On Wednesday, index futures are starting the session flat after a clearly bearish performance yesterday. Today’s price action looks like a modest technical correction following a very negative session. Yesterday, indices attempted an early rebound, but that reversal quickly failed and selling pressure returned, pushing prices lower into the close. This keeps the broader market firmly in a risk-off mode, with sentiment still tilted toward caution rather than dip-buying.
On the currency market, the Asian session has been relatively calm. We are seeing slight strength in the US dollar, continued weakness in the British pound, and a noticeable bid in the Japanese yen. Overall, FX flows remain defensive, consistent with the risk-off tone seen in equities.
Commodities continue to reflect this environment. Gold remains strong and extended its rally sharply yesterday. What stands out is the divergence between gold and silver. Silver is still trading at elevated levels, but gold clearly outperformed yesterday and is doing so again today. During the Asian session, gold climbed close to 2%, while silver moved into negative territory, highlighting a rotation toward the more defensive precious metal. In energy markets, oil continues its bearish correction, with downside momentum still intact.
From a fundamental standpoint, attention is split between earnings and macro developments. Yesterday after the market close, Netflix reported earnings that came in above expectations. Despite that, the stock is trading more than 5% lower in pre-market, a reminder that positioning and valuation are currently outweighing headline results. Today before the market opens, earnings are expected from Johnson & Johnson and Charles Schwab, which could add to early-session volatility.
Looking at the macro calendar, the key release will be UK CPI inflation, with consumer inflation expected at 3.3%. In addition, markets are bracing for further headlines around trade wars, tariffs, and Greenland, as discussions and speeches take place during the World Economic Forum meetings. Investors will be closely listening to comments from figures such as Christine Lagarde and Donald Trump, as any remarks on trade or geopolitics could quickly shift sentiment.
Finally, cryptocurrencies remain under pressure. Bitcoin suffered a sharp decline yesterday and is continuing to move lower, keeping the short-term sentiment clearly negative. From a technical perspective, the downside remains open, with potential targets well below the 90,000 level and even toward the 80,000 area if selling pressure accelerates.