Asian Pacific stock indices follow Wall Street down

US stock indices staged a dramatic turnaround on Thursday. All the majors were up initially, following the release of a stunning set of quarterly results from Nvidia after Wednesday’s close. The chip designer, and the most valuable corporation in the world by market capitalisation, rallied 6% on the news.

Investors rushed to reestablish long side exposure following a 14% selloff earlier this month. The company also gave a stronger-than-anticipated forecast for the fourth quarter, and CEO Jensen Huang said that demand for the firm’s Blackwell chips was “Off the charts”. Mr Huang also addressed concerns over the outlook for the Artificial General Intelligence (AGI) trade when he said that chip demand was coming from many different areas and not just the hyperscalers.

All this helped to lift the S&P 500 by 2%, while the tech-heavy NASDAQ gained around 2.5%, or about 600 points, by early afternoon. Then came the slump, which saw the S&P end the session down 1.6%, and the NASDAQ off 2.2%. While tech names were at the forefront of the drop, the selling was widespread with the Dow and Russell 2000 off 0.8% and 1.8% respectively.

Source: TN Trader

Nvidia gave back all its overnight gains, and more, to end down 3.2%. It had lost close to 3% in early trade this morning, smashing through support at $180. Having closed on their lows last night, all the US majors attempted to rally in Asian Pacific trade. But they were unable to hold on to initial gains and were mostly lower again in mid-morning in Europe.

It’s been difficult to pinpoint one single catalyst for the plunge. But it’s fair to say that the ‘Magnificent Seven’ constituents, which account for around 35% of the S&P 500’s value by market capitalisation, are, by many measures, fully valued and have been for some time.

Recent events, such as news that legendary figures such as Peter Thiel and Michael Burry have cut their exposure (Mr Thiel) or actively instigated short positions (Mr Burry) on Nvidia, have helped dampen speculative fever around the chip designer and the AGI trade more generally. Add in the growing likelihood that there will be no December rate cut from the Federal Reserve due to concerns that inflation may push higher from current levels.

Then consider the uncertainty over the legality of President Trump’s tariffs (the Supreme Court are expected to announce their judgment next month) and suddenly investors feel nothing but headwinds swamping prior tailwinds.

It almost seems irrelevant that yesterday saw the first official Non-Farm Payroll update in close to seven weeks. The September report (delayed due to the US government shutdown) came in above the 50,000 expected, at 119,000, although there was a modest downward revision to the August release.

There were some mixed messages as the Unemployment Rate ticked up. But overall, the takeaway is that the labour market may not be weakening by as much as previously thought. So, this still supports the views of FOMC members who are arguing against another rate reduction next month.

US stock indices are perilously positioned as the weekend approaches. And bear in mind that it’s US Thanksgiving next Thursday, which effectively takes out Friday as a full trading day as well. Suddenly, there’s some fear out there. But is it enough to lead to a full-scale rout, or will investors once again look for an opportunity to ‘buy the dip’?

European stock indices were sharply lower across the board. Traders not only reacted to the US indices closing on their lows last night. They also had to price in an unsuccessful rally attempt in the Asian Pacific trade and a resumption of the US selloff this morning.

Source: TN Trader

Sentiment across the continent has been fragile. And the reversal in Nvidia’s share price yesterday added fresh pressure to a market already grappling with uncertainty around valuations attached to the Artificial General Intelligence (AGI) trade. Hopes for a brief reprieve following Nvidia’s earlier earnings-driven rally were quickly dashed as US markets reversed sharply into the close.

This morning, UK Retail Sales came in well below expectations, while Public Sector Net Borrowing came in higher than forecast.  Sterling fell sharply on the news. But it later bounced to 1.3100 against the US dollar before dropping back to 1.3050 following the release of a mixed set of Flash Manufacturing and Services PMIs.

It was a similar picture across Germany, France and the Eurozone, with the main takeaway being that the manufacturing sector is now contracting in all three regions. Headlines around a potential Russia–Ukraine peace framework, put together by the US and Russia, also circulated, adding another layer of complexity to European sentiment.

Reports suggested the draft plan may involve significant concessions from Kyiv, though details remain unclear and politically sensitive, particularly given the ongoing Ukrainian corruption scandal.

The big overnight move across Forex came from the Japanese yen. The currency made gains across the board, having weakened significantly since early October, following the surprise election of Sanae Takaichi as leader of the governing LDP.

