The Democratic sweep in the US midterms turned a relief rally into a rout this week. Our weekly market sentiment read is that risk came off hard, with technology shares leading the fall.
Stocks jumped on Wednesday as President Trump accepted the result, then reversed on Thursday as the AI trade cracked. The S&P 500 ended the week sharply lower.
We flagged the oil run in last week’s market report, and this week it reversed hard, with Brent down about 16% as traders bet on a US-Iran deal. Gold went the other way and climbed back above $4,000.
Weekly Market Sentiment Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | 🟠 ⬇️ Weak Bearish | Fell despite the BoE hike to 4.00%. |
| USD | 🟡 ⬆️ Weak Bullish | Firmed as risk-off lifted the dollar. |
| EUR | 🟠 ⬇️ Weak Bearish | Softest major as the dollar steadied. |
| JPY | 🟠 ⬇️ Weak Bearish | Yen slipped past 158 again. |
| AUD | 🟠 ⬇️ Weak Bearish | Tumbled below 0.69 despite the RBA hike. |
| NZD | 🟠 ⬇️ Weak Bearish | Slid with the risk-off commodity currencies. |
| CHF | 🟡 ⬆️ Weak Bullish | Only major to gain, a haven bid. |
| DXY | 🟡 ⬆️ Weak Bullish | Rose to 102.30 on hike bets. |
| Indices | ||
| Nasdaq | 🟠 ⬇️ Weak Bearish | AI selloff drove it into correction. |
| ES | 🟠 ⬇️ Weak Bearish | Slid with the cash index. |
| S&P 500 | 🟠 ⬇️ Weak Bearish | Slid with the broad risk-off selloff. |
| Dow Jones | 🟠 ⬇️ Weak Bearish | Held up better but still fell. |
| Commodities | ||
| Gold (XAU) | 🟡 ⬆️ Weak Bullish | Rebounded 4% on haven demand. |
| Oil (Brent) | 🔴 ⬇️⬇️ Strong Bearish | Fell hard on US-Iran deal hopes. |
Geopolitical Spotlight
The week’s biggest geopolitical story was a sharp turn toward calm in the Middle East. Traders moved to price a US-Iran de-escalation, with reports of weekend talks, and that stripped the war premium out of oil.
Brent crude fell sharply on the week and settled near $98.32, after trading above $110 only seven days ago. The slide pulled headline inflation risk down with it.
That reversal fed straight into rate expectations. Cheaper energy eases the inflation picture the big central banks have been fighting, even as several of them raised rates this week.
Gold moved the opposite way. With equities falling and the dollar only firm, not surging, the metal drew a haven bid and climbed back above $4,000.
The desk at City Traders Imperium is watching the Gulf talks for the next move in oil.
The Middle East talks are the swing factor for oil into the next two weeks. A firm de-escalation would keep Brent heavy and cap inflation fears, while any breakdown would snap the premium straight back in.
Watch Brent at $95, the level that would show the selloff has further to run.
What would change our view: a breakdown in the US-Iran talks that puts the war premium back into Brent and lifts oil sharply.
Sources: CNBC, RTE.
Forex Markets
The dollar firmed as risk came off. DXY rose +0.4% to 102.30, helped by haven demand and firmer bets on a December Fed hike.
EUR/USD eased -0.2% to 1.1139, the softest of the majors, as the euro gave ground to the steadier dollar. The ECB’s hold last week still weighs on it.
GBP/USD fell -0.4% to 1.3345, even though the Bank of England raised Bank Rate to 4.00% on Thursday in an 8-1 vote. The rise was the first since 2023, but sterling could not hold its gains.
The commodity currencies took the hardest hit. AUD/USD tumbled -2.4% to 0.6864, below 0.69 for the first time since July, even after the RBA raised its cash rate to 4.85% on Tuesday.
NZD/USD fell -1.8% to 0.5531 as risk-off selling spread. USD/JPY rose to 158.44, so the yen slipped -0.6% despite the broad caution.
