Market navigator: week of 3 November 2025

Economic

Summary:

US–China reached a temporary tariff and supply reprieve, while the US deepened partnerships with Japan and South Korea. Central banks diverged on policy, Chinese manufacturing weakened, and global markets showed gains but narrowing breadth and mixed momentum.

What happened last week

US-China diplomatic breakthrough yields temporary reprieve: Trump and Xi reached an accord in Busan, halving fentanyl-related tariffs to bring effective rates on Chinese imports to 47%. China committed to postponing rare earth mineral export restrictions for one year while pledging to procure US agricultural products. Equity markets remained muted given the arrangement's temporary nature.

Strategic APAC partnerships: President Trump conducted bilateral meetings with Japanese Prime Minister Takaichi and South Korean President Lee, consolidating trade frameworks. The US formalised a rare earth supply agreement with Japan and finalised South Korea's $350 billion US investment plan.

Central bank policy trajectories diverge: The Federal Reserve (Fed) cut rates by 25 basis points but signalled December uncertainty, with market expectations for further easing declining from 90% to 70%. The Bank of Japan (BoJ) held rates steady, requiring additional time to assess the 15% US tariff impact and preliminary momentum from forthcoming wage negotiations. The European Central Bank (ECB) similarly held unchanged, noting diminished downside risks in the economy.

Chinese manufacturing activity contracts further: The official manufacturing purchasing managers' index (PMI) registered 49.0, marking six consecutive contractionary months. The National Bureau of Statistics attributed this decline to Golden Week holiday disruptions and elevated global economic uncertainty. The non-manufacturing PMI improved marginally to 50.1, barely entering expansionary territory.

Markets in focus

US equities continue the winning streak

The S&P 500 index concluded October with gains of 2.3%, marking the sixth consecutive month of positive returns. The technology-concentrated Nasdaq 100 advanced 4.8%, while the Dow Jones Industrial Average appreciated 2.5%. Despite this broad-based positive performance, concerning indicators of diminishing market breadth have emerged. The proportion of S&P 500 constituents trading above their 20-day moving average (MA) contracted from 62% at the previous Monday's close to merely 39%. A similar decline occurred at the 200-day MA level, suggesting that recent gains have been increasingly concentrated amongst a narrow cohort of market leaders.

Earnings season has progressed substantially, with 63% of S&P 500 constituents having reported. The blended earnings growth rate stands at 13.8% so far, surpassing the second quarter's 12% growth trajectory. Five members of the Magnificent Seven cohort released results during the week. Alphabet shares appreciated 2% following revenue of $102 billion that exceeded analyst estimates, propelled by robust cloud infrastructure growth of 34%. Microsoft similarly beat both earnings and revenue projections with Azure expanding 40%, though shares declined 4% as investors focused on accelerating capital expenditure growth. Meta plunged 14% despite surpassing revenue forecasts, after disclosing a $15.9 billion one-time tax charge that resulted in an earnings per share miss alongside upward revisions to capital expenditure guidance. Apple and Amazon both exceeded expectations in Thursday trading, with Apple shares unchanged as strong iPhone 17 demand offset revenue contraction in China, while Amazon surged 10% as AWS cloud business accelerated to 20% growth – the fastest pace since 2022.

From a technical analytical perspective, beyond the deterioration in market breadth, the Relative Strength Index (RSI) of the US Tech 100 exhibits bearish divergence characteristics, with lower peaks forming while prices continue establishing record highs. Both indicators suggest weakening bullish momentum. Nevertheless, the index retains potential to reach 26,830, representing a 50% extension of Wave 1 to 3 within the Elliott Wave framework. The 20-day MA near 25,200 should provide downside support.

Figure 1: US Tech 100 index (daily) price chart

Hang Seng Index consolidates on profit-taking

Following an approximate 40% appreciation since start of the year, the Hang Seng Index (HSI) terminated its five-month winning sequence, retreating 3.5% in October to close marginally below 26,000.

