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Headlines:US equities look to recover a little after a rough few daysHow have interest rate expectations changed after this week’s events?Oil prices in the spotlight as focus remains on US-Iran negotiations in OmanECB policymakers repeat policy is in “good place”; ease tone on euro’s strengthBOJ policymaker Masu says not thinking of a particular pace in hiking interest ratesGermany December industrial production -1.9% vs -0.3% m/m expectedFrench trade deficit narrows further in 2025 as exports reboundUK January Halifax house price index +0.7% vs -0.6% m/m priorMarkets:Precious metals bounce back, US futures cover early losses, Bitcoin reboundsSilver up 4.1% to $74.18 after the low in early Asia hit near $64Gold up 2.3% to $4,882 in less volatile tradingS&P 500 futures up 0.5% as tech shares bounce back, Amazon down 8% in pre-market thoughBitcoin up over 5% to above $66,000 after coming close to test $60,000 markUS dollar steady and more mixed across the board, commodity currencies lead on risk recoveryWTI crude oil flat at $63.16 as US-Iran talks continueIt was a calmer session in Europe today as broader market sentiment shows some tentative signs of recovery. Key word there being tentative of course. That after a rough few days for risk trades especially, amid a painful combination of selling in precious metals, tech stocks, and cryptocurrencies.Today, all three are showing a modest bounce but not without some early drama in early Asia trading before this.Silver got trounced once again in falling over 13% to near $64 before recovering to be up 4% now just above the $74 level. Gold was less volatile as it fell to a low of $4,655 before bouncing back over 2% now to $4,882 on the day.The dramatic bounce highlights that the volatility spikes are still very much in play but reaffirms a continued healthy correction for precious metals. Of note, the rebound in silver comes as dip buyers stepped in with price having moved within touching distance of the 100-day moving average – a key technical level on the charts.Overall risk sentiment also caught a modest rebound with S&P 500 futures now seen up 0.5%. At the lows earlier, futures were down 1% as tech shares stayed under pressure. Amazon’s earnings backlash did not help with shares still down 8% in pre-market, but at least there’s a broader recovery elsewhere.The mood music is helped by a rebound in Bitcoin after the cryptocurrency came within a whisker of testing the $60,000 mark. That saw bids come in with Bitcoin now rising back up above $66,000 to stabilise a little after a very poor week.In other markets, things were less dramatic with the dollar holding steadier and slightly softer at the balance against the rest of the major currencies. EUR/USD keeps just below the 1.1800 level amid large option expiries and some ECB commentary on the exchange rate.Meanwhile, USD/JPY is flat holding just above the 157.00 level while commodity currencies lead gains with AUD/USD up 0.8% to 0.6980 levels on the day.Besides that, oil prices also continues to be in focus in awaiting US-Iran talks in Oman. For now, the mood is tense but oil is still set for a weekly drop with price at $63.16 currently.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
US equities are trying to bounce back, but the underlying issues remain critical. Interest rate expectations have shifted, especially after recent economic data, which could impact market sentiment. Traders should keep an eye on how these rates affect sectors like tech and consumer discretionary, as they often react strongly to interest rate changes. Oil prices are also in focus due to US-Iran negotiations, which could lead to volatility in energy stocks. If tensions escalate, we might see a spike in oil prices, impacting inflation and, consequently, interest rates. On the flip side, the ECB’s easing tone on the euro’s strength suggests they might be more accommodating, which could weaken the euro against the dollar. This could create opportunities for forex traders looking to capitalize on currency fluctuations. Watch for key levels in the S&P 500; a break above recent resistance could signal a more sustained recovery. Keep an eye on economic indicators this week that could further influence interest rate expectations.
📮 Takeaway
Monitor S&P 500 resistance levels for potential breakouts and watch oil price movements amid US-Iran negotiations for broader market impacts.
