Stocks pause near record highs as tech declines

Stocks took a pause on Thursday after a series of gains since President Donald Trump’s inauguration brought European and US benchmarks close to record highs. The Stoxx Europe 600 index remained largely unchanged after narrowly missing an all-time high on Wednesday. Technology shares dropped over 1%, surrendering most of the previous day’s gains and lagging behind every other sector in the index. Puma SE saw a significant decline after the German sportswear company fell short of earnings expectations.

US equity futures edged lower after the S&P 500 also finished near record levels, fueled by optimism surrounding artificial intelligence and a series of earnings reports from major corporations. Contracts on the Nasdaq 100 fell by 0.5%, and those on the S&P 500 decreased by 0.2%.

Markets continue to process the effects of Trump’s initial days in office, which present mixed signals to investors. While his initiative to increase AI funding boosted major tech stocks on Wednesday, concerns about tariffs on key trading partners dampen sentiment. He has indicated potential tariffs targeting Europe and China, though he has not yet enacted any measures.

DXY upside trend may be finished

The US Dollar Index’s upward trend might be nearing its end, particularly if it finishes this week’s trading below 108.0. The index has been on the rise since September 27th, peaking on January 13th. Over the course of 79 trading days, it gained 7.9 points, equating to a 7.9% increase. This trend came to an end two days ago when the index closed below 108.25. Should the weekly close confirm this, it would signal the conclusion of the upward trend.

Focus on the Bank of Japan tomorrow 

The Bank of Japan is poised to increase interest rates to their highest point since 2008 on Friday, as the central bank steadily moves towards normalization while the Federal Reserve and the European Central Bank consider pausing their easing measures. 

At present, traders have fully priced in a 25bps rate hike for tomorrow with a 94.8% certainty. However, the key question remains whether this will be the final rate hike for some time. If that is the case, USDJPY could revisit January’s peak around 159.0.

Crude correction persists

In commodities, oil dipped after a report indicated the first increase in US crude stockpiles since mid-November. The market is also awaiting further global trade commitments from President Trump.

Brent has seen a decline for the fifth consecutive trading session, dropping to a low of 78.54. Earlier today, it rallied to 79.15 before the report was released. Currently, the downward correction has the potential to extend, with a chance to revisit 78.0 and, subsequently, 77.80, where buyers are expected to enter.

Gold approaches $2770

In yesterday’s trading, Gold climbed to around $2762, but has since retreated to the $2740 level today. Despite this pullback, the upward momentum appears strong, indicating that this correction is likely a temporary phase before upward movement resumes. Currently, gold is still aiming for the critical resistance level at $2770, which might be reached by the end of this week.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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