The highly anticipated Trump-Xi summit in Busan failed to catalyse sustained market enthusiasm, as the agreement's substance had been largely priced into valuations. In fact, 'sell the news' dynamics emerged as investors sought to crystallise substantial year-to-date gains ahead of year-end settlement. We view the deal as constructive, noting the one-year truce duration substantially exceeds the three-month extensions of previous negotiations. Furthermore, the expeditious de-escalation observed in recent discussions reflects Beijing's proactive approach to resolving external challenges as China continues to grapple with persistent structural headwinds within its domestic economy.

Sector rotation dynamics intensified as market participants secured profits from growth-oriented equities, particularly within biotechnology and artificial intelligence (AI) sectors, while reallocating capital towards equities aligned with the 'valuation system with China characteristics' framework – typically denoting undervalued state-owned enterprises offering attractive dividend yields. Energy and Financials sectors led HSI gains during October, while Information Technology, Consumer Discretionary and Communication Services sectors underperformed.

The HSI's inability to maintain positions above its 20-day MA demonstrates insufficient upward momentum. Should the index decline further, triggering a death cross formation between the 20-day and 50-day MA, near-term directional characteristics would likely mirror corrective Wave C within Elliott Wave theory. This downward leg's magnitude would minimally equal corrective Wave A, targeting approximately 24,316. Conversely, swift recovery above the 50-day MA may re-establish the ascending channel pattern established since mid-April, with the recent peak of 27,382 representing key resistance.

Figure 2: Hang Seng Index (daily) price chart

Nikkei 225 posts best monthly performance since 1990

The Nikkei 225 index surged above 50,000 and delivered exceptional returns of 16.6% throughout October, its strongest monthly performance since October 1990. Multiple catalysts underpinned this rally: confirmation of Prime Minister Sanae Takaichi, perceived as supportive of fiscal expansion and accommodative monetary policy; renewed US-Japan strategic partnership; robust corporate earnings; and yen weakness benefiting exporters.

Information Technology emerged as October's best-performing sector, while Financials and Real Estate detracted. Japanese corporations capitalised on AI infrastructure demand, with Hitachi reporting 56% net income growth driven by power grid infrastructure and digital transformation demand. Tokyo Electron raised full-year guidance, benefiting from semiconductor equipment market recovery. The forthcoming week proves critical as automotive exporters Toyota and Honda release earnings alongside technology investor SoftBank.

On balance, markets may insufficiently account for political risks, as PM Takaichi's policy effectiveness could be constrained by the Liberal Democratic Party's declining public support, while domestic consumption remains weak amid negative real wage growth.

Exuberant market sentiment propelled the Japan 225 index beyond its ascending channel established since April, leaving no clearly defined technical resistance. However, the RSI reading of 76 indicates overbought conditions. All seven previous instances when the RSI exceeded 70 preceded pullbacks, though correction magnitudes varied between 2% and 8%. Given the rally's steep trajectory, a technical correction towards the 20-day MA near 49,000 appears probable before the advance resumes.

Figure 3: Japan 225 index (daily) price chart

The week ahead

The forthcoming week centres on critical central bank policy decisions and labour market assessments. The Reserve Bank of Australia (RBA) confronts a complex policy decision on Tuesday. Australia's third quarter trimmed mean inflation accelerated to 3.0% year-on-year (YoY) from 2.7% in the second quarter. Education and housing costs represented primary inflation drivers. Concurrently, the unemployment rate elevated to 4.5% in September, the highest reading since November 2021, complicating the central bank's assessment. Governor Bullock's recent commentary emphasised the institution's reluctance to rely upon isolated data spikes when calibrating policy. Markets anticipate rates holding at 3.6%, with attention concentrated on guidance regarding potential easing timing.

Thursday's Bank of England (BoE) decision carries equivalent significance as policymakers evaluate whether inflation remains sufficiently controlled to justify additional rate reductions from the current 4% level maintained since August. Bond futures markets price a 70% probability of unchanged rates.

