After a long period of steady, quiet growth, the S&P 500 volatility index finally broke through the 20-point mark. It is still far from the highs we saw on April 8, when hopes for last-minute delays or concessions on tariffs before the midnight deadline faded, but what really stands out is the fact that market jitters are returning.What is worrying investors?It’s not just the ongoing U.S. government shutdown that is causing uncertainty due to delays in the release of key data, which, according to Treasury Secretary Scott Bessent, is already beginning to affect the real economy. The primary concern for investors is the resurgence of the trade war between the US and China.Coincidence or not, just before the planned meeting between Trump and Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea, Beijing announced new restrictions on exporting rare earth metals essential for chip manufacturing and electric vehicle production, and introduced port fees for U.S. ships.In response, Trump declared that the U.S. would impose an additional 100% tariff on Chinese products starting November 1, 2025. The Nasdaq and S&P 500 fell sharply after the news, but recovered partially on Monday following more moderate statements over the weekend. However, on Tuesday, confidence shifted again.What to expect next?If tensions between the United States and China continue to escalate, it will be tough for markets to perform well. Even so, investors seem to be hoping the president will fall back on his famous “TACO” strategy, which stands for “Trump’s Always Chickens Out,” if market sentiment starts to spiral again.A strong earnings season could also act as a safety net for the markets.So far, Goldman Sachs has reported a 37% increase in quarterly profits to $4.1 billion, driven by strength in investment banking and trading. JPMorgan also posted higher profits, thanks to gains in its trading division and a rebound in investment banking fees. Citigroup, Wells Fargo, and BlackRock have also reported solid results.Overall, analysts at FactSet expect S&P 500 companies to grow earnings by 7.9% compared to last year, making it the ninth quarter in a row of profit growth. If that happens, it should help support the market. However, strong earnings might not be enough to stop a market pullback if the tech sector struggles.Looking further ahead, Morgan Stanley expects rising profits, broader AI use, and easier rates to boost the S&P 500 by about 12% by mid-2026. JPMorgan forecasts the index could hit 7,000 by early 2026, driven by strong corporate spending and AI growth. Some analysts even see a “bubble scenario” with the index reaching 9,000. This article was written by IL Contributors at investinglive.com. 🔗 Read Full Article

He doesn’t want to confirm if he will favour the proposition to raise rates again in October, merely saying that he believes it to be “necessary to adjust degree off monetary easing to bring rates closer to neutral”. With Takaichi struggling to form a new government, this could be their final shot in trying to sneak in one more move just in case she starts to run the show.Tamura also says that they are still monitoring incoming data, especially that on tariffs. And for now, he does not want to make any preconceptions on that with two weeks to go until the decision day. This article was written by Justin Low at investinglive.com. 🔗 Read Full Article 💡 DMK Insight This situation highlights the delicate balancing act central banks face in navigating economic recovery while managing inflationary pressures. The uncertainty surrounding Takaichi's leadership adds another layer of complexity, suggesting that any potential rate hikes could be influenced by political stability. Investors may note that a hesitant approach to monetary policy could signal a prolonged period of volatility in the markets, as stakeholders await clearer guidance on the direction of fiscal strategy.

No comment on specific FX levelsBut important for currency to move in a stable manner, reflecting fundamentalsWill take into account if there is any discrepancy between own view and market view on rate hike expectationsBut believes that there is some distance from neutral rate currentlyPrevious rate hikes have had very limited impact on Japanese economy as a wholeCan’t deny possibility of reaching inflation target in latter half of fiscal year 2025It’s a lot of words and a roundabout way of him reaffirming that he still has a hawkish bias for the most part. But again, he’s just stopping short of explicitly confirming that he will favour another rate hike proposition in two weeks’ time. This article was written by Justin Low at investinglive.com. 🔗 Read Full Article 💡 DMK Insight This highlights the delicate balance central banks must maintain between market expectations and economic fundamentals. As rate hike discussions intensify, any perceived disconnect could lead to increased volatility in currency markets. Investors may note that a stable currency is crucial for fostering confidence, and any misalignment could reshape sentiment, prompting a reevaluation of risk across asset classes. The emphasis on distance from the neutral rate suggests that policymakers are wary of overstepping, which could have broader implications for economic growth.

