Markets Steady After a Wild Week as Fed Hike Bets Hit 80% Ahead of Tuesday’s CPI

Asian markets opened the week on a steadier footing on Monday, November 9, after one of the wildest weeks of the year for global stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 per cent, clawing back a small part of the 4.6 per cent it lost last week. Japan’s Nikkei jumped 2.5 per cent, Taiwan’s benchmark rose about the same after its heaviest weekly drop in two decades, and US stock futures edged higher after Wall Street’s partial recovery on Friday, when the Nasdaq rose 1.09 per cent and the S&P 500 added 0.31 per cent.

The calm is fragile. Last week’s sell-off was driven by doubts about the profitability of artificial intelligence and the cost of the data-centre build-out, and the US midterm elections added a new worry: a Democratic-controlled Congress could tighten regulation of AI and data centres. The S&P 500 fell 2.68 per cent on the week to 7,376.86. “The markets are far from being out of the woods yet,” Kyle Rodda, senior financial market analyst at Capital.com, told CNA, warning that momentum remains skewed to the downside after an underwhelming earnings season in which Magnificent Seven companies missed expectations.

The other force reshaping markets is the Federal Reserve. Friday’s jobs report showed US employers added 165,000 jobs in October, more than twice the roughly 65,000 economists expected, with unemployment dipping to 4.1 per cent. Traders now price an almost 80 per cent chance of a rate rise at the Fed’s December meeting, according to the CME FedWatch Tool, and LSEG data suggests markets expect two more quarter-point rises. New York Fed President John Williams added to the hawkish tone, saying growth has stayed remarkably resilient but inflation is too high and must be brought back to 2 per cent. The dollar notched its biggest single-day gain in five months, with the dollar index at 102.2. For readers tracking how rate expectations move currencies, our forex section explains why payrolls is usually the most powerful single release for the dollar.

Oil delivered the week’s most dramatic move. Brent crude fell 17 per cent last week, its steepest weekly decline since the start of the Covid pandemic and the biggest fall in absolute terms since LSEG records began in 1988. Brent traded near $97.49 a barrel on Monday after President Donald Trump said fresh attacks on Iran were highly unlikely while negotiations continued, with US West Texas Intermediate at $90.51. Cheaper oil is already reshaping emerging markets: foreign investors have bought more than $4.1 billion of Indian shares in November, their biggest monthly purchases since September 2024, helping the rupee to its strongest level in more than six months.

What to watch next: October’s US consumer inflation report lands on Tuesday at 8:30 a.m. ET, with consensus at 0.3 per cent on the month for headline CPI and 0.2 per cent for core; a hot number would all but lock in the December hike, while a soft one could unwind it fast. Producer prices follow on Friday. AI earnings are the other test: CoreWeave reports on Tuesday, Nebius and Cisco on Thursday, alongside Anthropic’s IPO roadshow, while a company-led investigation by Nvidia into its chief executive adds a fresh source of volatility. Strategists are not calling a bottom yet: the CBOE put/call ratio hit 1.2 on Thursday, twice its 0.6 average, and the VIX sat near 24 on Friday. With volatility this high, position sizing matters more than direction — our forex tools include calculators for sizing trades in fast-moving markets. (Not financial advice.)