Official US employment data release remains uncertain owing to the government shutdown potentially delaying Friday's non-farm payrolls report. However, Wednesday's ADP employment change should provide valuable insights into labour market conditions. Latest weekly data reveals improvement following September's concerning negative 32,000 reading.

China's inflation statistics on Sunday will prove particularly significant following the recent Fourth Plenum's identification of 'involution' – excessive competition driving deflationary pressures – as a priority concern. We anticipate consumer prices may have improved from September's negative 0.3% YoY contraction, though persistent producer price deflation suggests structural challenges persist. Sustained improvement would bolster risk appetite in Chinese and Hong Kong markets.

On the corporate front, technology earnings dominate, with semiconductor leaders Advanced Micro Devices and Qualcomm alongside software providers Palantir and AppLovin reporting results. Their commentary regarding artificial intelligence infrastructure demand, enterprise and government spending will prove critical for technology sector sentiment. Japanese automotive manufacturers Toyota Motor and Honda Motor will provide perspectives on global export conditions.

Figure 4: Australia's latest unemployment and inflation data complicate RBA's decision

Source:ig

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Stocks

US markets remain positive despite ongoing economic and political uncertainties. The S&P 500 marked a new record high last week at the 6,920 level and is consolidating above the 6,750 support level. However, the consolidation following the bullish chart patterns comes with growing concerns that Donald Trump’s trade policies could challenge the rally beneath the surface.

Supreme Court to Decide Fate of Trump’s Tariff Powers

The Supreme Court will hear arguments this week about Trump’s use of emergency powers to impose global tariffs. The case could define whether the International Emergency Economic Powers Act (IEEPA) can be used as a long-term tariff tool. While lower courts have rejected this approach, some believe the conservative majority on the bench could reverse that ruling. A decision in Trump’s favour would expand executive authority and lock in a more aggressive trade stance.

The S&P 500 (SPX) is highly sensitive to global trade dynamics. Tariffs increase input costs for companies, disrupt supply chains, and affect forward guidance. Moreover, technology, industrials, and consumer goods sectors face the most exposure. If Trump’s authority to impose broad tariffs is upheld, investor confidence may start to shift. Markets could then begin to price in higher operational risks for multinational firms.

On the other hand, the U.S. dollar is rebounding from its key support level at 96. Strong resistance remains at 100.50, and a break above this level would maintain a positive trend.

Trump Trade War: Can the S&P 500 Rally Survive Legal and Policy Risks?_1

Gold is consolidating above $4,000, while energy prices remain firm as OPEC+ signaled a pause in production increases, adding to inflation concerns. All of this feeds into S&P 500 valuations, which are sensitive to earnings expectations and monetary policy signals.

S&P 500 Technical Analysis: Bullish Structure Holds

The 4-hour chart for the S&P 500 shows that the index has been trading within an ascending channel pattern. It has found strong support at the 6,550 level, which triggered a sharp rebound. The key resistance level remains at 7,100. However, a break below 6,550 would invalidate the ascending channel and could lead to a deeper correction.

Trump Trade War: Can the S&P 500 Rally Survive Legal and Policy Risks?_2

The daily chart for the S&P 500 shows a strong bullish structure in 2025. This structure is supported by the formation of an inverted head-and-shoulders pattern, with the head formed in April 2025. The index broke above the 6,000 level in June 2025, confirming the pattern. After the breakout, it has been trading in a positive trend and shows no apparent signs of a correction.

Trump Trade War: Can the S&P 500 Rally Survive Legal and Policy Risks?_3

Final Thoughts

In short, the Trump trade war remains a wildcard. A favourable court ruling could lead to broader use of tariffs, putting pressure on corporate earnings and weighing on the S&P 500’s outlook. The market is riding a wave of optimism, but legal and political risks could quickly shift the tone.

