Markets Recover as Yields Ease, Gold and Oil Rise

Market Wrap-up: Markets Rebound as Treasury Yields Pause and Risk Assets Recover

Markets recovered as US Treasury yields paused after their recent rise to multi-year highs. Although the increase in yields moderated, the 10-year Treasury yield was little changed by the end of the session. It briefly climbed to 4.818% on 2 September, its highest level since November 2023.

Yields in the UK, Germany and France also rose, while Japan’s 10-year government bond yield traded near multi-decade highs.

On Wednesday, the S&P 500, tech-heavy Nasdaq Composite and Dow Jones Industrial Average all ended three consecutive sessions of declines. The S&P 500 rose 0.46% to 7,666.60, while the Nasdaq Composite gained 0.45% to 26,217.83. The Dow Jones Industrial Average advanced 0.56% to 53,061.95.

Spot gold rose 1.1% to $4,373.87 per ounce, recovering from its lowest level since 7 August as the US dollar eased from a near three-week high to 99.50.

Geopolitical developments remained in focus after Trump said the renewed US campaign against Iran would not last long, with the comments coinciding with a more limited rise in oil prices. Brent crude, the international benchmark, gained around 1% to $95.63 per barrel at the close, while US WTI crude rose nearly 1% to $91.01 per barrel.

Higher oil prices alongside a weaker US dollar contributed to gains in the Canadian dollar. USD/CAD extended its decline for a second consecutive session, trading around 1.3830. USD/JPY also fell sharply towards 158.00 amid fresh speculation over possible coordinated intervention by the US and Japan to support the yen.

Meanwhile, US private-sector hiring slowed in August. The ADP National Employment Change showed that private-sector employment increased by 38K, down from 46K previously and below the 47K expected.

Although the report had a limited immediate impact on markets, it may provide an early indication of the direction of Friday’s official Non-Farm Payrolls report.

Looking ahead, markets will focus on the latest Initial Jobless Claims and ISM Services PMI data.

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DXY:

Key takeaway:

• The dollar eased towards 99.50 as Treasury yields pulled back from recent highs.
• Softer-than-expected ADP hiring added to the focus on incoming US labour data ahead of Friday’s payrolls report.

Technical Outlook:

• Daily Bias: Bearish
• Support: 99.10  
• Resistance: 99.62  

Gold:

Key takeaway:

• Gold recovered 1.1% to $4,373.87, rebounding from its lowest level since 7 August.
• The recovery coincided with a softer dollar and a pause in Treasury yield gains.

Technical Outlook:

• Daily Bias: Bullish
• Support: 4,363
• Resistance: 4,471

Oil:

Key takeaway:

• Brent and WTI rose around 1%, keeping crude prices near elevated levels.
• Developments surrounding Iran remained in focus, while comments on the duration of the US campaign helped temper the move.

Technical Outlook:

• Daily Bias: Bullish
• Support: 88.97
• Resistance: 92.32

Japanese Yen:

Key takeaway:

• USD/JPY fell towards 158.00 as the yen strengthened sharply during the session.
• Fresh speculation over possible US-Japan coordination on yen support added to buying interest in the Japanese currency.

Technical Outlook:

• Daily Bias: Bearish
• Support: 156.68
• Resistance: 158.20

Calendar Watch:

• Initial Jobless Claims: Markets will assess the latest signals on US labour-market conditions.
• ISM Services PMI: The data will offer a fresh read on activity in the US services sector.

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