Market Report.
💻 On Friday, Wall Street managed to stop the hemorrhage in technology, and NASDAQ closed by turning positive. Valuation concerns have sparked a selloff in high-flying AI and tech stocks, with the Nasdaq down about 4% from its October peak. Bonds issued by companies like Oracle have also taken a hit. Hedge funds like Tiger Global have reduced their exposure to tech giants, adding to the bearish sentiment.
📊 Markets could remain bumpy as investors struggle to draw conclusions from the incomplete data and the Fed’s policy path becomes less certain.
🏗️ U.S. economic data starts flowing again on Monday, with construction spending figures for August. September jobs data is due on Thursday. More up-to-date labour and price figures are not due until next month and concern over the data’s quality as well as hawkish policymaker comments has expectations for a rate cut in December fading.
💰 Short-term interest rate futures now reflect a 60% chance that the Fed will not cut rates again in December, up from about 50% just a day earlier. Kansas City Fed President Schmid, Dallas Fed President Logan, and Cleveland Fed President Hammack expressed skepticism about the need for further rate cuts, citing concerns about inflation.
🏦 In contrast, Fed Governor Miran, who plans to return to the White House, made a case for another rate cut, aligning with President Trump’s view that rates are too high. Fed Chair Powell had previously cautioned that a December rate cut was “not to be seen as a foregone conclusion” given the data uncertainty caused by the government shutdown.
🤝 The U.S. and Switzerland reached a trade deal last Friday. According to U.S. Trade Representative Jamieson Greer. Under the deal, duties on Swiss imports will be reduced to 15%, down from the previous 39% tariff rate. As part of the agreement, Swiss companies have pledged to invest around $200 billion in the U.S. by the end of 2028, including funding for education and training. The deal means the tariff rate on Swiss goods will now match the rate levied on imports from the European Union.
🏭 Greer said the deal will help address the U.S. trade deficit with Switzerland, as Swiss companies agree to build more manufacturing facilities in the U.S. for products like pharmaceuticals and gold.
💶 Switzerland, an export-driven economy, has already faced economic headwinds due to the previous 39% tariff rate imposed by the U.S. The announcement of the trade deal led to a 0.4% gain in the value of the Swiss franc against the U.S. dollar.
🇪🇺 The eurozone economy continued to expand at a modest pace in the third quarter, with GDP growing 0.2% compared to the previous quarter. The eurozone’s rate of expansion remains lukewarm compared to other major economies, with few signs of catalysts for faster growth. France and Spain balanced out stagnation in Germany, which is struggling with weak output, poor exports, and muted private consumption.
🌍 German Finance Minister Lars Klingbeil is pressing for an “open, rules-based global trading system” as he departs for a high-stakes visit to Asia, amid growing trade frictions between the US, China, and Europe. Klingbeil emphasized that Germany does not shy away from competition, but it must be fair. He said all parties carry responsibility for maintaining an open, rules-based world trade system.
⚙️ Access to critical raw materials and curbing Chinese overcapacity in sectors like steel and electric vehicles are of high importance for Germany. Tensions between China and Europe have risen in recent months, with Beijing tightening export controls and a planned German foreign minister visit being postponed.
🛫 Klingbeil will seek solutions with Chinese counterparts “despite growing international tensions” and push for improved market access for German companies. The agenda for four-day trip to China, Shanghai, and Singapore has been coordinated with Chancellor Merz and the European Union.
🗾 Japan’s economy shrank almost 2% in the third quarter, as a drop in exports due to U.S. tariffs resulted in the first contraction in six quarters. The contraction was largely driven by a plunge in exports, particularly from automakers, as they had previously front-loaded shipments ahead of the tariff hikes. However, the overall contraction was not as severe as expected, suggesting this is a temporary setback rather than the start of a recession.
💹 Private consumption grew 0.1%, matching estimates, while capital spending rose 1.0%, exceeding expectations. The government is compiling a stimulus package to help households manage rising living costs, with advisers citing the GDP contraction as a reason for aggressive measures.
🔥 Japan’s core consumer inflation is expected to have accelerated in October for the second straight month, reaching around 3.0% year-over-year. The main driver of the higher inflation is the reduction in energy subsidies compared to a year earlier, which pushed up utility costs. Core inflation has now exceeded the Bank of Japan’s 2% target for more than three years, keeping market expectations alive for a potential near-term interest rate hike.
