Market Summary
- Reassessment of U.S. trade moves with EU, China joins pre-data anxiety to test market sentiment as New York trading begins.
- Gold stalls four-day downtrend, Bitcoin reverses previous losses amid a firmer U.S. Dollar and mixed markets.
- Trump’s stand on Russia, Israel, North Korea and Fed challenges risk appetite.
- U.S. CB Consumer Confidence, JOLTS Job Openings awaited ahead of big data/events starting from Wednesday.
New York Trading Brings Volatility
U.S. stocks open higher as Tuesday’s New York trading session begins. Among the key catalysts, mixed headlines surrounding the U.S. trade talks with major economies and growing anxiety ahead of this week’s key data/events gained major attention. Adding to the uncertainty are fresh political moves by President Donald Trump, touching on sensitive issues tied to the Fed and broader sentiment.
Amid the dicey markets, Bitcoin (BTC/USD) prices post mild gains to reverse the previous day’s losses while spot Gold (XAU/USD) bounces off a three-week low after declining for the last four consecutive days. That said, the US Dollar Index (DXY) remains firmer for the fourth consecutive day, reaching a monthly high by the press time, while stocks in Asia-Pacific and Europe edged higher.
Let’s discuss key catalysts to better understand the market’s move.
Trade Fears Prevail Despite Positive Developments
After initial optimism about the U.S.-EU trade ‘framework’ agreement, market players re-evaluated the EU’s response and scaled back earlier positive bias. France criticized the deal, and Germany showed little support.
On the same line, officials from the U.S. and China resisted announcing a 90-day tariff pause during their meeting in Stockholm, extending talks to Tuesday. Furthermore, the meeting between U.S. President Donald Trump and UK Prime Minister Keir Starmer marked another disappointment as both leaders failed to provide details on a final U.S.-UK trade deal, instead focusing on political issues, dampening previous trade optimism.
Trump Keeps Traders on Edge
President Trump expressed frustration over the lack of peace between Ukraine and Russia, giving Moscow 10-15 days to finalize talks, down from 50 days mentioned in early July. If talks fail, the U.S. will impose heavy sanctions on Russia, including 100% secondary tariffs on countries importing Russian oil, particularly targeting China and India, which’ve increased oil imports since the war. In response, Dmitry Medvedev, an advisor to Russian President Putin, accused Trump of playing a “game of ultimatums” with Russia.
Trump also showed readiness to engage with North Korea if it doesn’t end its nuclear programs, following North Korea’s rejection of being denied nuclear status. Additionally, Trump blocked Taiwan’s President from stopping in New York, citing objections from China. In the Middle East, Trump seemed less supportive of Israel’s stance on humanitarian aid to Gaza, while criticizing Iran’s behavior. Meanwhile, UK PM Keir Starmer stated that Hamas has no place in any future Palestinian government.
Trump also reiterated his push for lower interest rates, though he refrained from commenting on firing Federal Reserve Chairman Jerome Powell, saying, “He leaves fairly soon. I will miss him greatly.”
Treasury Yields Drop, Cryptocurrencies Consolidate
On Tuesday, the U.S. Treasury signaled plans to increase federal borrowing to $1 trillion in Q3, ahead of the quarterly refunding announcement due today. This kept the US Treasury bond yields under pressure while also lowering the Japan Government Bond Yields (JGBs) despite fears that the U.S. government continues issuing Treasuries to fund its deficit.
In the crypto universe, institutional buying continues as BlackRock purchased $147.4 million worth of Bitcoin and $132M of Ethereum. On the same line was the start of PayPal’s “Pay with Crypto” initiative. However, news like the U.S. SEC’s delay in deciding about the Truth Social Bitcoin ETF until September 18 joins the cautious mood ahead of July 30 “Crypto Report” from the White House to challenge cryptocurrency buyers, even as they pare Monday’s losses.
Wall Street Closed Mixed
Given the mixed market news and traders’ wait for top-tier Q2 earnings results scheduled for release on July 30 and 31, including names like Apple, Amazon, Meta, and Microsoft, Wall Street bulls relinquished control on Monday. That said, S&P 500 and Nasdaq reached all-time highs before ending the day with mild gains. The Dow Jones, however, posted minor losses but stayed near the all-time closing high marked last week.
- Gold posts the first daily gain in five, bouncing off a three-week low to $3,325 with mild gains by the press time.
- Bitcoin (BTC/USD) reverses Monday’s losses, with 0.70% intraday upside near $118,900 at the latest.
- Ethereum (ETH/USD) gains over 1.0% while consolidating the pullback from yearly top, up 1.30% intraday near $3,850 as we write.
- U.S. Dollar Index (DXY) hits a monthly high, up for the fourth consecutive day to 99.10 as the New York trading bell rings.
- Wall Street closed mixed: Nasdaq and S&P 500 made rounds to all-time highs before ending the day with mild gains, while Dow Jones dropped 0.14% on Monday. That said, U.S. stock futures and equities in Asia-Pacific, as well as in Europe, edged higher before Tuesday’s New York trading bell.
- WTI Crude rises to fortnight high, following the biggest daily jump since July 02, up 0.40% intraday to $67.20 at the latest.
What To Watch In New York Trading Session?
Unlike Monday’s light economic calendar, Tuesday brings the U.S. CB Consumer Confidence for July and JOLTS Job Openings for June and the Housing Price Index for May.
On the earnings calendar, Q2 results from Visa, Proctor & Gamble and UPS will entertain the equity traders.
While the scheduled U.S. data may not offer drastic changes to the U.S. Dollar, unless marking extreme outcomes, traders will likely position themselves for Wednesday’s Federal Reserve monetary policy meeting, U.S. Q2 GDP, and Friday’s U.S. NFP. The USD-positive signals ahead of these events could lead to a pullback in major currencies, cryptocurrencies, and commodities, giving them room for a correction.
Apart from the scheduled U.S. data, chatters about the trade deals and geopolitical tensions surrounding Russia, Middle East and North Korea will keep traders on edge.
If anxiety surrounding trade deals continue and negatively affect the risk appetite, the U.S. Dollar could extend the latest run-up, which in turn can weigh on major currencies like the Euro (EUR), British Pound (GBP), and Gold.
That said, the cryptocurrencies are likely to remain firmer amid recent institutional interest and due to nearness to key technical resistances.
Also read: Market Digest: Bitcoin Struggles at $119K amid Global Trade Shifts
