Ballots, hikes and a bruised AI trade

The AI trade took its heaviest hit yet last week. Alphabet lost about $500bn in market value in a single day after saying its AI search was eating into its advertising business, and weak results from Amazon and Intel sent the Nasdaq 100 down 3.5% on Friday, briefly into a correction. Investors are now buying protection against the AI build-out itself, with the cost of insuring big tech debt at its highest since 2021. The biggest spenders now face a no-win choice: keep spending and look over-borrowed, or pull back and signal the boom is fading. Apple, AMD and Qualcomm report this week.

Americans vote in the midterm elections on Tuesday. Democrats are expected to win the House and are slightly favoured in the Senate, and fund managers have moved to the sidelines ahead of the result. The governor races may matter most for markets, because states such as Texas and Ohio host many of the data centres behind the AI boom. Voters head to the polls feeling squeezed: wages have barely kept pace with prices, and the saving rate has fallen to 3.8%, one of its lowest readings on record.

The vote also sets the clock on Iran. Gulf states are bracing for a new phase of US and Israeli strikes after Tuesday, Iran's supreme leader has ordered his commanders to prepare for renewed confrontation, and Qatar is racing to broker a deal. Houthi attacks on Saudi Arabia have continued, with the kingdom moving schools to remote learning. WTI hit a five-month high above $104 after a tanker was disabled by mines in the Strait of Hormuz, and gold fell to its lowest in a year as oil kept rate expectations high.

Central banks are still tightening. The Fed held rates but two officials pushed for a hike, Canada raised rates, and New Zealand surprised by holding. This week, Australia is expected to deliver its fifth hike of the year on Tuesday and the Bank of England to hike on Thursday, before US payrolls on Friday, the week's final word on whether the Fed hikes in December. In crypto, a record $6.3bn hack at Binance knocked Bitcoin to a six-week low.

Beyond the US, the picture is just as strained. In Europe, France's economy shrank in the third quarter, eurozone inflation is expected to climb again on Wednesday, and Christine Lagarde's decision to leave the ECB early adds a leadership question to a debt problem. In China, mainland stocks have fallen for a record 12 straight weeks, prompting regulators to meet on support measures, even as South Korea's chip exports nearly doubled from a year earlier. And in Australia, house prices are falling at their fastest pace in 40 years just as the RBA prepares to raise rates again.

Dates shown in UTC. Markets to watch are listed in parentheses.

Monday 2 November

• China manufacturing PMI (HK50)
• US ISM manufacturing (USDX)
• Apple earnings (NDX100, US500)

Tuesday 3 November

• RBA rate decision (AUD/USD)
• US midterm elections (USDX, NDX100, US500, WTI)
• BoC Governor Macklem speech (USD/CAD)

Wednesday 4 November

• China services PMI (HK50)
• Eurozone inflation flash (EUR/USD, GER40)
• US Treasury refunding announcement (USDX)
• US ADP employment and ISM services (USDX)

Thursday 5 November

• BoE rate decision (GBP/USD)
• ECB President Lagarde speech (EUR/USD)

Friday 6 November

• US nonfarm payrolls (USDX, XAU/USD, NDX100)
• Canadian employment (USD/CAD)
• University of Michigan consumer sentiment (USDX)

The US Dollar Index trades at 101.89 after ending last week near 102.00, close to its 200-week moving average. A hawkish Fed and rising oil kept it supported. The Fed held rates at 3.75% to 4.00%, Chair Kevin Warsh said there had been essentially no progress toward the 2% inflation target, and Dallas Fed President Lorie Logan called for two more hikes.

Markets price a December hike at around 70%. This week tests the dollar from three directions: the midterms on Tuesday, a Treasury refunding announcement on Wednesday and payrolls on Friday, expected at 65,000 after September's 29,000. The economy grew at a 3.4% annualised pace in the third quarter, the fastest in a year, but hiring remains slow.

Price Levels

• Support: 101.50 → 101.35 → 100.93
• Resistance: 102.10 → 102.45 → 102.85

Technical View: A symmetrical triangle has formed since early October, with lower highs from the 102.85 spike and higher lows from 101.35, and price now sits near its apex. The 101.35 to 101.50 zone is the floor and 102.45 the ceiling, so a break of either should set the next direction.

Outlook: Rangebound. Hawkish Fed signals support the dollar, but election risk and slow hiring keep it pinned until the triangle resolves.

The Nasdaq 100 trades at 28,515 after its worst month since March 2025. Alphabet's one-day loss of about $500bn was the second-largest in history, behind only Nvidia's in January 2025, and Intel suffered its steepest drop in more than four decades.

The worry has shifted from whether AI will pay off to whether it is eroding the businesses that fund it. The cost of protecting against a default by Amazon, Alphabet, Microsoft, Meta or Oracle has reached its highest since 2021, and put option volume on AI cloud provider CoreWeave hit a record in October. Apple reports on Monday, followed by AMD and Qualcomm, with Nvidia due later in November.

