Global Markets Pause After Record Highs as Gold Surges, Oil Retreats

Global markets entered Tuesday on a cautious footing after US indexes hit record highs. Nvidia’s (NASDAQ:NVDA) ambitious investment in OpenAI fueled Wall Street optimism, but investors are now turning to Federal Reserve Chair Jerome Powell’s upcoming speech for direction.

Meanwhile, gold extended its record-setting rally, oil retreated on supply news, and stock performance across regions revealed clear winners and laggards.

US Momentum Meets Fed Uncertainty

The S&P 500, Nasdaq, and Dow all closed at record highs on Monday, underpinned by optimism around Nvidia’s multibillion-dollar investment in OpenAI. The deal reinforced enthusiasm around artificial intelligence, boosting semiconductor and tech-related shares across Wall Street.

However, futures flattened on Tuesday as investors awaited Powell’s remarks. Bond yields were little changed, with the 10-year Treasury at 4.14%. The muted moves signal caution as markets assess whether labor market softness could steer the Fed toward a more dovish stance.

Europe: Tech Weakness Weighs Despite Broader Gains

Europe’s Stoxx 600 rose 0.2%, supported by modest gains across national benchmarks. Yet stock-specific moves told a different story:

• ASM International (ASMI.AS) fell 4.6% in Amsterdam after slashing its earnings guidance, dragging the regional semiconductor space lower.
• Broader cyclical sectors, including industrials and financials, offered modest support to the index, offsetting tech weakness.

Meanwhile, monetary policy divergence remains a theme. Sweden’s Riksbank cut rates to 1.75% from 2.00%, while PMI surveys showed Germany outperforming expectations but France missing forecasts, underscoring the uneven recovery.

Asia: Sector Splits Define Market Moves

Asian trading closed mixed, with notable sectoral contrasts:

• South Korea’s Kospi gained 0.5%, driven by strength in semiconductors and pharmaceuticals, both beneficiaries of global demand resilience.
• Hong Kong’s Hang Seng slipped 0.9% after early gains, with weakness concentrated in property developers and financials, reflecting persistent structural headwinds.
• Shanghai Composite declined 0.2% as investors digested lackluster growth signals despite Beijing’s policy support.
• Japan’s Nikkei was closed for a holiday, leaving yen traders cautious ahead of Powell’s speech.

Gold Extends Historic Rally

Gold futures rose 0.4% to $3,788.80/oz after touching $3,795.10 earlier, building on a 43.5% year-to-date rally. The surge has been supported by:

• Dollar softness after US Dollar Index’s recent three-and-a-half-year low
• Persistent ETF inflows indicate institutional demand
• Central banks are diversifying reserves away from dollar assets
• Safe-haven demand as US labor market signals soften

Fed Governor Stephen Miran’s comment that interest rates may already be “too high” further emboldened bullish sentiment.

Oil Pressured by Supply Restart

Energy markets moved lower as Iraq and Turkey agreed to resume crude exports from Kurdistan.

• Brent crude slipped 0.4% to $66.30/bbl
• WTI dipped to $63.05/bbl

The restart highlights the market’s sensitivity to supply-side developments, with traders questioning whether production increases will outpace fragile global demand, especially given China’s uneven industrial recovery.

Key Market Metrics

Investor Outlook: Opportunities and Risks

The interplay between AI-driven equity strength, central bank caution, and commodity divergences sets the stage for a complex market narrative:

• Opportunities: Nvidia-led tech momentum, Germany’s resilient PMI, and gold’s role as a hedge all provide clear entry points for investors seeking growth or protection.
• Risks: Weak French and Chinese data, renewed oil supply, and fragile property markets in Asia could undermine sentiment and weigh on cyclicals.

Bottom Line: The next catalyst will be Powell’s speech. Expect volatility across equities, bonds, and gold depending on how firmly he reaffirms the Fed’s data-dependent stance.