Market News

The Fed, the ECB, and the Bank of Japan all kept rates on hold last week, just as expected. December is unlikely to bring any surprises either: unless the Middle East crisis eases, the base case is a rate hike, except perhaps in Japan, where the huge debt burden leaves little room for tightening. 

But why not act now?

Starting with the Fed, the case for a hike is already pretty compelling: inflation remains stubbornly high, hitting 3.6% year on year in September, while US growth is strong (GDP expanded at a 3.4% annualized rate in Q3 2026, up from 2.2% in Q2) and consumer spending and investment remain resilient. 

Hence, two FOMC members voted for a…

Wall Street is confronting the prospect of tougher AI regulation after Democrats won control of Congress. Yet AMD and Arista Networks have attracted strong buying after earnings. Is this an early sign that investors are becoming more willing to reward strong corporate results?

Nasdaq futures initially fell sharply on Wednesday, November 4, following a sweeping Democratic victory in the US midterm elections. Investors are reassessing the outlook for AI infrastructure, technology stocks and President Donald Trump's economic agenda.

But something interesting is happening beneath the market weakness.

AMD and Arista Networks are delivering a different message through their earnings reactions. Both attracted substantial buying after reporting…

European stocks are faring better in the early stages today with gains across the board as investors find some relief with US futures continuing to claw back earlier losses. Here's how things are shaping up after the opening hour:

• Eurostoxx +0.8%
• Germany DAX +0.5%
• France CAC 40 +0.5%
• UK FTSE +0.4%
• Spain IBEX +1.7%
• Italy FTSE MIB +1.3%

Meanwhile, S&P 500 futures and Nasdaq futures are currently up by 0.2% and 0.1% respectively. That's quite the turnaround for the latter, considering that Nasdaq futures were down by more than 2% at one point earlier in the day.

The initial market reaction to the US midterm election results was a rather ugly one, with the Democratic sweep raising concerns over tighter AI regulation and potential restrictions on data…

Bitcoin whipsawed today as the Democrats’ victory of both the House and the Senate initially weighed on the cryptocurrency before rebounding strongly.

I’m not sure on the reasons for the rebound as the only thing that changes with a Democratic Congress is more fiscal restraint. It won’t limit Trump’s power to impose tariffs or continue the war with Iran.

This should be a net negative for the growth outlook and therefore for risk sentiment, unless the US-Iran war finally ends.

The market might be reacting to lower Treasury yields and US dollar, but this is mostly due to overcrowded positions getting unwound as the fiscal impulse becomes less favourable.

Looking ahead, the focus will remain on…

• Eurozone October preliminary CPI +4.0% vs +4.0% y/y expected
• Prior +3.8%
• Eurozone October preliminary core CPI +2.5% vs +2.5% y/y expected
• Prior +2.5%

Details to follow..

Here's a funny thought. What if the very thing that saves Wall Street from another beating ends up being the thing that sends Treasury yields soaring again? I know, that sounds rather convoluted but hear me out.

Think back to the last two weeks, where we have seen Treasuries enjoy a decent bid lately as investors seek shelter from the growing concerns surrounding AI spending, credit risks, and now the political fallout from the US midterm elections. 10-year yields have fallen back to near 4.90% and have stuck around there since.

Then now, we start to see a Democratic sweep take hold and that puts the focus back on tech stocks once again. The anti-AI and anti-data centre campaigning that helped shape the midterms is now taking over as the…

Gold has been rallying strongly this morning as a blue sweep in the US midterm elections became a reality.

As mentioned yesterday, a Democratic congress is going to restrict further tax cuts, defence spending and fiscal expansion in general. This is positive for gold because it’s going to limit the rise in Treasury yields and the US dollar on lower rate hike expectations.

It could also support gold in case Trump decides to escalate the war with Iran as inflation expectations would rise alongside weakening growth outlook, creating a stagflationary environment.

Looking ahead, we have the US NFP report on Friday but it’s unlikely to change much for the Fed unless we…

• Prior 51.7
• Composite PMI 50.8 vs 50.8 expected
• Prior 51.0

Key findings:

• Growth in activity back in line with trend, supported by stronger new business inflows
• Business sentiment strongest since November last year
• Input cost inflation surges to almost four-year high

Comment:

Eleanor Dennison, Economist at S&P Global Market Intelligence:

"The Italian service sector maintained its steady path of growth in October, even signalling stronger inflows of new work. The headline reading was back in line with its average trend, having crept higher over the month. "Granular sub-sector data revealed the commercial & professional services segment was the only drag, with the consumer services and software & communication sectors recording fresh upturns. The…

IC – Europe Fundamental Forecast | 04 November 2026

What happened in the Asia session?

The US dollar and Treasury yields moved lower following early Democratic election victories, providing support for EUR/USD, GBP/USD, and gold. Meanwhile, Asian equities weakened, particularly Japanese and South Korean stocks, as concerns about technology valuations affected investor sentiment.

The Australian dollar received some support from stronger household spending, although the RBA’s cautious outlook and weaker Chinese services PMI created conflicting signals. Oil remained volatile as traders continued to assess geopolitical developments involving Iran and potential disruptions to global supply.

What does it mean for the European & US…