The franc was the one major to gain. USD/CHF fell to 0.8207, leaving CHF up +0.5% on a classic haven bid.
Currencies to Watch
AUD/USD. The Aussie sits at 0.6864 after a rate rise that failed to lift it.
The RBA’s own projections flagged subdued growth, so risk sentiment now drives the pair more than the rate gap.
USD/JPY. The pair trades at 158.44, back in the zone that has drawn official warnings from Tokyo.
Any fresh move higher could bring Japanese officials off the sidelines, so the upside may get harder from here.
GBP/USD. Sterling sits at 1.3345 before Thursday’s UK growth data.
A soft reading would add to the pressure the BoE rate rise could not relieve.
US inflation data sets the tone for the majors into the next two weeks. Tuesday’s CPI and Friday’s PPI will decide whether December Fed hike bets hold, and the dollar leans on that call.
Watch DXY at 103.00, the level that would confirm the dollar is breaking higher.
What would change our view: a soft US CPI on Tuesday that pulls December hike bets lower and knocks DXY back below 101.50.
Sources: Trading Economics, Bank of England, Reserve Bank of Australia.
Indices
US stocks fell hard as the AI trade unwound. The Nasdaq fell -3.4% to 24,579 and slipped into a correction.
The damage came in two acts. Stocks jumped on Wednesday after the midterms cleared, then the Nasdaq dropped -5.5% on Thursday as investors feared a Democratic Congress would slow the AI data-centre buildout.
The S&P 500 lost -2.7% to 7,377, and its E-mini future, ES, settled near 7,402. The Dow Jones held up better but still fell -0.9% to 51,286.
Friday brought a partial bounce, with the Nasdaq closing higher on the day as dip buyers stepped in to test the week’s lows. The rebound was thin.
The AI names still set the tone for the next two weeks, and US inflation data is the next test. If the selling resumes, the Nasdaq and S&P 500 have more room to fall.
Watch the Nasdaq at 24,000, the level that would signal the correction is deepening.
What would change our view: a firm rebound in the AI leaders that pulls the Nasdaq back above 25,500 and restores the risk-on tone.
Sources: Associated Press, CBS News.
Gold and Oil
Gold had a strong week as the havens came back. It rose about +4.4% to $4,045 after a run of heavy losses.
The move was about risk, not the dollar. Falling stocks and a softer inflation outlook, as oil collapsed, drew buyers back to the metal.
Brent told the week’s biggest story. It fell sharply to $98.32, down from above $110 a week ago, as traders bet on a US-Iran deal that would end the supply threat.
The war premium that drove October’s rally came out almost as fast as it had gone in, leaving the price at the mercy of the next diplomatic headline. The talks now run the tape.
Oil hangs on the Middle East talks into the next two weeks, not on demand. A durable de-escalation keeps Brent soft, while a breakdown would lift it fast.
Gold now leans on the Fed path and on real yields. Watch gold at $4,000, the floor it has just reclaimed.
What would change our view: a breakdown in the US-Iran talks that restores the supply premium and pushes Brent back toward $110.
Sources: FinanceFeeds, CNBC, RTE.
What happened this week
- The Democrats swept the US midterms, and markets swung from a Wednesday rally to a Thursday rout.
- An AI selloff pushed the Nasdaq into a correction, down -3.4% to 24,579 on the week.
- Brent crude fell hard to $98.32 as traders bet on a US-Iran deal.
- Gold rebounded about +4.4% to $4,045 on haven demand.
- The RBA and the Bank of England both raised rates, yet the Aussie and the pound still fell.
What to watch next week
- Tuesday 10 November, 13:30 GMT: US CPI, core seen at 0.2% on the month.
- Tuesday 10 November, 09:00 GMT: Fed’s Waller speaks.
- Thursday 12 November, 07:00 GMT: UK GDP, seen at 0.0% on the month.
- Thursday 12 November, 19:30 GMT: ECB President Lagarde speaks.
- Friday 13 November, 13:30 GMT: US PPI, seen at 0.4% on the month.
For informational purposes only. Not financial advice.
