Fundamental Analysis - Silver prices experienced fluctuations and declined, while platinum prices followed gold prices downward. The U.S. stock market faced significant sell-offs, with all three major indices closing lower. The S&P 500 and Nasdaq indices recorded their largest single-day declines since October 10, indicating growing concerns over high valuations. Investors are increasingly worried about overvalued stocks, leading to profit-taking despite some companies reporting good earnings that did not meet "outstanding" expectations. JPMorgan CEO Jamie Dimon previously warned of a significant market correction risk within the next six months to two years. The U.S. federal government has been in a shutdown for 35 days, matching a historical record, which has resulted in a lack of official economic data, making the market more reliant on private sector employment reports like ADP [1][3]. Currency Market Dynamics - The ongoing U.S. federal government shutdown has resulted in the inability to release key official economic data, prompting investors to focus on the upcoming ADP employment report for economic insights. Additionally, there is a divergence of opinions among Federal Reserve officials on how to address the current data gap. The U.S. dollar index has surpassed the 100 mark for the first time since early August. The euro has depreciated against the dollar for the fifth consecutive day, reaching a low of 1.1483, the weakest level since August 1. Despite the strength of other safe-haven currencies like the yen and Swiss franc, the dollar has slightly declined against the yen to 153.60, while the yen remains near an eight-and-a-half-month low. Market strategists note that despite frequent discussions about the "decline of the dollar," it remains a reliable safe-haven asset during market turmoil. The shift in market sentiment towards safe-haven assets corresponds with the stock market decline and increased demand for government bonds. Commodity currencies like the Australian dollar have come under pressure, dropping 0.8% to 0.649 due to the Reserve Bank of Australia maintaining interest rates and expressing caution towards further easing. The shift in Federal Reserve policy expectations is a key driver of the dollar's strength, with the probability of a rate cut in December dropping from 94% to 65% following last week's expected rate cut. The ongoing government shutdown has led to a lack of economic data, making the differing views among Federal Reserve officials on the economic situation a focal point for the market. Despite the recent strong performance of the dollar, the dollar index is currently in a fluctuating rebound trend [3].

Market Analysis - The S&P 500 Index (SPX) is currently facing a potential pause or inflection point at the 6,760 level, which is approximately 10% above the previous all-time closing high in February 2025 [1][3] - Recent trading activity has shown a short-term overbought condition as the SPX approached the 6,760 level, leading to profit-taking among bullish investors [3] - A significant sell-off occurred following President Trump's announcement regarding potential tariffs on China, which has reignited tariff uncertainty in the market [4] Volatility and Speculation - The net short position among large speculators on CBOE Volatility Index (VIX) futures is at its highest since August 2022, which historically preceded a 10% decline in the SPX [7] - The VIX surged higher as the SPX sold off, indicating that large speculators were positioned for lower volatility, marking the largest bet on lower volatility in over three years [7][8] - An unwind of the short volatility trade poses a risk, especially with the SPX closing below its 30-day moving average, which could lead to further selling in the stock market [8] Sentiment and Market Dynamics - The VIX has shown two peaks around the late-May closing high, suggesting potential volatility selling opportunities that could temporarily halt the VIX's advance and the equity market's selloff [9] - A close above 22.30 on the VIX could signal further increases in volatility and declines in equity prices in the coming weeks [12] - If short-term traders interpret the recent selloff as a "risk-off" cue, it may lead to reduced exposure from fund managers and increased put buying relative to call buying, indicating potential market weakness [13] Technical Indicators - The SPX's close below its 30-day moving average raises concerns about correction risks, similar to previous instances in July 2024 and February 2025 [14][15] - The 50-day moving average, located only 22 points below the recent SPX close, may provide immediate support if the SPX continues to decline [15]

Group 1 - Emerging market stocks have performed well this year, with the MSCI Emerging Markets Index rising approximately 15% [1] - DWS remains optimistic about the Chinese stock market, despite significant gains since early 2025, while being cautious about the Indian market due to high valuations [1] - DWS anticipates further downward adjustments in corporate earnings for Q2, although technology and financial companies may be less affected [1] Group 2 - European equities are still a preferred choice for DWS, with long-term potential driven by fiscal support and international capital inflows, despite ongoing political and geopolitical uncertainties [2] - The 10-year U.S. Treasury yield has recently increased but remains below early 2025 levels, with expectations of a slight rise to around 4.50% by June 2026 [2] - The U.S. dollar has depreciated approximately 13% against the euro, and DWS expects the dollar to remain weak due to the U.S. government's inclination towards a weaker dollar policy [2]