United States
Wall Street experienced one of its most volatile sessions of the year, with initial gains evaporating in spectacular fashion. The S&P 500 fell 1.6% to 6,538, the Nasdaq 100 plummeted 2.4%, and the Dow Jones Industrial Average dropped 0.8%. The VIX volatility index surged above 26, marking the highest level since April’s market turmoil.
The session began promisingly after Nvidia reported third-quarter revenue of $57 billion and forecast fourth-quarter revenue of $65 billion, both exceeding expectations. The chipmaker’s shares initially jumped over 5% in after-hours trading following Wednesday’s close, with chief executive Jensen Huang declaring that “Blackwell sales are off the charts, and cloud GPUs are sold out”.
However, the euphoria proved short-lived. By Thursday’s close, Nvidia had tumbled 3% as questions about elevated valuations and the sustainability of artificial intelligence investments overwhelmed the positive earnings narrative. The stock erased an advance of more than 5% during regular trading hours.
Interactive Brokers strategist Steve Sosnick noted the crucial role Bitcoin played in the reversal. Shortly before 11am New York time, the cryptocurrency began sliding, eventually falling 4.2% to $86,676. Sosnick observed that algorithms appeared to be acting on the relationship between stocks and Bitcoin, with the crypto selloff triggering broader market weakness.
The dramatic turnaround came as investors grappled with the fundamental question of whether massive AI infrastructure spending will generate sufficient returns. Chris Murphy at Susquehanna International Group noted that with Nvidia earnings now behind markets and the Federal Reserve unlikely to cut rates in December, investors are questioning what remains to drive a year-end rally.
Adding to uncertainty, the delayed September jobs report showed the US economy added 119,000 positions, better than the 50,000 expected, but the unemployment rate unexpectedly climbed to 4.4%, a near four-year high. The mixed data did little to clarify the Fed’s policy path, with officials remaining divided on whether further easing is appropriate.
Federal Reserve commentary reinforced the hawkish tone. Governor Michael Barr said the central bank needs to proceed with caution in considering additional rate cuts, while Cleveland Fed President Beth Hammack warned that lowering rates could extend the period of above-target inflation. Chicago Fed President Austan Goolsbee signalled continued apprehension about a December cut.
Treasury yields fell four basis points to 4.10% as investors sought safety, while the dollar rose 0.1% to hit a six-month high. The heightened volatility came just ahead of Friday’s expiration of an estimated $3.1 trillion in notional options.
Europe
European markets bucked the negative trend overnight, with the Stoxx 600 rising 0.4% to snap a five-day losing streak. Nvidia’s strong revenue forecast helped soothe investor concerns about an AI bubble, at least temporarily, with the continent’s markets closing before Wall Street’s dramatic reversal.
Banks led the advance, gaining 0.8%, with BNP Paribas surging 4.4% after announcing a new share buyback and plans to reach its capital strength target early. BBVA rose 1.2% after the chief executive said the bank would return capital within months rather than years. UniCredit added 1.6%, though it declined later after stating there are no active merger discussions with BPER Banca.
Industrials outperformed, rising 0.8%, driven by a rebound in defence stocks after JPMorgan declared Wednesday’s steep declines a “significant overreaction” that provided a “compelling entry point”. Rheinmetall gained 2.6%, while BAE Systems and Leonardo also recovered ground.
Siemens Energy jumped 2.9% to an all-time high after announcing a €6 billion share buyback – its biggest since going public five years ago. The move underscored optimism around surging data centre investments and the company’s positioning in the energy transition.
Technology shares edged 0.1% higher ahead of Nvidia’s results, with ASML adding 0.4%. However, the sector’s modest gains masked ongoing concerns about valuation that would become more apparent in the US session.
Energy shares advanced 1.1% as oil prices edged higher on concerns about US sanctions on Russia’s Rosneft and Lukoil, set to take effect Friday. Utilities rose 0.7%, providing defensive support.
