U.S. midterm election results and strong labor data drive market volatility, with WTI crude oil falling over 10% and gold holding above $4,000 as investors weigh AI spending concerns.
WTI crude oil dropped more than 10% after the midterm elections, as heavy Republican losses increased pressure to end the war with Iran and reduce rising living costs, triggering aggressive selling before prices found support near October's lows. Further large movements are possible as negotiations continue, though a quick end to the conflict could still prove difficult.
Stronger-than-expected U.S. jobs data of 165,000 new jobs versus 65,000 forecast helped USD/JPY finish the week near the top of its range above and below 158, and it is starting to move higher and could reach 159. Japanese intervention warnings against further yen weakness continue but traders appear willing to test them.
The Nikkei had a very poor week with aggressive selling in AI-related stocks after the U.S. midterm elections, but the market now appears heavily oversold, raising the chance of a recovery at the start of the new week. A rebound above 60,000 could stabilize sentiment, though direction remains uncertain.
Gold recovered above the $4,000 level after the midterm elections, supported by falling long-term U.S. bond yields as investors anticipated less pressure on government finances. However, the rapid recovery suggests limited further near-term gains, with sideways trading above $4,000 seen as more likely this week.
The Dow held up relatively well above its September and October lows after a volatile election week, and with a December rate hike already priced in a rebound is seen possible. However, AI spending worries and resistance near the 10-day moving average and 52,000 could cap gains.
Financial markets faced significant volatility following the U.S. midterm elections, where Democratic control of Congress triggered shifts in investor sentiment. While U.S. employment data outperformed with 165,000 new jobs, concerns over AI spending and potential policy changes weighed on technology stocks. Meanwhile, WTI crude oil dropped more than 10% on hopes for a resolution to the conflict in Iran, and gold consolidated gains above $4,000.
Heavy Republican losses in the U.S. midterm elections highlighted growing public opposition to the war in Iran and increased the possibility of the U.S. seeking a quick end to the conflict, triggering aggressive selling in WTI crude oil.
The stronger-than-expected U.S. employment report and expectations of a Fed rate hike support the pair toward 159, though Japanese intervention warnings remain a risk.
Concerns about AI and technology stocks triggered aggressive selling following the U.S. midterm elections, as investors questioned whether large AI investments would produce enough profits.
Falling long-term U.S. bond yields, as investors expected less pressure on government finances after the Democratic election victory, supported gold back above $4,000.
The article suggests a rebound is possible at the start of the week since a December rate hike is already priced in, but gains could be limited by resistance around the 10-day moving average and 52,000.