As mentioned earlier in the week, these kind of volatility spikes are going to be commonplace as gold (and silver) continue to scale higher over the past two months. The unrelenting run is still yet to be met with a real pause or stop/reversal, and that’s reason enough to expect price action to hit air pockets from time to time amid profit-taking activity.Gold was up as much as 0.8% on the day to $4,241 earlier but has now pared gains in a fall back to $4,204 in quick fashion:At the same time, silver has also dipped back from $53.00 to a low of $52.50 and is holding around $52.70 levels now – down 0.7% on the day.In the bigger picture, these volatility spikes aren’t anything too noteworthy as they are yet to form a larger reversal trend. But as we continue to keep at the highs, don’t expect conditions to be smooth sailing especially when there’s such a heavy consensus in wanting price to keep moving higher.As the old adage tends to go, consensus trades can be one of the most dangerous ones. A tip from many years ago:”Nothing in the market ever moves in a straight line forever. And when positioning becomes too crowded and overstretched, there is scope for a correction and profit-taking – especially if these are helped by short-term changes to the market narrative, thus prompting an exacerbated reaction in response. Or for quite simply the simplest of factors i.e. a trade goes too far, too fast.” This article was written by Justin Low at investinglive.com. 🔗 Read Full Article 💡 DMK Insight the market to brace for further fluctuations. This highlights the growing uncertainty among investors, who may be grappling with inflationary pressures and geopolitical tensions. As gold and silver prices rise, it suggests a flight to safety, indicating that traditional assets may be losing their luster in the face of economic instability. Such dynamics could reshape sentiment in both precious metals and broader financial markets, prompting a reevaluation of risk strategies.

There are just a couple to take note of on the day, as highlighted in bold below.They are all for EUR/USD with the expiries layered through 1.1600 to 1.1700. The pair is doing battle around the 100-day moving average of 1.1645 currently and the expiries at 1.1650 could play a role in terms of keeping price action more anchored in the session ahead.That said, the near-term bias is more bullish now on the week and that could see price extensions to the upside in European trading. So, the expiries at 1.1700 adds some layer to the ceiling for now at least.As for the larger ones at 1.1600, they shouldn’t factor much into play unless we get some headlines leading to dollar bids in a change of pace. The 100 and 200-hour moving averages at 1.1600 and 1.1625 are also key near-term levels to watch in case of any downside shoves during the session ahead.For more information on how to use this data, you may refer to this post here.Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com. 🔗 Read Full Article 💡 DMK Insight The positioning of expiries between 1.1600 and 1.1700 suggests a tight trading range for EUR/USD, indicating that market participants are bracing for volatility around this key level. As the pair hovers near the 100-day moving average, it highlights the importance of technical indicators in shaping short-term sentiment. Investors may note that a breach of this range could trigger significant price action, potentially reshaping trading strategies in the days ahead.

Prior 0.0%; revised to -0.1%Services output 0.0% vs +0.1% m/m expectedPrior +0.1%; revised to 0.0%Industrial output +0.4% vs +0.1% m/m expectedPrior -0.9%; revised to -0.4%Manufacturing output +0.7% vs +0.2% m/m expectedPrior -1.3%; revised to -1.1%Construction output -0.3% vs 0.0% m/m expectedPrior +0.2%; revised to 0.0%The headline reading matches estimates but there is more to scrutinise in the details of the report. There was a negative revision to July monthly GDP and services output was also flat in both months in July and August. Instead, the marginal growth in August largely stems from some improvements in the industrial side of things.Overall, it’s not one to shift the outlook for the BOE all too much with the central bank still widely expected to keep the bank rate unchanged at the start of November next. This article was written by Justin Low at investinglive.com. 🔗 Read Full Article 💡 DMK Insight the downward revisions in services and construction output suggest underlying weaknesses that could dampen economic optimism. This highlights a potential disconnect between headline figures and the reality on the ground, signaling that investors should remain cautious. As manufacturing shows resilience, it may not be enough to offset the broader concerns, indicating that the recovery could be more fragile than previously thought.