Market News

BoJ minutes due on the September hike that split the board

The Bank of Japan releases the full minutes of its September 17 and 18 policy meeting at 8:50 a.m. Tokyo time on Thursday, and they cover one of the most consequential decisions of the current tightening cycle.

At that meeting the BoJ raised its policy rate by 25 basis points to 1.25%, the highest since 1995, on a 7-2 vote. The hike came three months after the previous one, compared with six months between earlier moves.

The dissents drew as much attention as the hike itself. Toichiro Asada and Ayano Sato preferred to keep the rate at 1%, with Asada pointing to core inflation below 2% and questioning whether the economy was strong enough to absorb another increase. Sato later said…

The after-hours move suggests investors are pricing the guidance rather than the quarter, with the gap between a firm revenue outlook and a softer earnings range pointing to margin pressure as the key risk. A beat that fails to lift the stock tends to weigh on near-term sentiment across the broader chip complex, particularly for names leveraged to smartphone demand. Asian handset and semiconductor supply-chain stocks may take their cue from how Qualcomm trades at the US open. A sharper sell-off in the regular session would signal that the capex surprise is being read as a drag on returns rather than an investment in growth.

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Qualcomm cleared the bar for the quarter, but a light earnings outlook and a jump in spending left investors…

A 5% fall on a beat in both earnings and revenue shows how high the bar had been set, with the market treating guidance that only matches consensus as a disappointment. The reaction may weigh on AI-linked chip names in the regular session, where richly valued stocks have little cushion for anything short of a clear upgrade. The AGI CPU order book offers some longer-term support, but near-term trading is likely to be driven by positioning rather than the delivery timeline. A recovery would probably need clearer signs of the new processor’s revenue contribution.

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Earlier:

• Qualcomm beats Q4 forecasts, shares slip 2% as profit guidance comes in light

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Arm beat on every headline number, but an outlook that only matched expectations was not…

The share reaction was not available at the time of writing, but the mix points to a tug of war between margin-focused and growth-focused investors. A user miss tends to weigh more heavily on social media stocks than a small revenue shortfall, because audience size underpins future ad pricing. The in-line holiday-quarter outlook offers little to change sentiment either way. Read-through to other digital advertising names is likely to be limited, given the guidance gives no clear signal on the broader ad market.

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Earlier:

• Qualcomm beats Q4 forecasts, shares slip 2% as profit guidance comes in light
• Arm shares fall 5% after hours despite Q2 beat as outlook only edges past forecasts

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Snap is making more money from the users it has, but it…

US stocks closed sharply higher on Wednesday, with the Dow Industrial Average leading the way with a 3.03% gain. The S&P 500, Nasdaq Composite and Russell 2000 also advanced, but the Nasdaq 100 lagged as selling in Nvidia and AI infrastructure stocks limited the upside.

The rally followed the Democrats’ election victory in both chambers of Congress. Lower Treasury yields, a weaker dollar and falling oil provided a more supportive backdrop for equity buyers as markets assessed the implications of divided government.

The buyers showed up across much of the market. However, there was a clear dividing line within technology. Microsoft, Amazon and Apple posted strong gains, while a number of companies supplying the AI buildout moved sharply…

The divergence on Wall Street sets up a likely split in Tokyo, where AI-linked heavyweights could trail even as the broader market draws support from strong global risk appetite. Falling oil is a modest positive for energy-importing Japan, but a weaker dollar raises the prospect of a firmer yen, a headwind for exporters. The BoJ minutes add a second potential yen driver before the cash open. Traders looking for a relative-value signal will focus on the Nikkei-Topix spread, which tends to widen when AI and chip names diverge from the rest of the market.

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• Arm shares fall 5% after hours despite Q2 beat as outlook only edges past forecasts

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Wall Street gave Tokyo a strong lead, just not for the stocks the Nikkei leans on most.

