Asia Pacific stock indices sell off

US stock index futures were sharply lower this morning. There was no specific catalyst for the move; FX markets were quiet, as were US Treasuries. But there were widespread losses across the tech sector, which stood in contrast to yesterday's session.

The semiconductor sector was badly hit overnight with Nvidia, Super Micro Computer, Advance Micro Devices and Intel all down over 2%. All the ‘Magnificent Seven’ constituents were down as well in early trade this morning. It looks as if traders are finally booking some profits following the strong gains seen since late April, as equities bounced back following the ‘Trump Tariff Temper Tantrum’.

All the major US stock indices had been marking time over the past week or so, trading just south of all-time highs hit in late October. This morning’s selloff has seen the Dow and the S&P 500 fill the gaps which opened up on Monday, 26th October.

Source: TN Trader

The jump followed positive trade news over the weekend ahead of President Trump’s meeting with President Xi Jinping of China. The NASDAQ has not fallen far enough to fill the gap on its own chart.

Yesterday, the tech sector helped boost both the NASDAQ and S&P, while the Dow and Russell 2000 posted losses. Once again, news of a large investment in artificial general intelligence lifted tech.

OpenAI, the privately owned owner of ChatGPT, announced a $38 billion investment in Amazon Web Services, giving it access to Nvidia’s graphic processing units for seven years. Amazon jumped 4% on the news. But the deal has also raised fresh questions over the circulatory nature of AI investment. Well over $1 trillion has been promised for various AI programmes, and the vast majority of this involves a very small group of tech corporations, with OpenAI and Nvidia at the centre of most of it.

So far, there has been precious little return on all this funding, but investors expect to reap outsized gains in future years. But some are doubting whether AI can possibly live up to the hype in terms of future returns.

After last night’s close, Palantir Technologies handily beat earnings expectations. But its stock price fell in volatile trade and was down 6% soon after the European open. There are also questions about the future of the Fed’s monetary policy. Fed Chair Jerome Powell made it clear last week that a December rate cut is not a foregone conclusion.

Yesterday, Federal Reserve Bank of Chicago President Austan Goolsbee said that the threshold for cutting rates next month was higher than at the last two meetings. In contrast, Trump appointee Stephen Miran said he favoured deeper cuts.

The Fed is in a difficult position, made worse by the government shutdown, which has prevented the release of key economic data. Today’s JOLTS Job Openings is unlikely to be published, while Friday’s Non-Farm Payrolls has been postponed for a second month.

Instead, market participants will be paying very close attention to tomorrow’s ADP Payroll numbers. Yesterday's ISM Manufacturing PMI came in below expectations and indicated the eighth successive month of contraction in the sector.

European stock indices were weaker across the board on Tuesday, reversing the positive tone seen at the start of the week. This morning’s selloff follows a mixed session yesterday to start November.

Source: TN Trader

Positive sentiment faded amid risk aversion and fresh caution around the outlook for global growth. Oil giant and FTSE 100 constituent, BP, began the day on the front foot after it released results which beat market expectations. But it soon reversed earlier gains and fell in line with the broader market, despite announcing a $750 million share buyback programme.

The Forex market was relatively quiet this morning. Price action across major pairs was limited, with traders reluctant to take fresh positions ahead of tomorrow’s ADP data release and Fed commentary.

The US Dollar Index was little changed mid-morning, having pulled back from a three-month high just south of 100.00. The Index may need to consolidate now, as it added close to 1.5% over the past week, having broken above key resistance at 99.00. Its next big target is, of course, 100.00.

Source: TN Trader

The Japanese yen was sharply higher overnight, supported by risk aversion and steady demand for safe-haven assets. The move saw the yen recover after recent weakness. The USD/JPY hit its highest level since February overnight, taking the yen down to levels which could trigger intervention from Japanese authorities.

Elsewhere, the Australian dollar softened after the Reserve Bank of Australia (RBA) left rates unchanged at 3.6%. The pause was widely expected. But sellers emerged even after the RBA governor suggested that the central bank may have finished its programme of rate cuts. Markets don’t believe her, however, as they pencilled in another reduction in May next year.

Gold was weaker overnight, dropping below $4,000 to trade at $3,880 as European markets opened. Gold continues to consolidate around the $4,000 level following a sharp selloff. This saw it pull back sharply from its all-time high of $4,381 just over a fortnight ago. The stronger dollar has helped to shift sentiment and has weighed on prices, giving investors a reason to sell, or at least steer clear.

Despite this, the bulls should find some encouragement as gold appears to have found some support around $3,950 and is managing to consolidate at lower levels. This is helping the daily MACD to return to more reasonable levels after being very overbought as gold traded at all-time highs.

If this pattern continues, then it could herald a repeat of gold’s performance between April and August this year. That was when gold consolidated in a relatively narrow range following its jump to a record high of $3,500. But there’s still a risk that gold has another lurch lower towards significant support around $3,800.

Source: TN Trader

Silver bounced for most of last week following its own sharp selloff from record levels. It has drifted lower since Friday, but hasn’t dropped precipitously so far, suggesting that it, too, like gold, is managing to consolidate at lower levels.

The daily MACD has pulled back as well and is now approaching neutral levels. But having flattened out last week, it has started to dip down again, suggesting further downside momentum.

Traders will keep a close eye on prices, particularly should they break below $47.00. If they do so on a protracted basis, that could signal that silver could have further to fall, maybe testing major support around $40 per ounce.

Source: TN Trader

Oil prices were weaker this morning following a relatively quiet overnight session. Front-month WTI traded around $60 per barrel, a level which acted as support on a closing basis throughout last week. On Sunday, OPEC+ announced that it would raise output by a modest 137,000 barrels per day in December, matching November’s production increase.

Source: TN Trader

More importantly, they said that there would be no further increases for the first quarter of 2026, noting that oversupply existed across the global oil market and was forecast to rise further next year.

Following this announcement, oil prices gapped higher when trading resumed on Sunday night. But, in contrast to price behaviour after a similar OPEC+ decision in early October, the gap was quickly filled. All eyes will now focus on how crude behaves as it trades at support.

Natural gas prices slipped about 1% after a volatile start to the session. The market saw mixed flows through the day, with early gains giving way to steady selling as traders locked in profits following recent strength. The overall tone was choppy, reflecting uncertainty over short-term direction.

Crypto markets fell sharply again, extending their recent slide as risk appetite weakened across broader asset classes. Bitcoin fell towards $103,000, coming within a few points of the low from mid-October.

Should investor sentiment towards risk assets continue to sour, then a retest of significant support around $100,000 can’t be ruled out. Ether’s decline deepened following a hack that added to negative sentiment. It fell below $3,500 to trade at a three-month low.

Volatility has picked up sharply over the past seven sessions, with the VIX up 13% over that period. This marks a clear and, so far, sustained rise in volatility as investors turn defensive. The uptick came alongside a drop in equities and a souring in risk sentiment, prompting renewed demand for hedges and protection.

The move in the VIX suggests investors are now repositioning for further price swings ahead. The move highlights the nervous tone running through markets, with caution once again the dominant theme as the week progresses.

US stock index futures and European equities were sharply lower following weakness across Asian markets, setting the stage for a cautious start on Tuesday. Some analysts are warning of the risk of a significant pullback, given the lack of a protracted selloff during the rally since April.

The ongoing debate around the AI trade and stretched valuations continues to divide opinion, but for now, sentiment remains fragile. The early tone of trade suggests the bears may have the upper hand as the new week unfolds.