Asian Pacific markets fall sharply

US stock indices suffered their worst session in over a month as selling pressure intensified across major indices. The tech sector was hit hard, with companies at the forefront of the Artificial General Intelligence (AGI) trade suffering some of the deepest falls. Investor concerns over stretched valuations, returns on investment, as well as the circulatory nature of funding in the AGI space, all contributed to the flip in sentiment.  

Market heavyweights Nvidia and Palantir came under significant selling pressure once again, while the only ‘Magnificent Seven’ constituent to avoid a flogging was Apple. Semiconductors were lower across the board and were feeling the heat in early trade this morning. Another notable casualty of this risk-off move is Oracle.

Source: TN Trader

The stock surged to an all-time high in early September after the company announced a series of multi-billion-dollar cloud and AI infrastructure contracts with clients such as OpenAI, xAI, Meta and Nvidia. But it then came under near-relentless selling pressure and has lost 37% of its value since then. As an aside, Nvidia releases its quarterly results after the close next Wednesday.

While concerns over AGI valuations have been swirling around for some time, it was generally accepted that the US Federal Reserve was back in rate cutting mode. But Fed Chair Jerome Powell stated clearly during his press conference after the October FOMC meeting just over a fortnight ago, that a rate cut in December was not a foregone conclusion.

This saw the probability of another 25-basis point cut before year-end drop from 95% to 65%, according to the CME’s FedWatch Tool. Yesterday, it dropped below 50% following comments from FOMC members, most notably Susan Collins.

Late on Wednesday, Ms Collins said that the bar was high for further rate cuts, given elevated inflation levels, and uncertainty thanks to missing economic data due to the government shutdown. While some investors had hoped Wednesday’s government reopening would provide much-needed clarity, the suggestion that some reports may never be published has only deepened uncertainty around what policymakers will see and how they will respond.

US stock index futures were weaker again this morning. This could be a significant session as far as investors are concerned, as it will set the tone going into the weekend.

European stock indices fell sharply early in the final trading session of the week. Investors were keen to book profits, given recent strength across European and UK equities. They took their cue from Wall Street, where concerns over the likely returns from investment in Artificial General Intelligence (AGI) have been building for some time.

Source: TN Trader

A broad-based selloff across risk assets was then triggered as the probability of another 25-basis point rate cut from the US Federal Reserve dropped sharply.

But it wasn’t all about the US and AGI. The UK government reels from one cock-up to another in a remarkable display of incompetence, which has increased speculation that Prime Minister Kier Starmer won’t last much longer as leader of the Labour Party, or anything else for that matter.

All this comes less than a fortnight from a key budget, which is in the shaky hands of the Chancellor of the Exchequer, Rachel Reeves. The Labour Party made a manifesto commitment not to raise taxes. But last year’s sleight of hand saw the Chancellor hike employer National Insurance in a move which has contributed to growing unemployment.

Yesterday’s GDP numbers were dismal, and, having sent up numerous trial balloons to test the market’s patience with various money-raising tweaks, including tuppence on income tax, this morning’s papers suggest that Ms Reeves won’t be raising income tax after all. As this government is incapable of making any spending cuts, the markets dry-heaved, sending gilt yields soaring to two-month highs. Watch this space.

Within the Forex markets, the US dollar steadied this morning, making back some of its recent losses. The Dollar Index pushed back above 99.00, having dropped below here yesterday to trade at a two-week low. It’s becoming apparent that while 100.00 is an extremely effective level of resistance, 99.00 is not such a solid support area.

Source: TN Trader

The dollar has come under strong selling pressure for a week now, although buyers crept back in this morning. They were encouraged by growing speculation that the US Federal Reserve will keep rates on hold next month, rather than announcing a further cut.

Sterling rallied initially, as gilt yields shot high, but then reversed direction. Yet cable appears to be quite content, as GBP/USD looks rangebound between 1.3000 and 1.3200. Meanwhile, the euro pushed to a two-week high, helped by a softer dollar and views that the ECB may have reached the end of its rate-cut cycle.

Yesterday morning, gold had a strong start as it pushed up above $4,240 to trade at its best levels in three weeks. But it pulled back during the afternoon session, dropping below $4,150 before it managed to steady and end the session little changed. It was down again this morning and retesting yesterday’s lows.

The daily MACD does suggest that momentum is to the upside. But given the bounce-back over the past week, gold may need another period of consolidation before it’s ready to head higher. On the flip side, there’s always the risk of another lurch lower with a retest of the October low on a break of $3,900 a possibility. It’s a very difficult call at current levels.

Source: TN Trader

Silver managed to outperform gold on this latest upside move. Yesterday, it came within 25 cents of its all-time intra-day high from mid-October. That’s close enough to suggest that silver has made a ‘double top’, which is something of a historical feature on silver’s charts.

Like gold, silver has pulled back from yesterday’s high. But as yet it’s too early to know if this is a straightforward period of consolidation ahead of another push higher, or the start of a bigger downside move. Perhaps we’ll know more as we head into the weekend.

Source: TN Trader

Oil prices added to yesterday’s gains in early trade this morning. Thursday’s bounce helped oil make back a significant proportion of the prior day’s losses. The selloff came after OPEC updated its previous supply forecast.

It now expects a small surplus in supply throughout 2026. This brings it into line with other agencies and represents a change from its prior analysis, which predicted a supply shortage when measured against its outlook for future global demand growth.

Yesterday’s US inventory update from the Energy Information Administration (EIA) showed a bigger-than-expected build in crude stockpiles. But prices ultimately rallied on news that a Ukrainian drone attack took out a significant Russian oil depot on the Black Sea.

Despite this, front-month WTI continues to struggle to break and then hold above $60 per barrel. Meanwhile, there’s some mild support around $58.

Source: TN Trader

Natural gas prices pulled back this morning, having hit their highest levels since March this year in Thursday’s session. Even with today’s decline, gas remains elevated relative to recent trading ranges, with traders reassessing the strong rally off August’s lows. But bulls should take care, as the daily MACD is currently more overbought than at any time in the last three years.

Bitcoin scythed through support and crashed below $100,000 as investors reacted to weakness across the US tech sector. Concerns have grown over the possible lack of return on investment in Artificial General Intelligence (AGI). This has led to an overall pullback in investor risk appetite.

Bitcoin was testing some mild support around $95,000 this morning, and a failure to hold around here means $90,000 becomes the next significant support level. If that were to break, then a retest of the April lows around $75,000 grows in probability.

The VIX shot higher this morning, signalling a meaningful shift in sentiment. The rise reflects growing market unease as traders contend with a combination of tech-sector weakness, shifting Fed expectations, and uncertainty around the release of delayed economic data. With volatility edging up, markets appear to be bracing for more choppy price action.

The global retreat is raising questions about whether this is simply a healthy pullback or something more meaningful. With AI dominating sentiment and concerns growing around stretched valuations, the market remains highly sensitive to any shifts in expectations.

The end of the shutdown adds another layer of complexity, as missing data could leave policymakers and traders without crucial insight heading into December.

The Fed’s now 50/50 rate-cut odds appear to be unsettling markets further, contributing to the renewed caution across equities, crypto, and other risk assets.