Source: TN Trader

Last night’s rally in the yen came as traders responded to comments from Japanese Finance Minister Satsuki Katayama. She said that intervention to deal with speculation and excessive volatility (for this, read: halt the slide in the yen) was a possibility. At the same time, Prime Minister Sanae Takaichi's cabinet approved a fiscal stimulus package worth around $135 billion.

This has undermined confidence in the currency, as concerns grow over Japan’s deteriorating fiscal position. And last night’s latest inflation release showed that Core CPI rose at its fastest pace since July, reinforcing the case for potential Bank of Japan tightening.

Meanwhile, the Dollar Index edged back up towards 100.00, a level which has persistently held as resistance.

Gold was down around 1% this morning. But so far it has managed to hold above $4,000, which is its first significant support level. Hopes for a December rate cut from the Federal Reserve have diminished sharply over the last four weeks.

According to the CME’s FedWatch Tool, the probability of a 25-basis point cut in a few weeks' time is now around 33%, having been as high as 98% this time last month. This is despite yesterday’s labour market data (delayed for seven weeks due to the government shutdown) showing an uptick in the Unemployment Rate, even as Non-Farm Payrolls were better than anticipated.

The outlook for gold looks uncertain. It looks as if the daily MACD needs to reset at lower levels to encourage fresh buying. Despite the tech-led selloff across stock markets, there’s no evidence that investors are looking to gold as an alternative haven asset, so far.

Source: TN Trader

Today’s selloff in silver was even more dramatic. Prices dropped around 3.7% this morning, compounding yesterday’s 1.8% loss. At the time of writing, silver was trading around an area of mild support near $49 per ounce. Should it put in a prolonged break below here, then a move to a more significant support level, around $47, can’t be ruled out.

Having flattened out over the past fortnight, the daily MACD has started to curl down again. This could suggest that downside momentum is picking up. But it’s important to bear in mind just how volatile silver can be, and it’s possible that dip buyers come in and try to take advantage of prices which are now at their lowest levels in ten days.

Source: TN Trader

Oil prices were modestly lower again in early trade this morning. This follows two days of back-to-back losses, which have seen front-month WTI drop from close to $61per barrel to below $57.50 this morning. WTI is now back to the lows last seen a month ago. The main catalyst for this week’s decline has been the prospect of a Russia–Ukraine peace plan.

Source: TN Trader

This was put together by the US and Russia, in the absence of Ukraine, and appears to involve Ukraine ceding a large proportion of its territory and accepting restrictions on its military. This would have been unthinkable just a few months ago. But the Ukrainian corruption scandal has seriously undermined President Zelensky, so it seems possible that discussions involving Ukraine this time may proceed.

Yesterday’s stock market meltdown also weighed on oil, as it undermined some of the bullish arguments around the AGI trade. The first level of significant support for front-month WTI comes in around $56.80-56.50.

Gas prices rebounded this week, supported by a cold weather snap that helped offset the broader risk-off tone. The contract rallied this morning and continues to trade near 10-month highs, having lost some ground yesterday.

Crypto markets remained under heavy selling pressure this morning, having led the broader decline in risk assets. Bitcoin dropped to seven-month lows in early afternoon trade on Friday, falling towards $80,000. The move places BTC firmly in what traders described as a “full-blown bear market.”

Ether also extended losses, sliding another 5% toward the $2,700 zone before recovering slightly. There is a band of support around $2,500, which must hold for Ether to have a chance to recover.

Yesterday saw the VIX spike higher to see it hit its highest levels in a month. It eased back a touch this morning but remained elevated, reflecting sustained uncertainty after Thursday’s dramatic reversal in US equities.

The pullback suggests some stabilisation, but volatility remained firmly above recent lows as investors processed shifting expectations for Fed policy and AI-linked market action. Despite this, the VIX is not suggesting that investors are unduly rattled by yesterday's selloff. It remains well below the levels seen back in April.

The market whipsaw on Thursday, fuelled by Nvidia’s sharp reversal, captured some of the concerns gripping global equities. AI-linked names remain at the centre of the storm, with yesterday’s intraday swing highlighting just how sensitive sentiment has become.

Many analysts argue that the current pullback is healthy given the year’s strong gains, while others caution that the correction may not be finished. With global PMI releases, Michigan sentiment figures, and extensive Fed speak ahead, Friday looks set for another active session.

The bears were clearly in charge yesterday, rewriting the narrative for November. Whether the market finds its footing today may depend on how investors process the incoming data and whether AI-related volatility finally stabilises.