Summary:

• Arm…

The NZDUSD moved lower after weaker New Zealand jobs data early in the new trading day, but sellers could not push the price below a familiar floor near 0.5579 (see green circles on the chart below). That level has attracted buyers on a number of occasions going back to late September and through October. Today, buyers leaned against it again and were rewarded with a rebound as the market reacted to the US election results.

The hold matters technically. Buyers had a level to define and limit risk, and they defended it. However, holding support is only the first step. To increase the bullish bias, they now need to take back resistance above.

The 200-hour moving average stalled the rebound

The rally today off the solid floor, broke above its…

• October US ISM services 54.5 vs 54.8 expected
• US final October S&P Global services PMI 56.1 vs 57.9 prelim
• US September international trade balance -105.0B vs -108.0B expected
• Canada Trade Balance ($C) for September +5.35B vs +4.1B estimate
• The biggest loser of the US elections was data centers
• EIA weekly US crude oil inventories -865K vs +877K expected
• US October ADP employment +86K vs +65K expected
• House Democratic leader Jeffries says will pass bill to stop tariffs and to end the Iran War
• Trump says election loss was largely a result of the Iran war
• The market is telling the hyperscalers it's happy about a slower data center buildout

Markets:

• WTI crude oil down $7.58 to $88.51
• S&P 500 up 1.7%
• Gold up $135 to $4063
• US 10-year yield down 6 bps to…

Perhaps the clearest takeaway from Tuesday's US midterms is that data centers are unpopular. After a short-lived construction boom, they provide little ongoing employment and drive up local energy costs. There were 41 local votes on data center curbs and 40 of them are on track to win, with margins in the 75/25% range.

Microsoft and Amazon are heavily into the data center business, including huge plans to build more so they should be losers today, right? Wrong. Shares of those two are up around 7% and the market cheers a slower, smaller data center buildout. The market has been hating the massive spending on highly-inflated chips and data center supply chains.

In effect, the market is saying that the government is doing for you what you…

Gold is trading up more than $130, or 3.3%, at $4061.80. The price reached a high of $4070.53 after trading as low as $3919.93.

Lower Treasury yields and a weaker US dollar are helping fuel the gains. The US 10-year yield is down 6.6 basis points at 4.883%, near its lowest level since September 10.

Why do lower yields and a weaker USD support gold?

A weaker USD makes gold less expensive for overseas buyers. Gold is priced internationally in dollars. When the dollar falls against currencies like the euro or yen, buyers using those currencies can purchase the same ounce for less, assuming the dollar gold price is unchanged. That can encourage demand.

Lower yields reduce the opportunity cost of holding gold. Gold pays no interest. When Treasury…

If endless Middle East wars were on the ballot, it's safe to say how it would have gone. 

Republicans are openly blaming the war for the midterm rout and the market is taking that at face value. The indication is that Trump will be forced out of Iran, and possibly soon. That will mean a reopened Hormuz and oil will be flowing again.

The market is aggressively pricing it in with WTI down $7.69 to $88.39 today in one of the largest plunges of the war. The close was the lowest since August 31. Given the oil hit $105 late last week, that's a huge turn. It's a big drag for inflation too and you can see that in the Treasury market with yields down 3-6 basis points, though there are certainly puts and takes there with Democrats now looking like…

• It's largely true election loss was the result of the Iran war
• It was worth it
• You can't let Iran have a nuclear weapon
• I'll get along probably with Democrats
• If I were on the ballot we would have won
• We weren't able to transfer the love to candidates
• It would destroy Democratic Part if they impeach me

Notably, JD Vance wrote at length about the election loss and also blamed the Iran war. It's worth reading but it doesn't mean that Trump and Republicans will finally put an end to the war. At the same time, WTI crude oil is down $7.83 today to $88.25, which is a sign the market says that it will either be Trump or Congress that puts an end to an extremely unpopular war.

Vance:

One of the things the data analysts on our side obsessed over was…