Cautious Sentiment Amid Policy Uncertainty and Mixed Sector Moves

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Index Update:  Investors stayed cautious ahead of key economic data and Fed commentary, with focus on the potential for another rate cut next month. Intel gained nearly 4% premarket on reports it approached Apple for an investment, lifting Apple shares slightly. Lithium Americas surged 13% on news the U.S. government may take a stake, while Oracle fell over 2% after issuing $18 billion in bonds for AI expansion. Megacap tech stocks traded mixed, with Nvidia, Meta, Broadcom, and Alphabet lower, while Microsoft was flat and Amazon edged higher.

Market Movers:  On Wednesday, the top gainers were uniQure N.V. (+247.73%), followed by SHF Holdings, Inc. (+123.01%). On the contrary Zhengye Biotechnology Holding Limited. (-28.90%), and Fitell Corporation (-21.39%) declined the most the same day.

Commodities Update:  WTI crude fell below $65 and Brent slipped to around $69 per barrel on Thursday as investors booked profits after recent multi-week highs. Earlier gains were fueled by an unexpected drop in U.S. crude inventories, escalating supply risks from Ukrainian drone strikes on Russian energy facilities, the suspension of Kurdish oil exports, and NATO’s warnings over Russian airspace incursions. However, fading peak demand season and oversupply concerns tempered the rally, despite global demand growth staying broadly in line with expectations. Gold prices held steady near $3,750 per ounce, close to record highs, supported by expectations of further Fed rate cuts and geopolitical tensions in Ukraine. Markets are pricing in a 25 bps cut next month and another in December, while upcoming Fed speeches and the U.S. PCE inflation report could shape policy outlook. Gold is up nearly 1.8% this week, with sentiment also boosted by reports that China aims to position itself as a custodian of foreign sovereign gold reserves.

Macro Updates:  Dollar Steadies Ahead of Key U.S. Data

The dollar index held above 97.8 on Thursday after a sharp rebound, as traders awaited jobless claims and the PCE inflation report for guidance on Federal Reserve policy. Concerns over labor market weakness, tariff-driven inflation, and a potential government shutdown added to caution, while mixed Fed commentary left markets pricing in 43 bps of easing over the final two meetings this year.

U.S. Pushes Trade Deals with Southeast Asia

The U.S. is working to finalize trade agreements with more Southeast Asian nations in the coming months, Trade Representative Jamieson Greer said in Kuala Lumpur. Talks on tariffs—ranging from 10% to 40% across the region—are progressing, with deals involving Indonesia and Vietnam nearing completion. The move underscores Washington’s efforts to deepen economic ties with the export-dependent ASEAN bloc.

U.S. Cuts Tariffs on European Cars Under Trade Deal

The U.S. will reduce tariffs on European cars to 15% from 27.5%, retroactive to August 1, 2025, in line with the US-EU trade agreement announced in July. The move follows the EU’s recent duty reductions on U.S. goods and includes exemptions for aircraft, generic drugs, and certain natural resources, easing tensions from Trump-era trade measures.

Bonds Commentary:  The 10-year U.S. Treasury yield held around 4.14% on Thursday after a prior climb, as investors awaited jobless claims and Friday’s PCE data for policy cues. Concerns over labor market weakness, rising layoffs, and tariff-driven price pressures weighed on sentiment. Recent Fed commentary has clouded expectations for near-term rate cuts, with markets now pricing in 43 bps of easing across the remaining meetings this year. Uncertainty over a potential government shutdown further added to investor caution.

Futures Update:  U.S. stock futures were little changed on Thursday as investors awaited weekly jobless claims for clues on Federal Reserve policy. Around 05:55 ET, Dow futures rose 0.1%, while S&P 500 and Nasdaq futures each slipped 0.1%. On Wednesday, major Wall Street indices fell for a second session from record highs, led by declines in technology stocks amid valuation concerns and Fed uncertainty.

Following increased pressure from the previous day's trading activity, stocks experienced further declines during Wednesday's session. The S&P 500 fell by 18.95 points, or 0.28%, closing at 6,637.98. From a technical standpoint, the index faced resistance above the highs of the previous week and continued to drift lower, suggesting the potential for additional weakness over the remaining two trading days of the week. Moreover, the 14-day Relative Strength Index (RSI) has slightly decreased from overbought levels, reinforcing a bearish bias. Key support levels are around 6,590, while resistance is anticipated near 6,680.