🎯 However, BOJ Governor Ueda has stated the central bank is aiming for moderate inflation accompanied by wage growth and economic improvement. The internal data release on November 21 will provide the official October consumer price index figures for Japan.
👜 Chinese shoppers are returning to luxury, with top executives from Prada, Coach, EssilorLuxottica, and Value Retail reporting stabilizing demand in China after months of weakness. Prada’s CFO said the company is “cautiously optimistic” and sees things stabilizing, though a more “normalized” backdrop may only emerge in 2026.
💎 Recent earnings data supports the view, with Burberry, Richemont, and LVMH all reporting improvements in their China businesses. However, the apparent improvement is coming off an easy comparison base and may reflect spending being repatriated to mainland China.
💻 Bitcoin has erased the over 30% gain it registered since the start of the year, falling below $93,714 and wiping out the exuberance over the pro-crypto stance of the Trump administration. The dominant cryptocurrency reached an all-time high of $126,251 on October 6, but has since tumbled amid a broader cooling of high-flying technology stocks and a drop in overall risk appetite.
📉 The selloff is attributed to a confluence of factors, including profit-taking by long-term holders, institutional outflows, macro uncertainty, and the unwinding of leveraged long positions. Many of the biggest buyers, from ETF allocators to corporate treasuries, have quietly stepped back, depriving the market of the flow-driven support that helped propel Bitcoin to record highs earlier this year.
🪙 Smaller, less liquid tokens have been hit even harder, with a MarketVector index tracking the bottom half of the largest 100 digital assets down around 60% this year.
🌏 Geopolitics.
⚔️ A diplomatic row erupted after Japanese Prime Minister Sanae Takaichi stated that a Chinese military attack on Taiwan could pose a “survival-threatening situation” for Japan, potentially justifying a military response under Japan’s self-defense laws. China responded with outrage, characterizing the statements as “provocative” and “interference” in its internal affairs. China summoned Japan’s ambassador and issued warnings of severe consequences.
🚨 This marks a significant escalation in regional security alignments regarding Taiwan. The diplomatic crisis has put Japan-China relations under renewed strain and threatens to deepen geopolitical volatility in the region.
🇻🇪 Marco Rubio has announced plans to designate Venezuela’s Cartel de los Soles as a Foreign Terrorist Organization (FTO) and declare president Maduro as their leader. This designation is intended to provide the United States with a ‘legal’ framework to initiate actions against Venezuela.
📢 Maduro criticizes Trump, urging him to address domestic issues in the U.S., such as poverty, education, and drug addiction, before attempting to influence global governance, emphasizing Venezuela’s ability to manage its own affairs: “Millions can’t afford food, education, and drown in drug addiction. First you need to save yourselves… we know what to do with Venezuela”
🗳️ Ecuadorians decisively rejected the establishment of any US military bases in their country, with 60% opposing the plan proposed by President Noboa to set up US naval bases on Baltra Island. This vote effectively nullifies the initiative to permit foreign military bases in Ecuador.
💹 Market View.
🧭 Wall street managed to hold the supports on Friday and both SP500 futures and NASDAQ 100 futures bounced up.
📈 Nasdaq 100 futures have gained nearly 2.8% from Friday’s lows, rising to 25,310 points at present. S&P 500 futures have also rebounded by 1.8% since Friday, now standing at 6,790 points.
💵 The DXY dollar index climbed towards 99.50 in the early hours of Monday but has since retreated back to around 99.30. The EUR/USD pair had fallen below 1.16 but has now recovered to 1.1615.
🇩🇪 In Europe, DAX 40 futures fell below 23,700 on Friday, but Wall Street’s rebound has provided support, with the index now attempting to reclaim the 24,000 level, currently trading at 23,955 points. EuroStoxx 50 futures are following a similar pattern, rebounding as they try to reach 5,700 points. The chart patterns for both indices suggest volatility and uncertainty in the early hours of trading.
🛢️ Crude oil remains stable, with Brent trading around $64 per barrel.
🥇 Gold futures fell towards $4,000 per ounce on Friday but have since rebounded, now trading above $4,090 per ounce.
🪙 Bitcoin continues to worry retail investors — during Sunday evening it fell below $93,000 and has since staged only a weak rebound, currently trading below $96,000. More details are available in the news section.
