US markets faced a downturn on Thursday, with investor sentiment cooling after Federal Reserve Chair Jerome Powell signalled a cautious approach to future rate cuts. While optimism had run high following recent election results, Powell’s remarks in Dallas, emphasising the strength and resilience of the US economy as reasons to delay aggressive rate cuts, prompted a more measured outlook from investors. Global markets echoed this sentiment, with mixed economic data from Europe and Asia adding to uncertainty, leaving investors closely watching for upcoming policy moves and economic indicators that could shift the market’s direction.

Key Takeaways:

  • Dow Drops 200 Points as Fed Chair Signals Patience on Rate Cuts: The Dow Jones Industrial Average slipped by 207.33 points, or 0.47%, to close at 43,750.86, as markets reacted to Federal Reserve Chair Jerome Powell’s cautious stance on future rate cuts. The 30-stock Dow fell over 250 points at the session low, though it recovered slightly by the close. 
  • S&P 500 and Nasdaq Retreat Amid Economic Concerns: Broader markets also saw declines, with the S&P 500 falling 0.6% to close at 5,949.17 and the Nasdaq Composite slipping 0.64% to 19,107.65. The small-cap Russell 2000 index also underperformed, dropping over 1% as “Trump Trades” lost momentum after last week’s gains.
  • European Markets Climb Despite Inflation Concerns and Fed Caution: European markets closed higher on Thursday, with the pan-European Stoxx 600 gaining 1.08%, as investors processed a range of earnings reports and economic data. France’s CAC 40 rose 1.3%, Germany’s DAX climbed 1.26%, and the UK’s FTSE 100 added 0.51%. Tech stocks led the gains, up 3.13%, while the auto and oil sectors each increased by approximately 1.7%. Burberry shares surged 18.7% following the announcement of an overhaul plan to reverse declining sales, becoming one of the day’s top gainers across Europe.
  • Asia-Pacific Markets Mostly Decline on US Inflation Data: Asia-Pacific markets mostly declined on Thursday after US inflation data bolstered expectations for another rate cut by the Fed in December. Hong Kong’s Hang Seng index led regional losses, dropping over 2% as it extended a multi-day losing streak, with the index down 4% as of Wednesday’s close. In mainland China, the CSI 300 dropped 1.73% to 4,039.62, while Japan’s Nikkei 225 lost 0.48% to close at 38,535.70. However, Australia’s S&P/ASX 200 rose 0.37% to close at 8,224, supported by stable unemployment data showing a 4.1% jobless rate, with 15,900 new jobs added, although below expectations.
  • Mixed Economic Signals: Producer Price Index and Weekly Jobless Claims: Economic data released Thursday presented a mixed picture of inflation and labour market health. The producer price index (PPI) for October rose by 0.2%, matching Dow Jones expectations, while core PPI, which excludes food and energy, climbed 0.3%. Year-over-year, headline PPI was at 2.4% and core PPI at 3.1%, indicating moderating inflation. Meanwhile, initial jobless claims for the week ending November 9 fell by 4,000 to a seasonally adjusted 217,000, beating expectations of 223,000. Continuing claims dropped by 11,000 to 1.873 million, signalling resilience in the labour market despite earlier distortions from natural disasters and labour strikes.
  • 10-Year Treasury Yield Near 4-Month High as Powell Signals Rate-Cut Patience: US Treasury yields hovered close to a four-month high as investors digested Powell’s remarks on rate cuts. The 10-year yield remained steady at 4.449%, near its highest level since July, while the 2-year yield increased by 7 basis points to 4.353%. These moves came as markets assessed the likelihood of another rate cut in December, with Powell’s comments reinforcing a cautious outlook. 
  • US Crude Oil Edges Higher but Closes Below $69 as Surplus Looms for 2025: Crude oil prices ticked up on Thursday, with the West Texas Intermediate (WTI) December contract closing at $68.70 per barrel, up 27 cents, or 0.39%, though still below the $69 mark. Brent crude futures for January rose by 28 cents, or 0.39%, to $72.56 per barrel. A large supply surplus is expected next year, as the International Energy Agency (IEA) projects that global crude supply will exceed demand by over 1 million barrels per day, driven largely by robust growth in US production. 

