Market sentiment remained cautious ahead of the release of the Federal Reserve's meeting minutes, influenced by fluctuating Middle East tensions and a cooling in AI-related trading.
Following attacks on three vessels in the Strait of Hormuz, U.S. forces launched new airstrikes against Iran on Tuesday and revoked licenses for Iranian oil exports, posing a renewed threat to the fragile ceasefire agreement.
The market reaction mirrored the initial stages of the conflict, with crude oil prices spiking and the U.S. dollar index rising, while equities, bonds, currencies, precious metals, and cryptocurrencies all experienced declines.
As the dollar index climbed back above the 101 level, gold fell to around $4,100. Data indicates that global central banks remain among the largest buyers of gold this year, with the People's Bank of China increasing its holdings for 20 consecutive months, and the scale of purchases expanding in recent months. However, this appears only to limit the extent of gold's decline rather than genuinely reversing its downtrend. The gold price remains constrained by a strong U.S. dollar and expectations for interest rate hikes. In the near term, if the $4,100 level cannot be held, a further drop to seek support in the $4,040/4,070 region is possible. On the upside, resistance continues near the $4,200 level.
The three major U.S. stock indices closed lower overnight, with chip stocks continuing to pull back despite Samsung Electronics' "explosive" earnings results. Investors are torn between optimism over robust demand and earnings and concerns about an AI bubble, leading to recent volatile, range-bound trading in the Nasdaq 100 index.
As shown in the chart, a diamond pattern formed near historical highs is sufficient to raise market alert, as such a formation often signals an impending reversal. On an hourly chart, the initial level to watch is 29,000. A break below this level would bring 27,700 and 26,760 into focus for potential further declines.
This Friday, another major South Korean memory chipmaker, SK Hynix, is set to list on the Nasdaq, which will test investor confidence in the chip and AI sector's outlook. Additionally, SpaceX's share price has retreated to near its first-day IPO opening price of $150. However, as the company formally joins the Nasdaq 100 index, it may attract buying from index funds.
In the currency markets, the Japanese yen remains a focal point. As shown in the chart, USD/JPY has moved up from around 160.80 to near 161.60. With the exchange rate forcefully breaching the 162 level, a pattern of choppy upward movement could continue in the near term, potentially challenging the previous high of 162.84 again.
Data shows speculative short positions on the yen are steadily increasing, approaching the 2024 historical high. This indicates the current rise in the exchange rate is driven by both a strong U.S. dollar and a weak yen, suggesting the trend has a higher probability of continuation.
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