Price Levels

• Support: 28,220 → 28,000 → 27,400
• Resistance: 28,750 → 29,070 → 29,740

Technical View: Price has broken below the 28,750 to 28,900 floor that held through August and September, confirming the breakdown from the rising wedge that began in July. The wedge's measured target sits near 27,000, with 28,000 the next round-number support.

Outlook: Bearish bias. Markets are now punishing AI spending without clear returns, and until earnings change that story, rallies are likely to be sold.

The S&P 500 trades at 7,613 after falling 1.8% on Friday, its biggest drop since June, with the VIX touching its highest level since April. The index is still up about 11% this year, but without tech that gain is roughly halved, and Friday's fall was led by the largest stocks.

Options price only about a 0.9% move for the day after Tuesday's vote, and history favours the bulls: Deutsche Bank calculates that 21 of the last 23 midterm years brought fourth-quarter gains, averaging 7%. The bigger risk is a sweeping result that brings tougher AI regulation, or a disputed outcome.

Price Levels

• Support: 7,580 → 7,525 → 7,500
• Resistance: 7,630 → 7,650 → 7,700

Technical View: A rising wedge from August has broken lower after a double top near 7,840, and price is now testing the 7,580 to 7,630 support zone. The double top points toward 7,510, close to the 7,500 support.

Outlook: Cautious. Midterm seasonality favours a year-end rebound, but the index needs its largest stocks to stabilise before it can recover.

The DAX trades at 25,780 after rallying to near 26,150 midweek, then falling 1.2% on Friday. Germany's economy grew 0.2% in the third quarter, beating expectations of stagnation, as defence and infrastructure spending supported activity and manufacturers gained from a one-off boost in demand.

The rest of Europe is weaker. France's economy shrank unexpectedly in the third quarter, rising bond yields are lifting borrowing costs across the region, and energy prices look set to stay high into 2027, a heavy weight on Germany's industrial base.

Price Levels

• Support: 25,730 → 25,530 → 25,300

• Resistance: 25,800 → 26,160 → 26,580

Technical View: A double bottom near 24,800 drove the October rally, but the late-October high near 26,150 has formed the right shoulder of a larger head and shoulders pattern, with the head near 26,620 in late August. The 25,500 to 25,730 zone is the first support.

Outlook: Cautious. German growth is holding up better than expected, but rising inflation and French stress cap how far the rebound can run.

Gold trades at 3,895 after falling more than 3% on Friday to a new low for the year near 3,880, its first move below $3,900 since October 2025. It is now about 30% below its January record near $5,600.

Hawkish Fed comments did the damage. St. Louis Fed President Alberto Musalem said policy remains too loose, and oil near five-month highs keeps inflation fears alive. Friday's payrolls and any shift in the Iran talks are the week's key tests.

Price Levels

• Support: 3,885 → 3,790 → 3,720
• Resistance: 3,920 → 3,975 → 4,020

Technical View: Gold has broken below the 3,940 to 4,000 zone that held through the summer, extending the run of lower highs from the January peak. The next structure sits near 3,800, with 3,720 below.

Outlook: Bearish. Rates expected to stay higher for longer and oil-driven inflation outweigh gold's appeal in a crisis, and the trend has yet to show signs of turning.

Gold trades at 3,895 after falling more than 3% on Friday to a new low for the year near 3,880, its first move below $3,900 since October 2025. It is now about 30% below its January record near $5,600.

Hawkish Fed comments did the damage. St. Louis Fed President Alberto Musalem said policy remains too loose, and oil near five-month highs keeps inflation fears alive. Friday's payrolls and any shift in the Iran talks are the week's key tests.

Price Levels

• Support: 3,885 → 3,790 → 3,720
• Resistance: 3,920 → 3,975 → 4,020

Technical View: Gold has broken below the 3,940 to 4,000 zone that held through the summer, extending the run of lower highs from the January peak. The next structure sits near 3,800, with 3,720 below.

Outlook: Bearish. Rates expected to stay higher for longer and oil-driven inflation outweigh gold's appeal in a crisis, and the trend has yet to show signs of turning.

Bitcoin trades at 78,025 after falling to a six-week low near 76,200 following a record $6.3bn hack at Binance late on Thursday. The FBI has blamed a North Korea-linked group, and about $3bn of the stolen funds have been frozen.

Binance resumed withdrawals on Sunday and says it has replaced about 95% of the stolen assets, but users pulled a net $3.6bn in the first hours, about 2.1% of the exchange's holdings. Other major exchanges have tightened security. Bitcoin still trades with tech, so the Nasdaq and Friday's payrolls matter as much as the hack.

Price Levels

• Support: 76,800 → 76,000 → 74,900
• Resistance: 78,600 → 79,500 → 81,450

Technical View: Price has broken below the 80,000 area that held through October, reaching last week's triple top target near 77,600. The September low near 74,900 is the next major support, with 76,000 in between.

Outlook: Bearish bias. The hack has added a confidence shock to a market already tied to falling tech stocks, and rallies toward 80,000 are likely to meet sellers.

