Closing Recap

U.S. stocks finished broadly higher as markets returned from the long weekend, with investors adopting a more defensive posture ahead of Fed Chair Powell’s speech and the start of earnings season. S&P 500 surged in a “buy the dip” rally, erasing some of Friday’s steep losses as President Trump softened his tone on China, reigniting trade optimism. Gold and oil were little changed, while Treasury yields were mixed and the U.S. dollar firmed slightly. In the currency markets, the U.S. dollar was firmer overall but saw choppy action, with the GBP/USD pair weakening on a soft UK jobs report, while the Japanese Yen remained on the defensive due to domestic political instability and the EUR/USD was capped by large options expiries. Bitcoin, meanwhile, is attempting to find its footing after a massive flash crash.

Key Takeaways 

• Massive Rebound After Friday’s Rout: Equities staged a powerful rally (S&P +1.6%, Nasdaq +2.2%), recovering a significant portion of Friday’s losses as investors once again bought the dip. 
• Trump Softens China Tone: The rally was ignited by President Trump’s weekend comments that the China situation “will all be fine,” which significantly calmed fears of an immediate trade war escalation. 
• Government Shutdown Enters Day 13: The ongoing U.S. government shutdown continues to be a major source of uncertainty, delaying key economic data and fueling safe-haven demand. 
• Gold & Silver Surge to New Record Highs: Gold prices soared over 3% to a new record of $4,133/oz, and silver broke above $52, driven by the U.S. shutdown, dovish Fed expectations, and geopolitical risks. 
• Dollar Steadies as Euro and Pound Weaken: The U.S. dollar was on the defensive amid improving risk sentiment, with the Japanese Yen plunging as USD/JPY gapped up on political news in Japan, while the Euro was weighed down by political turmoil in France. 
• Bitcoin Stumbles After Brutal Flash Crash: Bitcoin and crypto assets rebounded sharply, with Bitcoin up 5% and Ethereum up over 10%, after a massive “flash crash” of liquidations on Friday. 
• Oil Prices Firm: Crude oil prices bounced off five-month lows, supported by the improved trade sentiment. 
• Treasury Market Closed: The U.S. bond market was closed for the Columbus Day holiday. 
• Focus on Bank Earnings: The market now looks ahead to the start of Q3 earnings season, with major banks reporting tomorrow.

Market Overview

After a brutal end to last week, Wall Street was treated to a classic “buy the dip” moment on Monday. U.S. equity markets opened for the week with a powerful surge, as investors aggressively bought the dip following Friday’s brutal, tariff-induced sell-off. The catalyst for the sharp turnaround in sentiment was a series of comments from President Donald Trump over the weekend that softened his aggressive stance on China. After threatening a 100% additional tariff on Friday, which wiped out an estimated $2 trillion in market value, Trump stated on Truth Social that the situation “will all be fine,” a pivot that provided immense relief to investors. 

Index	Last	Change	% Change
S&P 500	6654	102.16	0.0156
Nasdaq	22694	490.18	0.0221
Dow Jones	46067	588.05	0.0129
Russell 2000	2461	66.82	0.0279

This renewed trade optimism overshadowed ongoing concerns about the U.S. government shutdown, now in its 13th day. While the shutdown continues to create an information vacuum by delaying key economic data, the market’s focus remains on the prospect of a trade resolution and continued accommodative policy from the Federal Reserve. The risk-on mood was palpable, with European markets also rallying. 

Safe-haven assets also saw strong bids, highlighting the underlying anxieties. Gold and silver both surged to new all-time highs, benefiting from the shutdown uncertainty and expectations of Fed easing. Cryptocurrencies staged a massive rebound after a “flash crash” of liquidations on Friday. In the political arena, France unveiled a new government amid ongoing turmoil, while Japan is grappling with a fractured ruling coalition after the new Prime Minister’s party lost a key partner.

Economic Calendar

With the U.S. government shutdown ongoing, there were no major U.S. data releases on Monday. The key data point of the morning comes from the UK. 

• UK Jobs Report (Aug): A mixed report showing the unemployment rate ticking up to 4.8% (vs. 4.7% exp) and weaker-than-expected employment change. While headline wage growth was strong, real wages (adjusted for inflation) showed a more modest picture, keeping the Bank of England on a dovish path.

