a cautious tone to start the European session. Eyes now turn to US Durable Goods data later this afternoon, which may offer fresh clues on the state of the US economy. 

Record highs have been hit across major US indexes as clarity improves over global trade. As the week draws to a close, markets are delicately balanced between optimism and caution.