Yesterday was a brutal session for stock traders, with American indices plunging sharply and European markets also experiencing significant declines. While European indices remain in a technical correction within an uptrend, US indices are entering bearish territory, with key supports already broken and sentiment firmly negative.
As we step into Tuesday’s session, the market is attempting a small bounce, but it appears to be nothing more than a dead-cat bounce or take-profit action, rather than a genuine shift in sentiment. There are no strong signals that the negative momentum will stop anytime soon.
On the economic calendar, the main focus will be on JOLTS job openings from the US, expected at 7.6 million. However, with no major Tier 1 data, trading is likely to be driven by technical levels, unless we get unexpected developments from Donald Trump on trade wars or other market-moving headlines.
On the currency market, we see weakness in the Japanese Yen and Antipodean currencies (AUD & NZD), while European currencies—especially the Euro—are showing strength. The Euro is currently leading the pack, reflecting investor demand for relative stability.
In commodities, gold and silver are climbing higher, benefiting from the risk-off sentiment, while oil continues to struggle. Yesterday’s sell-off in crude was significant, and despite Tuesday’s slight rebound, the broader outlook remains weak.
Overall, while traders search for signs of a reversal in equities, the V-shaped recovery seen in the Asian session on futures does not yet indicate a true change in sentiment. It remains a short-term bounce within a larger downtrend, and traders should stay cautious.