Indices

US index futures pushed higher in the first half of Friday’s session, taking cues from a strong performance from European equities. Both European and US equity futures extending yesterday’s impressive recovery after the sharp sell-off earlier in the week. But the lingering concerns around the AI investment cycle remain, while bond markets were easing lower again, lifting yields.

Australian bond futures have exhibited a far stronger relationship with the ASX 200 than Wall Street over recent months. Now both markets are displaying remarkably similar price structures.

Bitcoin bulls eye a weekend bounce as Nasdaq finds support, BTC holds $80k and bullish reversal signals emerge alongside stronger correlations.

Following the CPI-related drop yesterday, Nasdaq 100 futures have fallen further following a weak handover from Asian markets overnight. US stocks came under intense pressure after a hotter-than-expected inflation report revived bets on further Federal Reserve rate hikes and sent Treasury yields and the dollar higher. While both the dollar and yields subsequently dropped back to pre-CPI levels and more in the case of yields, the Nasdaq has failed to respond positively as concerns over AI trade remained.

We've seen three substantial Nasdaq 100 selloffs this year, only for buyers to return. But the Treasury market's reaction to the latest decline is very different, raising questions about whether this is another temporary scare or something more substantial.

US index futures rebounded in the first half of Wednesday’s session, along with European indices ahead of the release of US CPI. Some slightly dovish remarks from the Fed’s Williams seem to have helped sentiment a little, but whether those comments will be backed by data remains to be seen. While slightly hotter than expected inflation data shouldn’t be enough for markets to price in an October Fed hike with more than a coin flip probability, it can nonetheless reinforce expectations of further tightening later in the year.

US small caps have lost nearly 9% since August, with surging Treasury yields overwhelming a historically favourable midterm trading period. Now the Russell 2000 is threatening to break a major support zone ahead of US CPI.

Global indices managed to bounce back towards the end of the week as risk mood improved following Thursday’s drop in bond yields and a slight decline in oil prices. But by late Friday afternoon, oil prices had made back most of Thursday’s drop and the bond markets remained under some pressure as European bourses closed for trading.

Markets went from risk off to risk on yesterday afternoon and we have since kicked on with some follow-up buying of stocks, gold and silver, while the dollar has also shown signs of weakness. Risk appetite turned positive after bond yields and oil prices both retreated yesterday.

Hang Seng Tech continues to slide despite improving earnings expectations across many major constituents. With valuations contracting and key technical support broken, the question is whether the selling has further to run.

The global equity markets remain under pressure and with oil surging higher again this week, we have even more reason to remain cautious. Already, the S&P and Nasdaq were running support from only a handful of hyperscalers and AI stocks. But even these indices have started to take notice of the deteriorating market breadth and global indices. Still, for me, the ongoing weakness is becoming more evident in the Dow and the small-cap Russell 2000 indices, and as such I will continuing watching these markets closely to provide a more accurate signal about the health of the stock markets.

Recent trading sessions have begun to highlight a clear lack of direction around Dow Jones price action. This can be seen in the performance of the last three sessions, where the index has posted a modest decline of approximately 0.2%, reflecting the absence of a consistent directional bias and a growing sense of caution across the market.