US Equities Decline; Tech Slumps as NFP & Key Earnings Loom

The EUR/USD pair weakened sharply on Tuesday, dropping 0.70% as risk-off flows intensified. Mounting concerns over threats to the Federal Reserve’s independence, controversial U.S. policy developments, and fiscal strains abroad drove the EUR/USD pair lower.

Market jitters deepened after U.S. President Donald Trump’s dismissal of Fed Governor Lisa Cook, a decision now awaiting a court ruling. The White House has ramped up pressure on the Fed to cut rates, amplifying investor unease.

Adding to uncertainty, the U.S. Court of Appeals ruled Trump’s tariffs illegal but left them in place until October 14 as the matter heads to the Supreme Court. The heightened policy and legal uncertainty boosted safe-haven flows into gold and the U.S. dollar.

In Europe, sentiment deteriorated ahead of France’s September 8 no-confidence vote, which weighed on broader G8 currencies—with the greenback standing as the notable exception.

Economic data provided few reasons for optimism. In the U.S., the ISM Manufacturing PMI contracted for the sixth straight month, inching up from 48.0 to 48.7, short of the 49.0 consensus. Sub-indexes showed factory employment and production both weakening, while prices paid eased modestly, reflecting lingering tariff effects.

Across the Atlantic, euro area inflation surprised to the upside. The Harmonized Index of Consumer Prices (HICP) rose 2.1% YoY in August, surpassing expectations and July’s 2.0% reading. However, core inflation ticked down slightly to 2.3%, in line with forecasts.

Gold extended its rally in Asian trading on Wednesday, briefly touching a new record high near $3,547 before paring some gains. While bullish momentum remains strong, extremely overbought conditions and a modest U.S. dollar rebound capped further upside.

Investor demand for the safe-haven metal remains robust amid firm expectations that the Federal Reserve will begin easing policy this month. Markets are now pricing in not only a 25 bps rate cut in September, but also the possibility of a second cut before year-end—supporting the appeal of non-yielding assets such as gold.

At the same time, persistent trade-related uncertainties and heightened geopolitical risks—from the ongoing Russia-Ukraine conflict to tensions in the Middle East—continue to underpin demand. Despite the supportive fundamentals, near-term upside could face resistance as traders take profits following gold’s historic surge. A modest uptick in the dollar has also slowed momentum, though its gains appear limited given dovish Fed expectations.

Looking ahead, investors will turn their attention to a busy U.S. economic calendar. Wednesday’s JOLTS Job Openings report will be followed by the ADP private-sector employment data and ISM Services PMI on Thursday. The week’s main event remains Friday’s Nonfarm Payrolls report, which could shape the Fed’s policy path and dictate the next leg in gold’s move.

Crude oil prices climbed on Tuesday, boosted by fresh U.S. sanctions targeting Iran’s oil revenue and expectations that OPEC+ will maintain voluntary output cuts at its upcoming meeting.

The U.S. Treasury announced sanctions on a network of shipping companies and vessels accused of disguising Iranian oil as Iraqi-origin shipments. The move comes as the Trump administration maintains pressure on Tehran while nuclear talks remain frozen.

Attention now shifts to the September 7 OPEC+ meeting, where analysts expect the group—including Saudi Arabia and Russia—to keep existing voluntary cuts in place. The decision is seen as key to maintaining prices within the $60 per barrel range despite a potential supply surplus later this year.

The Shanghai Cooperation Organization (SCO) summit in China brought together leaders from over 20 non-Western countries, including Xi Jinping, Vladimir Putin, and India’s Narendra Modi. Analysts warned the event could prompt Washington to consider additional secondary sanctions, including on India, potentially tightening global supply. The U.S. and India are discussing a bilateral trade agreement after Washington doubled tariffs on Indian goods in response to its continued purchases of Russian crude.

Expectations of another U.S. crude stock draw added support to prices. The end of the U.S. summer driving season with Labor Day also marked a key demand transition.

U.S. equities closed lower on Tuesday, with technology stocks leading the decline as trade policy uncertainty and a surge in Treasury yields pressured risk sentiment.

Fresh concerns over U.S. trade policy weighed on markets after President Donald Trump said he would seek an expedited Supreme Court ruling on an appeals court decision declaring most of his tariff’s illegal. The ruling emphasized that only Congress has the authority to impose duties.

While the administration is confident that the conservative-leaning court will ultimately uphold Trump’s authority, analysts warned the uncertainty could cloud corporate planning.

Treasury yields climbed in tandem with global bond yields, reflecting concerns over rising sovereign debt and the potential fiscal fallout if tariff revenues must be repaid. Higher yields hit rate-sensitive sectors, particularly technology, with Nvidia leading the sector lower.

Elsewhere, PepsiCo rose more than 1% after reports that activist investor Elliott Management had built a $4 billion stake and is pressing for strategic changes.