Euro (EUR/USD)

EUR/USD trades at 1.1161 after revisiting 17-month lows near 1.1100 last week. Eurozone growth beat forecasts at 0.4% in the third quarter, though Ireland did much of the lifting, and the ECB held rates while signalling more hikes may be needed, with policymaker Fabio Panetta warning that the outlook for prices is worsening.

Wednesday's inflation flash is expected to rise to 3.9%, with some forecasters seeing a higher print, which would firm expectations of a December ECB hike. The euro also faces fresh uncertainty at the top: Christine Lagarde will step down as ECB president in February, more than eight months early, with France's debt close to 120% of GDP among the problems her successor inherits.

Price Levels

• Support: 1.1150 → 1.1113 → 1.1060
• Resistance: 1.1180 → 1.1269 → 1.1325

Technical View: The pair has spent October inside a rectangle between 1.1110 and 1.1270, and a second low near 1.1090 has formed a potential double bottom at its base. A break of 1.1270 would confirm it, while a close below 1.1110 would break the range lower.

Outlook: Two sided. A hawkish ECB supports the euro, but French stress and a firm dollar keep rebounds contained.

GBP/USD trades at 1.3385 after a third straight weekly gain took it to a six-week high near 1.3430. Markets expect the Bank of England to raise rates to 4.00% from 3.75% on Thursday, and a BoE survey showed businesses expect to raise prices by 3.8% over the next year.

The question is whether the BoE signals more. Wage growth is cooling, with businesses expecting pay rises to slow to 3.4% next year, and 71% of firms expect energy costs to squeeze their margins. A hike paired with cautious guidance could cap the pound even if the decision lands as expected.

Price Levels

• Support: 1.3341 → 1.3310 → 1.3270

• Resistance: 1.3400 → 1.3418 → 1.3475

Technical View: The rally from the 14 October low near 1.3135 has formed a rising wedge, with a potential double top near 1.3430. A break of the wedge's lower line near 1.3310 would put the October gains at risk.

Outlook: Cautious. A BoE hike is already priced, so sterling needs a hawkish message to extend, and momentum is fading near resistance.

AUD/USD trades at 0.7028, holding above 0.7000 after September inflation rose to 4.3%, above the 4.2% expected. Markets price about an 80% chance that the RBA raises rates to 4.85% on Tuesday, which would be its fifth hike this year and the highest cash rate in 18 years.

Not everything points to a hike. House prices in major cities have fallen 8.1% in seven months, on track for the biggest drop in 40 years, and unemployment has risen to 4.7%. A hike while the Fed, ECB and BoJ hold would widen rate gaps in the Aussie's favour, but last week's surprise hold in New Zealand is a reminder that near-certain hikes can still be missed.

Price Levels

• Support: 0.7013 → 0.6991 → 0.6960
• Resistance: 0.7067 → 0.7077 → 0.7120

Technical View: A falling wedge from the September high near 0.7240 broke higher in October after a double bottom near 0.6890. Price is consolidating above the 0.7000 breakout level, with 0.7067 to 0.7077 the first resistance.

Outlook: Bullish bias. A hiking RBA and widening rate gaps support the Aussie, though a surprise hold on Tuesday is the clear risk.

USD/CAD trades at 1.3977 after the Bank of Canada raised rates on Wednesday with a modestly hawkish message, pushing the pair below 1.40. High oil and narrowing yield gaps with the US have pulled it down from its October high near 1.43.

Governor Macklem speaks on Tuesday, and Canada's October jobs report lands on Friday alongside US payrolls, with employment expected to rebound by 15,000 after a loss of 68,300 in September. A strong print would support the case for further hikes.

Price Levels

• Support: 1.3939 → 1.3890 → 1.3761

• Resistance: 1.4000 → 1.4150 → 1.4200

Technical View: The decline from 1.43 has formed a falling wedge, and price is now testing its lower boundary near 1.3950. The 1.3890 to 1.3900 zone is the next support, while a move back above 1.40 would bring the wedge's upper line into play.

Outlook: Bearish bias, meaning a stronger Canadian dollar. A hiking Bank of Canada and high oil favour the loonie, though the falling wedge near support suggests the decline is slowing.

The Hang Seng trades at 23,366 after rebounding from a low near 22,850 last week. Mainland stocks remain under heavy pressure, with the CSI 300 falling 8.5% in October, its worst month since 2016, and posting a record 12 straight weekly losses.

Support is building. China's central bank and securities regulator meet on Monday to discuss tools to steady the market, and October PMIs arrive midweek. Demand for AI hardware across Asia remains strong, with South Korea's chip-led exports up 94% in October, but that has not been enough to lift Chinese profits.

Price Levels

• Support: 22,820 → 22,500 → 22,375
• Resistance: 23,675 → 23,960 → 24,175

Technical View: After breaking below 23,700, the index has formed a bearish flag, a short rising channel after a sharp fall, and price is testing its upper edge near 23,400. The June low near 22,500 remains the major support.

Outlook: Bearish. Policy support may slow the decline, but falling profits and a bearish flag keep sellers in control.