Positive close for Asian Pacific indices

US stock indices built on Friday’s gains yesterday and ended higher across the board. The tech sector rebounded sharply, and the NASDAQ added 2.7% on the day. The small cap Russell 2000 jumped 1.9% and the S&P 500 ended up 1.6%. The Dow lagged somewhat but managed to tack on 0.4% by the close. Alphabet, owner of Google and YouTube, surged 6.3% yesterday and added another 3.6% overnight.

Source: TN Trader

These gains followed the release of Google’s upgraded Artificial Intelligence (AI) model, Gemini 3, which is outperforming other AI models, in particular its main rival, ChatGPT. OpenAI’s CEO, Sam Altman, the man behind ChatGPT, has acknowledged Gemini 3’s capabilities and recently warned his staff that competition was increasing across the Artificial General Intelligence (AGI) space.

It’s worth noting that US stock index futures were firmer overnight but gave up gains in early European trade this morning. Across big tech and chip stocks, Alphabet is the only large player trading in positive territory this morning. It’s fair to say that investors seem quite nervous currently. They remain cautious despite a stock market recovery on Friday, together with yesterday's gains.

This follows last Thursday’s huge reversal in Nvidia’s stock price, which saw it lead tech up, and then down. That sell-off came despite a stellar earnings report and positive forward guidance. The trigger for Friday’s rebound was a speech from the New York Fed’s CEO, John Williams, which raised the probability of a December rate cut.

Mr Williams is a senior member of the Federal Reserve, and his dovish comments follow on from a string of speeches from other Fed members which dampened the likelihood of another cut next month. Yet his comments should not be seen as an outlier.

Analysts are convinced that he wouldn’t have been so explicitly dovish without getting the thumbs up from Fed Chair Jerome Powell first. This is even though it was Mr Powell who played down December rate cut expectations during a press conference after the FOMC’s monetary policy meeting at the end of last month. This sudden shift in outlook would suggest that the Fed is now prioritising concerns about the labour market over above target inflation.

This comes as there’s still a lack of clarity over both parts of the Fed’s dual mandate, thanks to the six-week-long government shutdown, which began in early October. Even last week’s delayed September jobs data was inconclusive.

Payrolls came in above expectations, but there was also an unwelcome uptick in the Unemployment Rate. There will be another Non-Farm Payroll release before the Fed’s rate decision next month. But the data won’t be ‘clean’ thanks to difficulties collecting the October numbers due to the shutdown. Retail Sales and wholesale inflation will be released this afternoon.

European stock indices began the day on the front foot, following the positive move across US stock index futures. They then turned lower as US indices gave back early gains to fall into the red. The moves were relatively modest and undramatic, as investors look ahead to the shortened trading week due to Thursday’s US Thanksgiving holiday.

Source: TN Trader

There were no major economic releases across Europe and the UK. But investors are girding their loins ahead of tomorrow’s Autumn Budget from UK Chancellor of the Exchequer, Rachel Reeves.

So many kites have been flown to test out the market’s appetite for all manner of wheezes and fiscal chicanery. Income tax hikes, wealth taxes, pension twiddling and mansion taxes are among the horrors which may or may not come. But one thing seems likely, and that is that this government won’t make a serious dent in spending.

The Treasury faced a backbench revolt at the last budget when it tried to arrest spiralling welfare costs. Unfortunately, this is a weak government, and it’s unlikely its reputation will be improved by tomorrow’s budget. Prove us wrong. Please! Meanwhile, defence stocks, which have been volatile amid developments around a US-brokered Ukraine peace plan, steadied after two sessions of steep declines.

It was another quiet morning across Forex for the most part. The spot Dollar Index continued to trade just south of 100.00, while the December contract, which has a premium of around 25 ticks, was yet again unable to clear resistance around 100.25.

Ahead of tomorrow’s UK budget, sterling was steady around 1.3100 against the US dollar. So far this month, the GBP/USD has ranged between 1.3200 and 1.3000.

Meanwhile, the Japanese yen was a touch stronger across the board. The yen has been very weak of late as the Japanese government has put together a large programme of fiscal stimulus, which more than offsets the likelihood of a small rate hike from the Bank of Japan. But markets are preparing themselves for the possibility that the Ministry of Finance may intervene to support the yen.

Some have speculated that it may happen this week, particularly as FX will be relatively quiet over Thanksgiving. Others believe that the USD/JPY may need to hit 158.00, or even 160.00, to trigger intervention. 

Source: TN Trader

Gold was a touch weaker this morning, giving back a modest part of yesterday’s gains. Overall, there’s been no change in the market structure. Prices continue to consolidate, with resistance coming in around $4,200 and support holding at $4,000 per ounce.

The daily MACD has moved sideways over the past fortnight, albeit with a slight negative bias. But it is no longer overbought by any stretch of the imagination. Nevertheless, the bulls seem to have lost their mojo, while there’s currently little fight left in the bears for now.

Source: TN Trader

Once again, it’s a similar story for silver. It too was a touch weaker in early trade, having put in a strongly positive session yesterday. Yet it continues to consolidate, finding near-term support around $50 per ounce, and some resistance near $52. Silver traders appear to be sitting on their hands for now. Bulls and bears lack conviction, and both await a catalyst to force silver out of its current range.

Source: TN Trader

On Friday, oil prices fell to their lowest levels in a month. This saw front-month WTI drop back towards $56 per barrel, having traded close to $61 earlier in the week. Prices bounced yesterday as short sellers came in and booked profits, and oil was little changed in early trade this morning.

Source: TN Trader

Last week’s selloff came as traders took in the news of an agreement, drawn up by the US, which had the potential to end the war between Russia and Ukraine. While the initial deal was seen as strongly favouring Russia, it now sounds as if Ukraine has finally had some input and has managed to engineer some significant changes.

President Trump had set Thursday’s Thanksgiving as the deadline for an agreement. But that has since been lifted. If a deal can be reached, that should bring an end to sanctions on Russian oil exports, and this in turn should bring in additional supply to an oversupplied market. Meanwhile, global demand growth continues to slow.

Gas prices were sharply lower in early trade this morning, with prices back to levels last seen this time last week. The decline reflects the impact of a milder weather outlook, which continues to reduce near-term demand expectations. But there’s also some evidence of profit-taking as prices pull back from 10-month highs seen over the past fortnight.

Crypto markets saw strong gains on Monday, rallying in line with the broader increase in risk appetite. But some of that upside was surrendered overnight. Bitcoin remains significantly below $90,000. The tone suggests improved sentiment but also lingering caution after recent volatility.

The VIX fell sharply yesterday as risk appetite returned, though it edged up slightly in early trade today. The index continues to reflect shifting expectations around market swings, tracking from the extremes of last week’s Nvidia-driven reversal back toward a more neutral zone.

The two-day rally has given the bulls renewed confidence, though US stock index futures remain relatively muted. Today’s data releases, which include US PPI, Retail Sales, Business Inventories and private oil inventory data, could be pivotal given the Fed’s upcoming meeting and the recent surge in rate-cut expectations.

The holiday-shortened week is likely to influence market dynamics and volume, adding another layer of uncertainty. With a December rate cut from the Fed now at an 80% probability, traders are taking note of just how quickly expectations have shifted. All eyes turn to today’s catalysts to determine whether the rebound has legs or whether the tape is setting up for another twist.