Morning brief: Stocks Edge Higher as Fed Probe and Tariff Risks Loom
US stocks ended slightly higher with the Russell leading gains, while financials lagged on Trump’s push for credit card fee caps. Fed independence concerns persisted after Powell faced DOJ scrutiny. DAX remains firmly bullish above key EMAs, targeting 25,750. Trade headlines dominated as Trump threatened tariffs on Iran-linked nations and Taiwan advanced toward a semiconductor deal with the US.
Share this:
US TRADE
EQUITIES
US stocks managed to close in the green, showing gradual strength throughout the session and paring overnight weakness. The Russell outperformed while sectors were mixed. Consumer Staples led gains, largely due to Walmart (WMT) rising on news of its inclusion in the Nasdaq 100 index. Financials lagged as Trump targeted credit card fees, calling for caps—pressuring banks ahead of earnings. Elsewhere, focus remained on Fed independence concerns after the DOJ investigation into Fed Chair Powell over building renovation costs.
EU TRADE
Germany 40 (DAX) – Technical Analysis
Germany 40 remains in a strong bullish trend on the 4-hour chart, trading at 25,375.5 after a minor pullback. Price action is well above all key EMAs (20, 50, 100, 200), which are stacked in a rising sequence, confirming trend strength. The 20-EMA at 25,278 continues to act as dynamic support, while the 50-EMA at 25,038 and the 100-EMA at 24,764 provide deeper structural support. The previous resistance zone around 24,600–24,700 now serves as a key support area, and the major swing low sits near 23,260. RSI is at 68.82, close to overbought but not extreme, and MACD remains positive, though the histogram is flattening, signaling early signs of slowing momentum rather than reversal.
The bias stays firmly bullish as long as price holds above the 25,150–25,200 zone, with continuation targets at 25,450 and 25,750. A corrective phase would only emerge if price breaks below 24,930–24,900, opening room toward 24,300–24,200 before buyers regain control. Overextension above fast EMAs suggests potential volatility and shallow pullbacks, but the overall structure remains intact. Traders should watch for a breakout above 25,500 for further upside or a decisive close below 24,600 to signal trend risk.
TRADE/TARIFFS
US President Trump said any countries doing business with Iran will pay a 25% tariff on all business conducted with the US.
Taiwan officials said “some” consensus has been reached with the US on a trade deal. The agreement would cut tariffs and require TSMC to build at least five more semiconductor facilities in Arizona. The US-Taiwan trade deal will reduce tariffs on the island’s exports to 15%.
Japan’s Finance Minister Katayama noted detailed proposals on rare earth supply chains during meetings with the US. A potential price floor on rare earths was discussed.
US Treasury Secretary Bessent posted that he was pleased to see a strong, shared desire to quickly address vulnerabilities in critical minerals supply chains: “I am optimistic that nations will pursue prudent derisking over decoupling.”
NOTABLE HEADLINES
US President Trump reportedly unhappy with AG Pam Bondi’s performance and has repeatedly complained to aides, according to WSJ.
Trump posted: “I never want Americans to pay higher electricity bills because of Data Centers,” adding that Microsoft (MSFT) will make a major change this week to ensure Americans do not “pick up the tab” for power consumption.
House Republican leaders intend to put the next funding package up for a vote Wednesday night, according to Politico.
NVIDIA (NVDA) said it does not require upfront payment and would never require customers to pay for products they do not receive.
AbbVie (ABBV) signed an agreement with the Trump administration securing a tariff exemption.
CENTRAL BANKS
Fed’s Williams (Voter, Neutral) said monetary policy is well positioned amid a favorable outlook and now closer to neutral ahead of the January decision; expects labor market stabilization this year and inflation returning to 2%.
Blackrock’s Rick Rieder said reports of meetings with Trump on the Fed role are “reasonably accurate”; believes the Fed is independent and needs to get rates down to 3%.
House Speaker Johnson said he intends to let the Powell investigation play out without jumping to conclusions.
US Treasury Secretary Bessent reportedly told Trump that the Powell investigation “made a mess” and could harm markets, via Axios.
ECB’s Villeroy said it is “fanciful” to think the ECB could raise rates this year and noted a dollar decline is possible if Fed independence is challenged.
APAC TRADE
EQUITIES
Asia-Pacific stocks extended Monday’s gains, trading mostly in the green. ASX 200 started +0.4% and moved higher, supported by gold near ATHs, boosting metals and mining (+2.0%).
Nikkei 225 returned from a long weekend with a gap higher, opening up as much as +3.7% to new ATHs amid a weaker JPY and speculation PM Takaichi may dissolve parliament.
KOSPI opened at ATHs and oscillated near highs before slightly paring back but remained firmly positive. Hang Seng surged, aided by Gigadevice gains, while Shanghai Composite lagged with modest +0.2%.
US equity futures pulled back from ATHs, losses led by big tech (NQ −0.3%) while S&P 500 futures slipped to 7,000.
FX
DXY climbed back toward 99.00 as JPY weakness helped the dollar recover Monday’s losses. EUR/USD drifted lower, finding a trough at 1.1656, staying range-bound ahead of US CPI. GBP/USD traded in a tight 13-pip range (1.3463–1.3477).
USD/JPY initially weakened after Katayama said Bessent shares concerns over the weak yen, signaling possible intervention. Later, USD/JPY reversed higher, peaking at 158.50.
Antipodeans outperformed, with NZD/USD and AUD/USD both up 0.1%, tracking gold despite XAU −0.2%. CNH weakened modestly after a softer CNY fix. PBoC set USD/CNY midpoint at 7.0103 vs exp. 6.9734 (Prev. 6.9849).
FIXED INCOME
UST futures muted ahead of CPI; headline inflation expected at 2.7% YoY, core at 2.7% vs 2.6%. Bund futures traded in a tight range before ticking lower. JGB futures fell sharply on speculation PM Takaichi may call elections, then pared half the move.
US sold $39bn 10-year notes at 4.173% (stop-through 0.7bps), bid-to-cover 2.55x. Sold $58bn 3-year notes at 3.609%, bid-to-cover 2.65x. Bills: $86bn 3-month at 3.570%, $6-month at 3.490%.
COMMODITIES
Crude traded in tight ranges amid lack of fresh Iran headlines. Gold and silver pulled back from Monday’s ATHs ahead of CPI; gold peaked at $4,630/oz before easing below $4,600. Citi raised 3-month targets: gold $5,000/oz, silver $100/oz.
Base metals mixed; copper held above $13k/t despite slight pullback. Talks at Chile’s Mantoverde mine remain stalled amid strike.
CRYPTO
Bitcoin held above $91,000 amid US equity pullback.
-Philip Papageorgiou – Market Analyst
--X ex Twitter: PhilipForexCom
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD, USD/JPY Outlook: Oil, yields and an FX identity crisis
Crude oil is setting the tone across rates and FX, leaving EUR/USD vulnerable and USD/JPY caught between higher Treasury yields and the growing threat of intervention
Gold forecast: Rising yields become too hot for gold, but the outlook is far from bearish
Gold and silver prices took a plunge today, with the former down 3% and the latter falling some 5% by mid European session, before bouncing off their lows. The losses come after the metals remained largely supported until last week, despite the big dollar rally and surging bond yields as we have seen in recent weeks. But it simply got too much, and the metals succumbed to pressure today.
Nasdaq 100 Forecast: NDX falls as oil jumps and Treasury yields rise
U.S. stocks are pointing to a weaker open on Monday after President Trump rejected an Iranian ceasefire, sending oil prices higher and fuelling inflationary concerns and pushing Treasury yields higher.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.