US and Asian equity indices rose to reach new all-time high prices, led by AI tech.
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- The major story in the financial markets continues to be the advance of global stock markets to new all-time high prices led by technology stocks, notably the AI sector. However, yesterday's rise was a bit soft, and we have seen a bearish retracement within recent hours. The major index in South Korea (KOSPI Composite), Japan (Nikkei 225) and some US indices, notably the NASDAQ 100 Index, the S&P 500 Index, and the Dow Jones Industrial Average did make new all-time highs. This is a great time to be long of stocks, especially tech and AI stocks, and trend traders will already be positioned this way. Stock markets are mostly filtering out noise over the USA / Iran standoff, even though the US and some of the gulf nations have been trading fire with Iran today.
- Crypto looks bearish, with Bitcoin falling firmly to reach a new 2-month low near $65k. There are initial signs that the price is finding support now in this area which was strongly bullishly inflective the last time the price was here - long-term investors who believe in Bitcoin will see this as a buying point. The weakness of crypto while technology stocks are rising to record highs is very telling, and the tell is not good news for crypto investors. This is a sector I will be avoiding at this time.
- Crude Oil has continued to gain moderately. This is partly due to the fact that markets are pricing in more of a chance that the USA and Iran will not reach a peace deal soon, even though this seems to have become largely decoupled from risk sentiment. I would not be a buyer, however.
- In the Forex market, the US Dollar is just consolidating within its range of the past few days, showing no significant direction. The rest of the market has been relatively quiet so far today, with the Japanese Yen the strongest major currency and the New Zealand Dollar the weakest. I forecasted last weekend that the NZD/JPY currency cross would probably decline this week on a purely technical analysis.
- Australian GDP data released earlier today showed a quarterly increase of only 0.3%, while an increase of 0.5% had been generally expected. This will be seen as a minor dovish tilt and seems to have temporarily weakened the Aussie (AUD) by a few pips in the market, although the Kiwi (NZD) is even weaker. I think Forex traders might do well to look for opportunities to short these currencies today.
- There are three potentially high-impact data releases due today which might affect the USD (more likely) and the JPY (less likely):
- US ADP Non-Farm Payrolls forecast
- US ISM Services PMI
- Bank of Japan Governor Speaks
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