* Stocks mixed as Nasdaq outperforms Dow Jones

* Gold and silver volatile on some profit taking ahead of NFP

* Dollar slightly firmer against peers as markets assess labour market data  

* EZ inflation eases to 2% before possible move below target in 2026  

FX: USD was relatively quiet as the index traded around the 100-day SMA at 98.60. Data was mixed with ADP private sector payrolls modestly missing estimates while JOLTS job openings were also weaker than expected. The latter reinforces the ‘low hire, low fire’ theme as markets await Friday’s NFP report. The flip aside saw the ISM services index hit a 14-month high with surging output, orders and employment. Interestingly, this contrasts sharply with softer regional surveys. Friday will also likely bring the Supreme Court decision on Trump’s tariffs which could hurt USD if struck down.

EUR was similarly muted ahead of NFP though eurozone inflation was of interest. Headline inflation dropped back to the 2% target in December from 2.1% in November, with core inflation falling from 2.4% to 2.3%. The ECB has referred to the current situation as ‘the good place’ and is unlikely to change that mantra as current data continues to point to a benign inflation environment. Going forward, prices could drop further due to low energy prices, softening wage growth and a strong euro but around 2% seems very likely in the coming months.

GBP was the mild underperformer as UK-US rate spreads have faded a little in recent days. There is very little domestic news, with broader sentiment and dollar drivers moving sterling at present.    

JPY was quiet as focus stayed on rising JGB yields though the two-year paused around 1.2% These should be fundamental support for the yen though the currency isn’t especially acting as such. Momentum is neutral in the major with the daily RSI hovering just above the 50 threshold.

US stocks: The S&P 500 lost 0.34%, closing at 6,921. The Nasdaq moved higher by 0.06% to finish at 25,654. The Dow settled lower by 0.94% to close at 28,996. Healthcare, Communication Services and Tech were the only sectors in the green. Utilities, Industrials, Materials, Financials and Real Estate were all down over 1.3% in a turnaround to what we have seen with the rotation away from tech in previous weeks. Notably, the German Dax made fresh record highs. Stocks saw two-way trade with upside seen throughout most of the US session before selling off in the afternoon into the closing bell. President Trump called on defence stocks like Lockheed Martin, RTX, Northrop Grumman, Boeing and Palantir to stop buybacks and dividends until they increase production and maintenance. Housing was also in the Trump radar as he said he will ban big institutional investors from buying more single-family homes, which weighed on the real estate sector. Chevron, ConocoPhillips and Exxon Mobil will meet with US President Trump on Friday, according to the WSJ.

Asian stocks: Futures are mixed. APAC stocks were mixed as markets waited for major US data despite record highs Stateside. The ASX 200 saw tech strength help with modest gains, amid softer than expected CPI data. Lower inflation doesn’t alter the market view that the RBA will be raising its policy rate by the May policy meeting. The Nikkei 225 was the laggard as China imposed export controls on Japan. The Hang Seng and Shanghai Comp moved lower with Hong Kong hurt by tech and energy losses. The former saw China announce measures for online platforms.

Gold took a breather after a strong start to the year. Haven buying likely abated as Venezuela calmed, though President Trump hinted about action in Greenland.

Chart of the Day – Gold push higher pauses

It’s been quite a frenetic and volatile start to kick off the new year for bugs so some profit-taking and reassessment of the Venezuelan situation especially seemed in order yesterday. We note geopolitical events rarely impact markets on a lasting basis, but the unpredictability of current US foreign policy likely underpins support for bullion. Fed rate cut expectations have also buoyed prices with around 60bps of cuts currently predicted by markets. The announcement of the pick for the next Fed chair, a candidate that the market believes will push for lower interest rates amid a divided Committee, will be important. Otherwise, focus is on NFP on Friday with the record in sight at $4,550 if the data is weak. Central bank buying and more of the debasement trade should support prices if we get stronger figures.