The automotive sector underperformed, falling 1.4%, with French car parts maker Valeo plunging 13% after its investor day failed to enthuse the market. Chemicals also declined 0.5%, closing at the lowest level in over three years.
Consumer products and services outperformed, gaining 0.9% after consultancy Bain & Co predicted the market for personal luxury goods should return to growth in 2026. Games Workshop surged 13.5% following an upgrade after what analysts called an “outstanding” update.
Australia
Local futures point to a sharp 1.4% decline at the open, with approximately 118 points set to be wiped from the ASX 200. The potential selloff follows Thursday’s 1.2% gain, which saw the benchmark close at 8,553 after rallying on the back of Nvidia’s initial post-earnings surge.
Reports suggest China is expanding its ban on BHP iron ore to include a new product, according to Reuters, adding to concerns about the miner’s exposure to the crucial Chinese market. BHP’s American depositary receipts fell 1.5% overnight, trading at a 2.2% discount to the last Sydney close.
Morningstar market strategists warned that the “most hated rally ever” has hit an air pocket, with the ASX 200 now down about 6% from its late-October peak. Year-to-date returns have been cut to just 4%, with large caps absorbing most of the damage. CSL has fallen 18% in a month, Macquarie 16%, Commonwealth Bank 12%, and Wesfarmers 11%.
Bally’s Corporation received probity approval from the NSW Independent Casino Commission, paving the way for the American casino giant to take control of Star Entertainment. The approval allows Bally’s and the Mathieson family’s $300 million offer to proceed, though Star’s licence to operate in Sydney remains suspended under independent management.
Air New Zealand announced it will cancel its on-market share buyback from 25 November, while Comvita maintained its expectation of a return to profitability in FY26. Sky Network Television reported continued pressure on revenue in the first quarter.
Ampol and Viva Energy were both raised to outperform at Macquarie, suggesting analysts see value emerging in the energy retail sector. Guzman y Gomez received a new sell rating from Citi with a $21.05 price target, indicating concerns about the fast-food chain’s valuation.
The Reserve Bank reiterated that the jobs market remains too tight for inflation to settle at target, reinforcing expectations for an extended pause on interest rate cuts despite softer wage growth data.
Commodities and currencies
Crude oil dipped 0.5% to $59.14 a barrel despite looming US sanctions on Russia’s two largest oil producers. Markets focused instead on signs of weakening demand, with the Energy Information Administration’s weekly report showing petrol and distillate stockpiles in the US built for the first time in over a month. Brent crude fell 0.2% to $63.39 a barrel.
Gold held relatively steady around $4,084 an ounce, finding modest support as safe-haven demand persisted despite the stronger dollar. The precious metal has been caught between competing forces – dimmer prospects for near-term Fed rate cuts weighing on prices, while broader market uncertainty provides support.
The Australian dollar weakened 0.4% to US64.55¢ as the greenback strengthened across the board. The local currency faced additional pressure from the Reserve Bank’s hawkish commentary on labour market tightness, which reinforced expectations for prolonged policy restrictiveness. The New Zealand dollar held steady at US55.99¢.
Bitcoin’s collapse proved the most dramatic currency move, with the cryptocurrency plunging 4.2% to $86,676 – its lowest level since April. The selloff reflected both profit-taking after October’s rally and growing concerns about speculative excess in crypto markets. Ethereum fared even worse, tumbling 4.7% to $2,849.
Iron ore shipments from a major Australian port hit an October record despite concerns about Chinese demand, providing some support for local resource stocks. However, base metals remained under pressure, with investors cautious about the outlook for Chinese stimulus and global growth.
Economic Calendar
US:
- S&P Global US Manufacturing PMI 01:45
- S&P Global US Services PMI 01:45
- S&P Global US Composite PMI 01:45
- Uni. of Michigan Sentiment 02:00
- Wholesale Inventories MoM 02:00
EU:
- HCOB Eurozone Manufacturing PMI 20:00
- HCOB Eurozone Services PMI 20:00
- HCOB Eurozone Composite PMI 20:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
