Fed Speculation Drives Big Market Reversals

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It has been a roller coaster 24 hours for global markets, particularly risk and AI plays. Yesterday’s early enthusiasm around strong Nvidia earnings completely fell apart and stocks across several sectors staged big bearish reversals. A positive start turned into a rout as the NASDAQ lost 2.1% and the Dow dropped 0.9%. The catalyst for the reversal was a better-than-expected US catchup nonfarm payrolls report for September which dampened expectations for a December interest rate cut.

A shift to risk off sentiment continued overnight. Bitcoin fell toward $80,000 for the first time since April. The Nikkei and the Hang Seng both dropped 2.4%. Cautious sentiment continued into early morning trading into North America, but now a bullish reversal appears to be underway. Comments from New York Fed President Williams suggesting that a potential December rate cut is still on the table has sparked a rebound in stocks. Three more Fed officials are scheduled to speak this morning.

US index futures have gone from negative to positive and are currently up 0.3% to 0.5%. European markets are still lower with the FTSE down 0.1% and the DAX down 0.5%. Bitcoin has bounced from $80,000 toward $84,000 but is still down 3.2% on the day. Gold, having held $4,000/oz, and Copper have climbed up to flat, but Silver is still down 2.4%. 

Meanwhile, reports of a new Ukraine peace proposal making the rounds appears to be weighing on Crude Oil this morning, which is down 1.0% trading near $58.50/bbl. Natural Gas is up 0.9%.

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