Japan leads Asian Pacific gains

US stock indices pushed higher for a third straight session on Tuesday. The small cap, domestically focused Russell 2000 led the charge, ending up 2.1%. The old school Dow played catch-up, adding 1.4%, while the S&P 500 and NASDAQ tacked on 0.9% and 0.7% respectively.

Source: TN Trader

Alphabet, parent company of Google and YouTube, saw its stock hit a fresh all-time high yesterday, having jumped over 10% since the end of last week. The move comes as users rave about its Gemini 3 AI model, which is seen as far superior to OpenAI’s ChatGPT, let alone other various AI offerings from the likes of Anthropic.

On top of this, there have been reports that Meta Platforms, one of Nvidia’s main customers, is considering using Google’s in-house chips, known as tensor processing units, in its data centres. This gave investors yet another reason to sell Nvidia.

Stock in the chip designer slumped around 7% at one stage yesterday, before recovering somewhat. That move lower saw Nvidia briefly drop below $170, to hit its lowest level since mid-September. That represented a drop of 19% in its share value from its all-time closing high of $210 at the end of last month.

Meanwhile, Advanced Micro Devices, viewed as Nvidia’s main competitor in chip design, fell 6% as investors shifted their attention to the possible deal between Google and Meta.

US stock index futures were firmer across the board this morning, even as Nvidia ceded more ground. Investors responded to more dovish comments from Federal Reserve members. Christopher Waller and Mary Daly followed John Williams in supporting the idea of an additional rate cut before year-end. This saw the probability of a 25-basis point cut on 10th December rise to 85%, according to the CME’s FedWatch Tool, up from 30% this time last week.  

Sticking with the US central bank, Treasury Secretary Scott Bessent, suggested that President Trump may announce his preferred candidate as the new Chair of the Fed within the next four weeks.

The current chair, Jerome Powell, is set to end his second term in May. Recent speculation over his likely replacement has centred on National Economic Council Director Kevin Hassett. Mr Hassett is viewed as a dove and therefore likely to support the further easing of monetary policy.

European stock indices shadowed US stock index futures in early trade this morning. That left them all in positive territory, but off their highs, by mid-morning. With little in the way of economic data or anything else, most eyes will focus on the UK’s Autumn Budget. This year’s budget has become far more significant, in the City and out, than many previous ones.

Source: TN Trader

One of the main reasons is that Chancellor Rachel Reeves needs to raise funds, yet has ruled out a direct increase in income tax, thereby avoiding breaking a manifesto commitment. This means that money will have to be extracted from a wide variety of sources, which will only complicate the calculations.

In addition, investors are keen to see if Ms Reeves delivers a budget aimed at pleasing MPs on her side of the House, rather than delivering one for the People. The extended build-up, which included an unprecedented period of policy “kite-flying”, has generated heightened uncertainty, leading to confusion among households, businesses and investors. This has seen UK economic activity grind to a halt.

The market now awaits some clarity as Ms Reeves outlines her full spending and taxation plans. Elsewhere in Europe, there were no major data releases beyond Germany’s GDP print, which came in flat as expected.

The US dollar sold off sharply yesterday as the probability of another Fed rate cut next month increased sharply. This came as Fed members Christopher Waller and Mary Daly joined John Williams in favouring an additional loosening in monetary policy before the year-end.

The spot Dollar Index once again pulled back from resistance at 100.00. The December contract trades at a premium, so its own resistance comes in around 100.25. The Japanese yen was a touch weaker across the board as investors flattened some of their long positions. These were taken in the expectation that Japan’s Ministry of Finance may use tomorrow’s US Thanksgiving holiday as an opportunity to intervene to strengthen the yen.

Yesterday, and again this morning, the British pound tested the upside of its range at 1.3200 against the US dollar. But this was more on dollar weakness than in anticipation of a positive UK budget.

Source: TN Trader

Gold was modestly firmer in early trade this morning, following yesterday’s muted session. Gold is now closer to the top of its recent trading range than the bottom, as it looked relatively comfortable around $4,150. For most of this month, support has held at $4,000 while the upside has been capped at around $4,200.

Source: TN Trader

Prices have held up as the probability of another 25-basis point rate cut from the Federal Reserve next month has increased sharply since Friday. This was when the head of the New York Fed, John Williams, delivered a dovish speech, which effectively drowned out earlier hawkish statements from many of his colleagues.

It is widely believed that his message would have been agreed by Fed Chair Jerome Powell, and this prepared the way for more dovish comments from Fed members Christopher Waller and Mary Daly earlier this week.

Overall, gold continues to consolidate within its $200 range, and this is helping the daily MACD reset at lower levels. Many traders will be watching the US dollar now, particularly as it appears to have failed to break out to the upside. Any further weakness in the greenback should help both gold and silver.

Source: TN Trader

Oil prices were a tad softer in early trade on Wednesday. Front-month WTI drifted down below $58 per barrel but remained above yesterday's lows. A brief look at the daily chart shows a marked, yet gentle, decline ever since WTI put in a cycle high just below $62.50 this time last month.

Source: TN Trader

Prices were coming off their best levels well before there was any sign of a breakthrough in negotiations to end the Russian invasion of Ukraine. In fact, prices briefly jumped after the Trump administration announced sanctions on two of Russia’s main energy companies, Lukoil and Rosneft. But there are encouraging sounds now coming from Ukraine, with President Zelensky saying that he was prepared to go forward with the US-originated peace plan.

It remains unclear what the Kremlin think about the deal, as it may be quite different from their original proposal. As far as supply and demand dynamics are concerned, the US Energy Information Administration will release its latest inventory update later today.

Yesterday, Natural Gas fell sharply to hit its lowest levels in close to three weeks. Prices recovered a touch in early trade this morning, but it may still be a bit early to suggest that the pullback from ten-month highs is already over.

Bear in mind that in the ten weeks since late August, Gas prices were up 75%. So far, prices have pulled back under 7%.  The move reflects easing weather-driven demand as milder forecasts continue to cap upside momentum.

Bitcoin was mixed in early trade, as prices continue to consolidate at lower levels. After a torrid period, which saw Bitcoin shed 36% of its value in the space of six weeks, it is likely to take time for investors to rebuild their confidence in cryptocurrencies. It’s still far from sure that a local bottom is in.

Nevertheless, record amounts of leverage have been employed trading in Bitcoin and other cryptos, and it seems likely that much of that has been wrung out of the market thanks to this latest brutal selloff. Many observers are saying that this marks the end for Bitcoin. But seasoned players will have experienced similar drawdowns before, and may view this as an opportunity, not a disaster.

Volatility eased again overnight and now appears to be settling down at lower levels. Early last Friday, the VIX jumped to a month high as investors reacted to the pullback across tech names.

Since then, the VIX has dropped around 16%, falling sharply during the US market’s three-day rally. Monday’s slump in the index reflected the return of risk appetite as equities regained upside momentum.

US stock indices have enjoyed a three-day rally into the Thanksgiving holiday. This has helped the bulls regain the upper hand. Tech appears poised to lead once again, though the backdrop remains data dependent. This is due to a renewed expectation of a December rate cut.

There’s currently an 85% chance of the Fed cutting rates in December, a sharp turnaround from recent weeks. Whether that optimism continues may determine whether markets can keep the rally alive.