Chinese equities fall after Trump-Xi meeting

Investors had a flood of important market updates to deal with yesterday, and more to come today. US stock indices rallied after the Federal Reserve’s FOMC confirmed market expectations of a 25-basis point rate cut. This took the Fed Funds rate range down to 3.75-4.00%, its lowest level in three years. But equities then sold off after Fed chair Jerome Powell said that another cut in December was far from being a foregone conclusion.

This saw the probability of another quarter point cut before year-end drop sharply. This time last week, the likelihood of a December cut stood at 95%, according to the CME’s FedWatch Tool. It has now fallen to 70%, so still possible, but far from certain.

The Federal Reserve also addressed the ongoing reduction in its balance sheet, or quantitative tightening. This will end on 1st December; a step aimed at supporting liquidity conditions going into year-end. US stock indices ended Wednesday’s session mixed. The Dow closed 0.2% lower, and the S&P was flat.

The NASDAQ tacked on 0.6% while the small cap Russell lost 0.9%. After the close, Alphabet, Meta Platforms, and Microsoft announced their third quarter results and highlighted the shifting dynamics of AI-related spending. Alphabet’s strong report saw its stock price rally over 7%, while Meta and Microsoft both fell sharply, with losses of over 9% and 5%, respectively.

Source: TN Trader

Meta posted its strongest revenue growth since early 2024 but said it incurred a $15.93 billion one-time charge tied to President Trump’s “One Big Beautiful Bill Act.” The company noted that the legislation will impact federal cash tax payments for the remainder of the year and beyond.

Meanwhile, Microsoft’s update revealed $3.1 billion earnings hit from its investment in OpenAI, raising fresh questions about the near-term returns of heavy AI spending. Two more ‘Magnificent Seven’ constituents, Apple and Amazon, report after tonight’s close. That will leave Nvidia as the last ‘Mag 7’ member to report later in November.

US stock index futures were modestly lower in early trade this morning, in a move which saw the majors pull back from all-time highs. Doubts over the possible returns on investments planned for artificial general intelligence, the Fed’s ‘hawkish’ rate cut and President Trump’s underwhelming trade deal with China have done little to boost sentiment.

With big tech valuations already looking very toppy, it feels as if the market is desperate for something more positive to keep the bull market on course into year-end.

European stock indices were lower across the board in early trade this morning. Investors reacted to a mixed close on Wall Street and a weaker finish across Asian Pacific markets by cutting their exposure to risk.

Source: TN Trader

As with the US, European investors are having to deal with an onslaught of earnings reports. Defence and aerospace giant Airbus rallied over 2% on better-than-expected numbers, while banks ING and Standard Chartered gained 4% and 2% respectively as they also beat forecasts. But oil giant Shell slipped a touch, despite announcing better-than-expected profits along with a new $3.5 billion share buyback.

The European Central Bank will announce its latest interest rate decision later this morning and is expected to keep rates on hold.

Forex markets were a touch livelier yesterday and overnight, thanks to monetary policy announcements from the US Federal Reserve and the Bank of Japan (BOJ). Last night, the Fed announced a 25-basis point rate cut, in line with market expectations. The Dollar Index was little changed. But it then rallied and came within a cent of hitting 99.00. 

This followed Fed Chair Jerome Powell’s press conference, where he said that another rate cut in December was not a foregone conclusion. Once again, the 99.00 level acted as resistance, and the Index subsequently pulled back. But it has crept higher again this morning and looks as if it may test resistance again.

Overnight, the BOJ kept rates unchanged as expected. But it said it stood ready to raise rates should economic conditions come out in line with its projections.

Despite this, the Japanese yen was sharply lower against all the majors this morning. The USD/JPY broke above an area of mild resistance, going on to hit its highest level in over ten months. The EUR/JPY rallied to its highest level in history, although in fairness, that history only goes back to the adoption of the euro in 1999.

Source: TN Trader

Gold was firmer in early trade this morning, having briefly poked its nose back above $4,000 in Asian Pacific trade. It also rallied yesterday morning, hitting $4,030 by midday before a rally in the US dollar saw traders hit the ‘sell’ button.

Gold has been attempting to bounce back following its sharp correction after it hit an all-time high of $4,381 ten days ago. Selling pressure saw prices drop to $3,886 on Tuesday for an overall high-to-low fall of 11%. This means that gold has ‘corrected’ in that it filled the definition of dropping over 10% from its most recent high. But that in itself does not indicate where prices may go next.

Since then, the gold price has shown signs of stabilising, and this is helping the daily MACD to pull back from being seriously overbought to more neutral levels. Should gold continue to consolidate, and if it can break and then hold above $4,000 over the next week or so, then that could set the stage for another rally. But should prices turn lower, then this should increase the probability of a deeper correction.

Source: TN Trader

Silver hit an all-time high of $54.60 on 12th October. It then fell 16% over the following twelve days, taking it back to levels last seen at the end of September. Like gold, prices have stabilised over the last two sessions as silver bounced back from being short-term oversold.

Again, the bulls will be hoping that silver can make back some of its recent losses. But prices may have to consolidate further if they are to form a solid base from which silver can rally. Yesterday’s bounce in the US dollar proved to be a setback for silver’s recovery. But should it continue to back and fill around $48 per ounce, this will give the daily MACD an opportunity to pull back further and reset at more neutral levels.

If so, that could set the scene for another rally. But should selling pressure rebuild, then silver may suffer another pullback, which could see it test support around $42.

Source: TN Trader

Oil prices drifted lower in early trade on Thursday. But the move was modest and only unwound yesterday’s gains. A look at the hourly chart for either Brent or WTI shows that the market has been consolidating in a narrow range since Tuesday morning.

Source: TN Trader

Traders appear to be brushing off news of a trade deal between the US and China, and who can blame them? There’s no doubt that President Trump has spent this week overselling the agreement between the US and China, given that the deal will only last for a year, and the Trump administration has only agreed to drop tariffs by 10% to 47%.

Yesterday, the US Energy Information Administration (EIA) reported a much bigger-than-expected drawdown in US crude inventories, supporting data from the American Petroleum Institute on Tuesday. Traders are now looking ahead to Sunday’s OPEC+ meeting. The group is expected to announce another production increase as it gradually unwinds previous output cuts.

At the beginning of this month, OPEC+ announced a much smaller-than-expected production increase, which caused oil prices to gap higher on the open. Analysts are expecting a similar rise of 137,000 barrels per day.

Bitcoin continues to come under selling pressure. It was trading above $116,000 on Monday, but has sold off steadily since then, dropping below $108,000 earlier today for a high-to-low loss of around 7%. It has been a similar story for Ether, which has lost around 9% over the same period.

Life hasn’t been any rosier for crypto treasury companies. Strategy (formerly MicroStrategy) has dropped 41% since the highs hit in mid-July and is 10% down since Monday. Sentiment towards cryptos feels grim. But it may be too early to write off the sector.

Stock market volatility rose slightly following the Fed decision. The modest increase reflected investor caution after Fed Chair Jerome Powell signalled uncertainty about another rate cut in December. While the uptick suggests a mild rise in hedging demand, overall volatility remains contained — a sign that markets still view recent pullbacks as controlled rather than the start of a broader risk-off phase.