Stocks wobble: Tech takes a hit as the Nasdaq drops 3% and traders eye a possible end to the US shutdown.
Gold steadies, Bitcoin rebounds: Safe havens and crypto find their feet after a wild few weeks.
Central banks stay cautious: The Fed, BOE, and RBA all hold steady while traders bet on more cuts ahead.
The US stock market finally lost its footing last week after three straight weeks of gains. A sharp sell off in the tech sector sparked concern that valuations have run a little too hot. The Nasdaq 100 ended the week down nearly 3% while the S&P 500 slipped 1.5%.
Over the weekend there was a glimmer of optimism that the longest US government shutdown in history might finally be nearing an end, and that alone has helped stem the outflow from equities. It will be a huge relief for traders to see Washington back in business. The lack of official economic data has been frustrating to say the least. Last week’s Non Farm Payrolls and PCE numbers were cancelled again, forcing traders to rely on private bank estimates, most of which point to a slowing labour market but not a collapse.
The only official data came from Michigan’s Consumer Sentiment Index which dropped to its lowest reading in three years. Despite the gloomy tone, traders are growing more confident that the Fed will continue cutting rates, with markets now pricing in a 70% chance of another 25 basis point cut at the next meeting.
Across the pond, the Bank of England kept rates on hold after a tight 5 to 4 vote. The close call weighed on sterling as traders began pricing in another cut at the next meeting. Meanwhile, the Reserve Bank of Australia also left rates unchanged but struck a slightly more hawkish tone, noting that inflation remains a challenge. Futures markets now suggest no further cuts until late 2026 which should help keep the Aussie dollar relatively firm in the short term.
Gold seems to have found its footing after that sharp 10% correction. Last week saw four positive sessions out of five although prices finished roughly where they started. Still, the new week has kicked off in positive territory helped by expectations of further US rate cuts and a weaker dollar as optimism builds around an end to the government shutdown.
Bitcoin also ended last week 5% lower in the broader risk off tone but has since bounced back as risk on sentiment returns. If the shutdown officially wraps up this week we could see another strong move higher in crypto alongside equities.
This week looks quieter on the macro front with the spotlight squarely on US inflation data. The Consumer Price Index will be the main event. It is not the Fed’s preferred measure of inflation but with so few official releases lately, traders will be hanging on every tick. I’ll be streaming it live and running a Prize Trivia during the release, so don’t miss it:
Friday brings more inflation focused data with Producer Prices and Retail Sales, both of which could help fill in some of the blanks. But the real story remains the US government shutdown. The Senate votes again on Wednesday and if a deal is finally reached, it is likely to give stocks a big boost and could push indices back toward record highs.
On my radar this week
• Risk on assets look attractive again. Stocks could make a run for new highs.
• Crypto and Bitcoin buyers may step back in after recent weakness.
• Gold should continue to edge higher with a softer dollar backdrop.
• On Forex, the USD may remain under pressure while EUR and AUD could outperform.
• I’ll be watching EURGBP for buying opportunities and GBPAUD for potential shorts.
As always, I’ll be keeping an eye on market correlations, just as we teach in PropIQ, because the best trades often come from spotting how these markets move together or drift apart.
Disclaimer
This market commentary is provided for educational and informational purposes only. It reflects the opinions of the author at the time of writing and should not be taken as financial or investment advice.
Funded Trading Plus operates evaluation and simulated funded programs, not live trading accounts. All references to trading, strategies, or market opportunities relate to simulated trading environments. Past market performance or individual trader results are not indicative of future outcomes.
About Andrew Lockwood
Andrew Lockwood is a seasoned professional trader with over 40 years of experience in financial markets. Starting his career on the floor of the London International Financial Futures Exchange (LIFFE) in the 1980s, Andrew has traded through multiple market cycles and volatility regimes. Today, he specialises in prop trading strategies, focusing on technical setups, risk management, and trader psychology. As the founder of PropIQ and a leading mentor, Andrew is dedicated to training the next generation of prop traders with proven, real-world trading methods.