Equities struggle to push past the uncertainty, silver volatility spikes

• Momentum in equities fizzles out as investors scrutinise US-China headlines
• Silver short-squeeze drives volatility

The ongoing US-China trade war is weighing on sentiment in equity markets despite an attempted recovery on Monday. European stocks are trading lower across the board and US futures point to a similar dynamic once the session gets underway after China’s Ministry of Commerce announced that it is taking countermeasures against five US-linked firms, despite announcing that they held working-level talks on Monday and noted that both sides have maintained communication. Markets are still hopeful that another TACO trade will happen, but the risks of further escalation and imposition of 100% tariffs by the end of the month are limiting further upside in a stock market that was already heavily overbought. This mix of caution and hope is keeping the volatility contained but the break can go either as further headlines shape the narrative in markets.

NASDAQ 100 daily chart

Past performance is not a reliable indicator of future results.

Meanwhile, silver is crashing down from another high in early trade driven by a short squeeze after concerns about liquidity emerged. Silver inventories in London are historically low, creating a premium compared to the price of the metal trade in New York. The lack of physical volumes coupled with increased demand for precious metals is likely to continue driving the price of silver higher, however, heightened volatility is expected.

Silver (XAG/USD) daily chart

Past performance is not a reliable indicator of future results.