FX Today:

  • EUR/USD Pulls Back as Bearish Sentiment Grows Amid Downtrend: EUR/USD closed at 1.0513, marking a significant decline as it failed to break through major resistance levels at the 50-period SMA at 1.0710 and the 100-period SMA at 1.0767. The pair’s inability to sustain gains above these moving averages reinforced a bearish outlook, with sellers stepping in aggressively and driving the price lower. The downtrend was further validated as the pair fell below the 200-period SMA at 1.0855, suggesting that bearish sentiment is likely to continue. Support near 1.0450 now becomes critical for buyers seeking to stabilize the pair in the short term, while resistance remains substantial up to the 50-period SMA.
  • GBP/USD Continues Decline Amid Persistent Selling Pressure: GBP/USD closed at 1.2652, extending its downtrend after a strong rejection at key moving averages. Attempts to recover were capped by the 50-period SMA at 1.2864, with the 100-period and 200-period SMAs at 1.2912 and 1.3004, respectively, acting as further resistance points. This sustained selling pressure has left GBP/USD trading below all major SMAs, keeping the outlook firmly negative. Should the current trend persist, the pair could target the 1.2600 support level, a significant area that might attract buyers. However, any recovery attempt would need to breach the 50-period SMA to signal a shift in sentiment, though resistance remains robust at higher SMAs.
  • AUD/USD Weakens Further on Soft Employment Data and Mixed US Signals: AUD/USD closed at 0.6445, continuing its downward trajectory as weak Australian employment data added to the bearish outlook. Earlier in the session, the pair briefly attempted to regain ground, approaching the 50-period SMA at 0.6570, but sellers stepped in, driving the price back down. Both the 100-period SMA at 0.6583 and the 200-period SMA at 0.6669 acted as strong barriers, reinforcing the bearish sentiment. If AUD/USD continues to decline, it could test support around 0.6400, a level that may attract buyers looking to stabilize the pair. Conversely, a close above the 50-period SMA would be required for a recovery attempt, though resistance remains considerable at higher SMAs.
  • USD/CHF Strengthens as Bulls Retain Control Amid Strong Economic Signals: USD/CHF closed at 0.8912, with buyers maintaining a firm hold following a strong breakout above key moving averages. The pair climbed above the 50-period SMA at 0.8765, signalling renewed bullish interest, and continued to advance past the 100-period SMA at 0.8714 and the 200-period SMA at 0.8648, reinforcing a positive outlook. This sustained upward momentum has positioned the pair for a potential test of resistance at 0.8950. Should USD/CHF maintain its levels above the 50-period SMA, the outlook remains bullish; however, a retracement below 0.8765 could indicate a weakening trend, with support from the 100-period SMA at 0.8714 potentially coming into play.
  • Gold Slips as Powell’s Caution Dampens Bullish Momentum: Gold closed at $2,567.07, pulling back after facing stiff resistance near the 50-period SMA at $2,655.62 and the 100-period SMA at $2,702.22. Despite initial bullish attempts, both moving averages acted as formidable barriers, leading to a shift in sentiment with sellers re-entering the market. Gold is now positioned below the 200-period SMA at $2,683.65, which previously served as support. Immediate support could emerge around $2,550 if selling pressure continues, with further downside likely near $2,520. A recovery above the 50-period SMA would be necessary to signal renewed bullish interest, but resistance at the 100-period SMA remains substantial, keeping the short-term outlook cautious.

Market Movers:

  1. Disney Rallies on Strong Earnings and Streaming Growth: Disney shares jumped 6% on Thursday after the company reported better-than-expected earnings, buoyed by robust growth in its streaming division. The company also provided positive guidance, forecasting high-single-digit adjusted earnings growth for fiscal 2025. 
  2. Tapestry and Capri Surge After Calling Off Merger: Shares of luxury apparel brands Tapestry and Capri rose significantly after the companies announced the cancellation of their planned merger, citing regulatory hurdles. Tapestry’s stock surged nearly 13%, while Capri added 4.4% on the news. 
  3. Hims & Hers Health Slumps on New Amazon Competition: Telehealth provider Hims & Hers Health saw its stock plummet 24% as Amazon announced a new offering for Prime members, allowing them to access fixed pricing for treatments related to men’s health, including hair loss. 
  4. Super Micro Computer Declines Amid Reporting Delay: Super Micro Computer’s stock fell over 11%, marking its fifth consecutive session of losses. The company announced it would delay the filing of its quarterly report for the period ending September 30, which spooked investors. 
  5. Ibotta Drops on Weak Fourth-Quarter Guidance: Shares of digital rewards platform Ibotta declined more than 12% following disappointing fourth-quarter guidance. The company forecasted revenue between $100 million and $106 million for the quarter, falling short of analysts’ expectations of $110.3 million, as compiled by FactSet. 

As Thursday’s trading session concluded, markets reflected a cautious tone, with the Dow dropping over 200 points following Fed Chair Jerome Powell’s remarks that suggested a more measured approach to rate cuts. Investor sentiment was further influenced by mixed economic signals, with the producer price index showing modest inflationary pressure while jobless claims hinted at resilience in the labour market. Meanwhile, crude oil prices edged higher but remained below $69 as forecasts of a 2025 surplus weighed on future expectations. In global markets, European stocks managed to climb on strong corporate earnings and reform announcements, while Asia-Pacific markets mostly declined amid heightened Fed rate-cut speculation. With Powell’s cautious outlook tempering expectations, market participants now turn their attention to upcoming economic data and policy decisions, which could play a critical role in shaping the next phase of market direction.