Positive close for Asian Pacific indices

US stock indices pushed higher for a fourth straight session yesterday. The NASDAQ and Russell 2000 led the other indices higher, with both adding 0.8% on the day. The Dow and S&P 500 both finished 0.7% higher. US equities are closed on Thursday for the Thanksgiving holiday, although there’s a shorter-than-usual session for stock index futures. Sentiment improved this week on the increased probability of a rate cut from the Federal Reserve next month.

Source: TN Trader

The CME FedWatch Tool, which uses real money flows to calculate the implied chances of rate changes, now gives an 85% chance of a 25-basis-point reduction in December, up from just 30% last week. The biggest part of the shift came after a speech last Friday from New York Fed CEO John Williams.

Mr Williams, a senior member of the Federal Reserve, appeared to open the door once again for another rate cut next month. His comments were a contrast to recent speeches from other Fed members, which were distinctly hawkish in nature. This seems odd.

Yet analysts are convinced that he wouldn’t have been so explicitly dovish without getting the thumbs up from Fed Chair Jerome Powell. Ironically, at the end of last month, Mr Powell used his post-FOMC press conference to dampen December rate cut expectations. This sudden shift in outlook would suggest that the Fed is now prioritising concerns about the labour market over sticky inflation data.

This week, Fed members Christopher Waller and Mary Daly followed John Williams in supporting the idea of an additional rate cut before year-end. This helped to bolster US equities going into the long holiday weekend.

Despite this week’s recovery, November hasn’t been good for equities, with market darling Nvidia leading the decline.  Despite a stellar set of third-quarter earnings, the chip designer at the vanguard of the Artificial General Intelligence (AGI) trade fell from a record closing high of $210 at the end of last month to break briefly below $170 on Tuesday. That’s a high-low decline of 19%.

The selloff was triggered by some high-profile selling. But there are also concerns that Nvidia finally has some serious competition. Meta Platforms, an Nvidia customer, is talking to Alphabet’s Google about using its proprietary tensor processing units in Meta’s data centres. This looks like quite a specific deal, but it has certainly opened a breach in Nvidia’s near-monopoly.

The share price has just experienced its worst run since late January, when Chinese startup DeepSeek launched a free AI assistant produced at a fraction of the cost of its US competition. When investors woke up to the implications of this, they sent Nvidia’s share price down 36% over the next six weeks. Could we be seeing something similar now unfolding?

European stock indices were mixed in early trade. Investors were unwilling to take on fresh exposure with the US closed for Thanksgiving today. Trading volumes are also expected to be light due to an early US close tomorrow as well. The UK budget came and went. Most of the market action took place before Chancellor Reeves got to her feet, as the budget contents had been mistakenly released early by the Office of Budget Responsibility.

Source: TN Trader

You couldn’t make it up, as they say at The Mail. Ms Reeves got off to a very shaky start. But she put in a strong finish after producing a budget seemingly designed to appeal to her own backbenchers. The tax rises pleased financial markets as well. Gilts rose, as did sterling, which was an impressive result. This may be enough to keep Ms Reeves and her boss, PM Starmer, in place until local elections in May next year.

Unsurprisingly, Forex markets were relatively quiet in holiday-shortened trade this morning. The Dollar Index continued to steady just north of 99.00. It fell sharply earlier this week as markets repriced after senior Fed members expressed their support for a rate cut next month.

Once again, the spot Dollar Index ran into stiff resistance around 100.00. The Japanese yen made some modest gains overnight. Traders were exercising some caution after Japan’s Ministry of Finance suggested it was prepared to intervene in FX markets to support the yen.

The USD/JPY dipped below 156.00. But there’s a general feeling that Japanese policymakers will hold off from intervening unless the USD/JPY were to rise to 158.00-160.00. Others have suggested that the MOF would get more bang for its buck if it acted now in the thin holiday trade.

Source: TN Trader

Gold had a positive start to the week. Investors reacted positively to dovish comments from some members of the Federal Reserve who now back an additional rate cut before year-end. The news led to a sharp pullback in the US dollar and a commensurate jump in gold.

Gold appears to be consolidating around $4,150. This is helping the daily MACD reset at lower levels. This could be interpreted as a loss of upside momentum. Alternatively, it could be a precursor to another attempt to break above resistance around $4,200. Support comes in around $4,000.

Source: TN Trader

Silver has outperformed this week. Overnight, prices pushed up towards $54 per ounce, hitting their best levels in a fortnight. This brought silver back within sight of its all-time high of $54.60 from mid-October. But for anyone concerned about the bearish significance of a double-top, they now must consider a triple-top as well.

The daily MACD suggests that upside momentum is building, and silver has a reputation for large, sudden and unexpected moves. But whether that next big move is more likely to be up or down seems impossible to predict.

Source: TN Trader

Oil prices were a touch firmer this morning, building on yesterday’s modest gains. Front-month WTI appears to have found some support around $58 per barrel this week, on a closing basis at least.

Source: TN Trader

Overall, oil has come under selling pressure of late. Hopes that the war between Russia and Ukraine may be ending have helped keep a lid on prices recently. Should a peace treaty be agreed, then this should bring an end to sanctions on Russian oil exports (such as they were) and therefore boost supply.

Yesterday, the US Energy Information Administration announced an unexpected build in crude inventories. Analysts had anticipated a modest drawdown. Despite this, prices rallied, although not enough to retest $59. Traders look to be positioning themselves ahead of Sunday’s OPEC/OPEC+ meetings.

Gas was a touch weaker in early trade on Thursday, but was still hanging on to most of yesterday’s gains. It appears to be stabilising after a period of softness driven by ample storage, and as investors booked profits following its strong bullish run. The market has lacked a clear catalyst in recent sessions, and prices continue to consolidate.

Bitcoin pushed back above $90,000 yesterday and built on these gains this morning. This week’s price action has proved constructive as both Bitcoin and Ether have bounced back as overall risk sentiment improved. It’s possible that these cryptos have finally found a bottom. But it’s unlikely that last week’s lows would hold should there be another leg down across tech stocks.

Volatility continues to ease as risk appetite strengthens following the four-day rebound in US equities. The shift reflects renewed confidence across markets as expectations firm around a December rate cut. Still, levels remain elevated relative to earlier in the year, showing that underlying uncertainty hasn’t fully disappeared.

The bulls now appear back in control after the tech-driven wobble earlier this month.  Seasonal trends and historical patterns continue to support the case for further gains, especially heading towards the Fed’s monetary policy meeting in less than a fortnight’s time.