With the shutdown in full swing and U.S. bond traders on holiday, today’s focus is almost entirely on Fed Chair Powell.

• 11:00 GMT – German ZEW Economic Sentiment. 
• 16:20 GMT – Fed Chair Jerome Powell Speaks. 
• Start of U.S. Earnings Season: JPM, C, WFC, GS are all scheduled to report.

Commodities, Treasuries and Currencies 

Gold prices soared to a new all-time high, with the December futures contract gaining a massive $132.60 (+3.2%) to settle at $4,133.00 per ounce and hitting a record 4,179 in overnight trade. The rally was a direct response to the U.S. government shutdown and expectations of a prolonged Fed easing cycle. Silver also surged to a multi-decade high above $52. Crude oil prices bounced off five-month lows, with WTI gaining 1.00% to settle at $59.49/bbl, as the positive shift in U.S.-China trade sentiment bolstered the demand outlook. 

Asset	Change	Unit	Last
WTI Crude	0.59	USD/bbl	59.49
Gold	132.6	USD/oz	4133
EUR/USD	-0.0047	USD	1.1571
USD/JPY	1.12	JPY	152.25
US 10-Yr Yield	(Closed)	%	(Holiday)

The currency market is seeing the U.S. Dollar hold its ground as weakness in its European and Japanese counterparts provides a supportive backdrop. The U.S. Dollar Index (DXY) was flat to slightly higher, supported by the Yen’s weakness, but the Euro was down as political instability in France created headwinds. 

• EUR/USD: The pair is struggling to hold gains, trading weakly around 1.1570. The Euro is weighed down by the ongoing political crisis in France, where a newly formed government immediately faces a no-confidence motion. A notable $1.2B options expiry at the 1.1600 level, which sits near the 100-hour moving average, is likely to act as a significant technical and options-related resistance cap today. 
• GBP/USD: Sterling has turned sharply lower, falling 0.4% to 1.3285 following the soft UK jobs report. The data reinforces expectations that the Bank of England will remain cautious, weighing on the pound.
• USD/JPY: The pair is trading with a firm tone above 152.00. The Yen remains on the defensive following the election of pro-stimulus PM Takaichi and the collapse of the ruling coalition, which has created significant political instability and pushed back expectations for any BoJ tightening.

U.S. Treasury markets are closed today. Cryptocurrencies are rebounding sharply from Friday’s “flash crash,” with Bitcoin up 5% to over $115,000 and Ethereum up over 10%. In crypto, the aftermath of Friday’s “flash crash” is still being felt. But after a brutal plunge to $102,000 that wiped out over $20B in liquidations, during the overnight session Bitcoin is struggling to find its footing and is trading down around $113,500.

Looking Ahead 

The market will be entirely driven by trade headlines, particularly any further comments from President Trump or Chinese officials that confirm a path toward de-escalation. The ongoing U.S. government shutdown and any progress (or lack thereof) in funding negotiations will also be a key focus. The start of the Q3 earnings season tomorrow, with reports from major banks, will provide the first crucial insights into corporate health and guidance in the face of ongoing uncertainties. What to watch: 

• Powell’s Every Word: In a data vacuum, Fed Chair Powell’s speech is the single most important event of the day. The market is pricing in a 97% chance of an October cut. Any comments that either validate or push back against this aggressive pricing will trigger significant volatility. 
• The Gold & Silver Mania: The move in precious metals is becoming parabolic. While the trend is undeniably strong, the rallies are extremely extended, and traders should be wary of sharp, sudden pullbacks on any unexpected shift in sentiment. 
• Bank Earnings Kick-Off: The start of earnings season provides a new catalyst. The reports and forward guidance from major banks like JPMorgan and Goldman Sachs will offer the first real glimpse into the health of the U.S. economy amid the data blackout. 
• Bitcoin’s Post-Crash Environment: The massive liquidation event has reset the crypto market. Traders will be watching to see if the bounce has legs or if the on-chain signs of declining network usage point to a more prolonged period of consolidation and weakness.