On the other hand, the S&P 500 remains in a strong bullish structure, supported by technical patterns and recent market momentum. Short-term charts indicate that key support levels are holding, while long-term charts confirm an upward trend with no immediate signs of weakness. This supports the idea that investor sentiment remains intact despite policy risks.

Source: fxempire

Risk Warnings and Disclaimers

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Justin

Central Bank

Federal Reserve Governor Stephen Miran said on Monday it is wrong to put too much emphasis on the strength of equity and corporate credit markets in assessing monetary policy that he feels remains too restrictive and is heightening the risk of a downturn.

"Financial markets are driven by a lot of things, not just monetary policy," Miran said on the Bloomberg Surveillance television program, in explaining why he dissented last week against a quarter-percentage-point rate cut in favor of a half-percentage-point reduction.Rising equity prices, narrow corporate credit spreads, and other factors don't "necessarily tell you anything about the stance of monetary policy" at a moment when interest-sensitive sectors like housing are less buoyant and some parts of the private credit market appear under stress.

Miran's remarks highlight the competing views that Fed officials have begun to offer about the state of the economy and the risks facing it since last week's divided decision to reduce the U.S. central bank's benchmark policy rate by a quarter of a percentage point to the 3.75%-4.00% range.

The 10-2 policy vote marked only the third time since 1990 that voting Fed members have objected in favor of both tighter and looser monetary policy, and Fed Chair Jerome Powell's remarks at his post-meeting press conference indicated an even deeper divide as he noted the "strongly differing views about how to proceed" at the central bank's December 9-10 meeting.

It was an unusual reference to action at an upcoming meeting, with Powell emphasizing that another rate cut "is not a foregone conclusion - far from it."

SCHMID LAYS OUT CASE FOR KEEPING MORE FOCUS ON INFLATION

Kansas City Fed President Jeffrey Schmid, who dissented in favor of no rate cut last week, laid out on Friday the case for keeping more of a focus on inflation that remains above the central bank's 2% target, including the fact that "financial markets appear to be easy across many metrics. Equity markets are near record highs, corporate bond spreads are very narrow, and high-yield bond issuance is high. None of this suggests that financial conditions are particularly tight or that the stance of policy is restrictive."

Asked specifically about the arguments cited by Schmid, a career banker, Miran said it overlooked stress that may be developing elsewhere in the financial system and the sluggishness in the housing market.

In addition, repeating arguments he has laid out since joining the Fed while on leave as a top economic adviser to President Donald Trump, Miran said the economy has been buffeted by population changes and other shocks since last year that have lowered underlying interest rates and mean "that policy has passively tightened" despite the Fed's rate cuts. He said he continues to think the Fed should cut in half-percentage-point increments until hitting a "neutral" level he estimates is "quite a ways below" where it is now.

Other U.S. central bank officials are due to continue the debate later on Monday, including in an appearance at the Brookings Institution by Fed Governor Lisa Cook, her first since Trump attempted to fire her earlier this year in an action so far blocked by federal judges but awaiting an appeal to the U.S. Supreme Court.

Source: Kitco

Risk Warnings and Disclaimers

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Winkelmann

Forex

Stocks

Economic

Nvidia's advanced Blackwell chip for artificial intelligence would not be available to "other people," U.S. President Donald Trump said Sunday.

Nvidia, the world's most valuable company, dominates the market for AI chips.

Questions have swirled about whether Trump would allow shipments of a version of the Blackwell to China since August, when he suggested he might allow sales of a scaled-down version of Nvidia's next-generation advanced GPU chip in China.

However, Trump's remarks to reporters aboard Air Force One suggest his administration may not be inclined to grant broad overseas access to the prized chip.

"The new Blackwell that just came out, it's 10 years ahead of every other chip," Trump said as he flew to Washington after a weekend in Florida. "But no, we don't give that chip to other people," he added.

The possibility that Blackwell chips might be sold to Chinese firms has drawn criticism from China hawks in Washington, who fear the technology would supercharge China's military capabilities and accelerate its AI development.

