Markets stabilize after AI sell-off as Fed, earnings loom
Asian and US equity markets rebounded on Monday, recovering from last week's sharp AI sector sell-off. Investors are now focused on upcoming tech earnings and Federal Reserve policy signals, with markets pricing a high probability of a December rate hike.
Asian and US markets showed signs of stabilization on Monday after a volatile week driven by AI sector sell-offs. Investors are now assessing upcoming tech earnings and Federal Reserve policy signals to gauge the sustainability of the rebound.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2% after sliding 4.6% the previous week. Major regional bourses posted significant gains, led by a powerful recovery in Taiwan.
| Index | Performance |
|---|---|
| MSCI Asia-Pacific ex-Japan | +2.0% |
| Japan’s Nikkei | +3.5% |
| Korean shares | +1.8% |
| Taiwan’s benchmark | +6.0%+ |
Wall Street rallies after AI-led chaos
US equities rallied on November 6, ending a chaotic week marked by heavy artificial intelligence-related selling. Global stocks had already been under pressure in recent weeks with the AI trade crumbling amid rising interest rates. Analysts suggest some dip-buyers might be emerging in a week relatively light on data and events.
Chris Weston, head of research at brokerage Pepperstone, highlighted the mood. "The only fundamental this week that matters is price," he said. He added that some investors might see the sell-off as a buying opportunity, noting, "You could easily see a lot of people going, ’You know what, now’s the time to buy."
Tech earnings in focus this week
Earnings reports due this week from tech companies including CoreWeave, Applied Materials and Cisco Systems are set to put the profitability of AI ambitions to the test. Tech stocks had fallen recently on doubts over chip demand and AI profits. A company-led investigation by industry bellwether Nvidia into its chief executive Jensen Huang's relationship with an alleged Chinese spy could also draw some volatility. Nvidia shares fell about 3.5% in after-hours trading on the Blue Ocean alternative trading system.
Monetary policy and currency markets
Markets are pricing in a high probability of a Federal Reserve rate hike in December, with recent economic data and official comments supporting tighter policy. A blowout jobs report on November 6 showed US employers added 165,000 jobs in October, more than twice economists' expectations. Market expectations for an increase of at least 25 basis points at the central bank's December meeting moved up to nearly 80% in the wake of the report, according to the CME FedWatch Tool.
New York Fed president John Williams said US economic growth has remained remarkably resilient but inflation is too high and it is essential to bring it back to 2%. This helped the US dollar notch its biggest single-day gain in five months. The dollar index, which tracks the greenback against a basket of currencies, last traded at 102.2. The European single currency was little changed at $1.1148, while the yen was 0.2% stronger at 158.215 per dollar.
Commodities and crypto mixed
Oil prices eased as geopolitical tensions appeared to reduce. Brent crude fell to $98.2 per barrel after US President Donald Trump said on November 8 that he was highly unlikely to order fresh attacks on Iran as long as talks progress. In cryptocurrencies, Bitcoin added more than 1% to $74,934 while Ether was steady at $2,140, crawling back from their lowest levels in over two months. Markets stayed wary of higher regulation after US midterm results fueled fears of a Democratic-controlled Congress toughening rules on digital assets.
Elsewhere, economic data showed China’s factory-gate inflation accelerated to its fastest pace in more than four years while consumer inflation cooled in October. US stock futures, the S&P 500 e-minis, were 0.6% higher. The week ahead will be determined by the flow of tech earnings reports and clearer signals on the Federal Reserve's next policy move.
