Asia Pacific mixed

US stock index futures were a tad softer in early trade on Monday as investors prepare for a busy financial calendar. The Federal Reserve concludes its two-day monetary policy meeting on Wednesday.

The central bank is expected to keep rates unchanged, but investors will look for clues as to the timing of the first rate cut of 2026. This is unlikely to come in the first quarter, with the CME’s FedWatch Tool suggesting that it is most likely to come in June or later.

Source: TN Trader

It’s also thought that President Trump will name his pick to succeed Jerome Powell as Fed Chair sometime this week. Mr Powell’s term expires in May, and there’s fierce speculation over who may follow him into the role.

Mr Trump appeared to rule out former favourite Kevin Hassett last week. The President said he wanted him to stay as Director of the NEC. This put Kevin Warsh into pole position. But over the weekend, Rick Rieder, CIO at BlackRock, suddenly rose in the popularity charts as a ton of money came in to back him on US prediction markets.

Aside from this, the fourth quarter earnings season picks up a touch with four members of the ‘Magnificent Seven’ due to report. On Wednesday, there’s Microsoft, Meta and Tesla, with Apple on Thursday.

So far, according to FactSet,13% of S&P 500 constituents have reported, with 75% beating expectations on earnings, and 69% beating on revenues. That’s a fairly solid start, although Netflix and Intel have been notable disappointments.

On Friday, US stock indices posted their second consecutive weekly decline, with the S&P 500 down 0.4%. The index continues to consolidate around 6,900, having failed to break above 7,000 just under a fortnight ago.

It’s unclear whether this consolidation is a precursor to a fresh assault on all-time highs or if US equities are running out of positive momentum. Perhaps this week will offer up some clues.

European and UK stock indices were little changed in early trade on Monday. As in the US, attention now turns to quarterly earnings reports from ‘Mag Seven’ members Microsoft, Meta Platforms, Tesla and Apple.

Source: TN Trader

Investors will also keep an eye on the Federal Reserve’s rate decision on Wednesday, and any clues over the timing of the first rate cut of 2026. While no rate change is expected, European markets are likely to take their cue from any shift in tone around US monetary policy and global risk appetite.

With the US now unlikely to invade Greenland, militarily at least, investors are watching developments between the US and Canada. This came after President Trump threatened Canada with 100% tariffs if it were to agree to a trade deal with China. Canadian Prime Minister Carney said that there would be no such agreement. 

The Dollar Index gapped down to a four-month low overnight, raising speculation that it may fall under 96.00 again to challenge the three-and-a-half-year low hit back in September.

The Japanese yen was a major contributor to the US dollar’s weakness. It surged higher on Friday morning on increased speculation that Japanese policymakers were preparing to intervene to support the yen. This was given greater credence after the New York Federal Reserve checked rates. This suggested that the US would join Japan and conduct a concerted round of intervention for the first time in fifteen years.

It looks as if physical intervention has been unnecessary so far. But markets are now on notice that a USD/JPY rate of 160.00 appears to be the red line for monetary authorities. As noted previously, the yen has weakened significantly since Sanae Takaichi became Prime Minister in October last year.

Source: TN Trader

In addition, Japanese Government Bonds have sold off sharply, with the latest surge in yields coming after Prime Minister Sanae Takaichi announced plans for a two-year suspension of the 8% consumption (food) tax to help offset increasing living costs. Investors want to know how she will pay for this.

There’s also much talk around the “Sell America” trade, and the EUR/USD is retesting a band of significant resistance between 1.1850 and 1.1900.

Precious metals remain the standout performers, with gold pushing through $5,100 an ounce to fresh all-time highs. The rally has been helped along by ongoing geopolitical risk, fiscal concerns, US dollar weakness and sustained demand from central banks, institutions, and retail investors.

Source: TN Trader

Silver exploded to fresh all-time highs overnight, briefly topping $110 per ounce. This meant that silver had added 22% to its value since last Wednesday and led some observers to announce that this was a new paradigm for precious metals. Time will tell.

It’s become very difficult to trade. The air is very thin up here above $100. And anyone looking for a reversal and who’s actually shorted silver has been stretchered off the pitch so far. Stories of shortages, strong industrial demand and broad-based investment flows continue to underpin the rally. But if it was overbought last month, it’s even more so now.

Source: TN Trader

Crude oil was little changed this morning, with front-month WTI hovering around $61 per barrel. Rising US crude inventories last week revived oversupply concerns, with the latest US Energy Information Administration (EIA) data showing a larger-than-expected build of 3.6 million barrels.

Source: TN Trader

This appears to be weighing on prices despite ongoing geopolitical risks. Crude prices continue to consolidate around resistance levels. While crude has broken out of the downward-sloping trading channel which had built since the summer, it has not yet managed to break out decisively to the upside.

Natural gas continues to rally sharply, building on last week’s impressive recovery. Prices climbed as forecasts for an incoming Arctic cold snap across the US boosted demand expectations. The move underscores how sensitive the gas market remains to weather-driven supply and demand shifts.

Bitcoin and Ether were a touch firmer this morning. But this early strength hardly made a dent in losses made over the weekend. Technically, the outlook has turned quite negative over the past two weeks. This has seen Bitcoin sell off sharply from multi-month highs.

While it continues to trade within a band of support, a break below $85,000 increases the likelihood of a deeper decline towards the November lows around $80,000.

A US invasion of Greenland may be off the table for now. But traders appear quite nervous as the new week gets underway, with four members of the ‘Magnificent Seven’ set to report quarterly earnings, and as the Fed’s FOMC holds a two-day monetary policy meeting which concludes on Wednesday.

Volatility, as measured by the VIX, gapped up overnight, suggesting increased nervousness amongst investors. Geopolitical concerns have reduced since President Trump’s appearance at the World Economic Forum in Davos, when he dialled back his threat to use force to take ownership of Greenland. But he threatened Canada with 100% tariffs should Prime Minister Carney sign a trade deal with China.

Mr Carney has said that he has ‘no intention’ of agreeing to a free trade deal with China. But this week still has some dangers, as four ‘Mag Seven’ corporations release their quarterly trading updates, and ahead of the Fed’s FOMC meeting, which concludes on Wednesday.

All eyes turn to Wednesday’s Federal Reserve decision and earnings from the Magnificent Seven, with Microsoft, Meta, Tesla, and Apple setting the tone. The strong recovery in the Japanese yen following speculation over US-Japan intervention is being watched closely. Meanwhile, gold and silver continue to hold attention as both rocket to fresh all-time highs.