Republican Congressman John Moolenaar, who chairs the House Select Committee on China, said such a move "would be akin (to) giving Iran weapons-grade uranium."

Trump had hinted he might discuss the chips with Chinese President Xi Jinping ahead of their summit in South Korea last week, but ultimately said the topic did not come up.

Nvidia CEO Jensen Huang said last week that Nvidia has not sought U.S. export licenses for the Chinese market because of Beijing's stance on the company.

"They've made it very clear that they don't want Nvidia to be there right now," he said during a developers' event, adding that it needed access to China to fund U.S.-based research and development.

Nvidia said on Friday that it would supply more than 260,000 Blackwell AI chips to South Korea and some of the country's biggest businesses, including Samsung Electronics.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Forex

The recent rise in the US Dollar may seem linked to the Fed’s interest rate policy, but it also signals a broader shift in global financial conditions. The Fed’s 25-basis-point cut at its last meeting, followed by its statement that this could be the final cut of the year, weakened market hopes for quick and continued easing.

The cautious remarks from Chair Jerome Powell and other Fed officials, who highlighted ongoing inflation risks, suggest that further cuts may come later and at a slower pace than investors expected. This shift in tone has helped the US dollar index regain strength in recent weeks.

At the same time, the delay in key economic data due to the government shutdown has made it harder for investors to gauge the health of the economy. With limited access to employment and growth figures—data the Fed relies on most—the market has turned to private indicators such as PMIs, ADP reports, and confidence surveys. During such uncertain periods, investors often seek safe havens, and the US dollar continues to play that role.

Global Policy Divergence and the Shifting Balance of the US Dollar

Looking at the US dollar index only from the US perspective gives an incomplete picture. The state of other major currencies also plays a key role in shaping this balance. The Bank of Japan’s slow and cautious approach to tightening policy, along with its occasional hints at easing, continues to weigh on the USD/JPY.

In the Eurozone, a weak economic recovery, debates over fiscal discipline, and ongoing political uncertainty have kept the euro under pressure. As a result, the US dollar’s recent strength reflects a two-sided story—it rises not only because of its own momentum, but also because its major counterparts are losing ground.

The recent improvement in US-China relations has had a mixed impact on the US dollar. While the easing of trade tensions boosted market confidence, China’s retreat in areas such as rare earths and supply chains ended up supporting the US dollar in the long run. These moves have strengthened the US’s bargaining position rather than weakening it.

This is why the US dollar index has continued to climb even as geopolitical tensions eased—the balance still leans in favor of the US, even if the nature of the risk has shifted.

Shifting Risk Appetite Across Commodities and Emerging Markets

When the US dollar strengthens, pressure on developing countries tends to rise. This happens not only because capital flows shift away from them, but also because borrowing in US dollars becomes more expensive. As the US dollar’s value climbs, the financial balance in emerging markets becomes more fragile, and portfolio flows can reverse quickly.

This often triggers the unwinding of carry trade positions. From this point of view, it is natural that a rising US dollar index goes hand in hand with greater weakness in emerging market currencies.

In the commodities market, precious metals—especially gold—usually come under pressure when the US dollar strengthens. Gold has struggled to find a clear direction in recent weeks, as uncertainty over the Fed’s interest rate path has made it difficult for the metal to establish a lasting trend.

In the oil market, how OPEC+ production decisions influence global inflation will continue to indirectly shape the Fed’s policy outlook. This places the US dollar at the center of the cycle linking energy costs, inflation, and central bank responses, extending its influence far beyond domestic economic factors.

US Dollar Technical Outlook

The US dollar index’s recovery, which began around 98.5, is now testing the key 99.7 level. This zone marks the upper boundary of the sideways trend seen since May, making it an important technical threshold. If the index holds above 99.7, it could gain further momentum toward 101.6—a level that has previously marked major medium-term trend shifts.

A break above 101.6 would suggest that the current move is more than a short-term rebound and may signal the start of a new upward trend.

However, if the index closes below 99.7, focus will return to 98.5. A drop below that point would weaken the US dollar’s short-term momentum. In the days ahead, the index’s path will largely depend on how prices behave within the 99.7 to 101.6 range.

The Fed’s cautious but hawkish tone, the weak policy outlook for the euro and yen, and the recent easing in US-China relations have all helped maintain the US dollar’s strong long-term position. At the same time, uncertainty in economic data keeps safe-haven demand steady, while high energy prices continue to influence inflation expectations. Together, these factors are supporting the US dollar index’s short-term upward trend.

As long as the US dollar index stays above 99.7, the upward trend remains intact. The 101.6 level will likely serve as a key point in confirming whether this rise develops into a sustained trend.

Source: investing

Risk Warnings and Disclaimers

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Glendon

Forex

Economic

Rising equity prices, narrow corporate credit spreads, and other factors don't "necessarily tell you anything about the stance of monetary policy" at a moment when interest-sensitive sectors like housing are less buoyant and some parts of the private credit market appear under stress.

It was an unusual reference to action at an upcoming meeting, with Powell emphasizing that another rate cut "is not a foregone conclusion - far from it."

SCHMID LAYS OUT CASE FOR KEEPING MORE FOCUS ON INFLATION

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Commodity

Crude Oil Slips as OPEC+ Pause Fails to Lift Sentiment

Daily Light Crude Oil Futures

Light crude oil futures are softening Monday, giving up early gains after buyers were rejected at the 50-day moving average resistance at $61.42. The failure to break this key technical level has shifted the intraday tone bearish, with traders now eyeing minor support at $60.57 and more substantial downside risk toward the main bottom at $59.64. Deeper support lies within the retracement zone from $59.27 to $58.49.

On the upside, bulls would need a clean move through $61.42 to retest resistance at the 200-day moving average at $61.91 and the swing high at $62.59.

At 11:54 GMT, Light Crude Oil Futures are trading $60.63, down $0.35 or -0.57%.

OPEC+ Output Decision Overshadowed by Demand Concerns

Oil prices remained largely unchanged despite OPEC+ announcing plans to pause output increases in early 2025. The coalition confirmed a modest 137,000 bpd hike for December but signaled a halt to further additions in Q1.

This decision underscores concern about oversupply heading into the new year, especially as prices fell over 2% in October, marking the third straight monthly decline and touching five-month lows on October 20.

ING’s Warren Patterson noted that the move reflects growing acknowledgment of a significant surplus in early 2025. However, he warned that uncertainty remains over the impact of U.S. sanctions on Russian oil flows, which could skew the supply balance.

Geopolitical Risks Countered by Surging U.S. Supply

Despite persistent geopolitical tensions—including a Ukrainian drone attack on Russia’s Tuapse oil port over the weekend—oil markets are showing limited bullish response. The attack reportedly damaged a ship and caused a fire, adding to supply-side instability from the region.

However, rising U.S. production continues to offset geopolitical risk. According to the Energy Information Administration, U.S. crude output hit a record 13.8 million bpd in August, reinforcing a well-supplied market narrative.

Weak Asian Demand Adds to Bearish Pressure

Demand-side sentiment also remains subdued, particularly in Asia, the largest oil-consuming region globally. Fresh business surveys on Monday showed that manufacturing activity stayed weak across major Asian economies in October. Sluggish factory output from China and other regional hubs is compounding fears of demand stagnation just as supply risks rise.

Outlook: Bearish Bias as Supply Surplus Outweighs Geopolitics

The short-term outlook for oil remains bearish. Technical resistance at the 50-day moving average has capped rallies, while fundamental pressures from robust U.S. output and weak Asian demand outweigh the bullish potential of OPEC+ restraint and Russian supply disruptions. Until demand signals improve or a deeper supply shock emerges, crude oil prices are likely to remain under pressure.