APAC followed suit to the AI-led slump on Wall Street, Europe looks set for a negative open - Newsquawk EU Market Open

• US stocks slumped on Thursday amid a broad risk-off environment, with the Nasdaq falling over 6% as AI-related chip, memory and neocloud names tumbled to multi-month lows amid fears of an AI slowdown following the Democratic sweep.
• APAC stocks were lower across the board, with the KOSPI amongst the hardest hit and triggering multiple sidecars; US equity futures found a base, while European equity futures indicate a lower cash market open.
• DXY was slightly firmer as US Treasury yields rebounded from Thursday’s decline; USTs came off their peak, while JGBs gapped higher to play catch-up to Thursday’s bid.
• Crude extended on Thursday’s gains with Brent hovering around USD 100/bbl, while spot gold is on track to end the week with its biggest gains since August.
• Looking ahead, highlights include French Trade Balance (Sep), EU Retail Sales (Sep), US Jobs Report (Oct), University of Michigan Consumer Sentiment Prelim. (Nov), Canadian Jobs Report (Oct), Ivey PMI (Oct). Speakers include Fed's Williams, Musalem, Bowman, ECB's Lane, BoE's Pill and BoJ's Ueda.
  
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US TRADE

EQUITIES

• US stocks slumped on Thursday amid a broad risk-off environment, with the Nasdaq falling over 6% as AI-related chip, memory and neocloud names tumbled to multi-month lows. The sell-off appeared to reflect fears of an AI slowdown following the Democratic sweep in the midterms, adding to existing concerns surrounding AI spending and funding. Meanwhile, Qualcomm (QCOM) earnings disappointed following weak smartphone chip sales. There was also considerable chatter regarding potential hedge fund liquidations, with unverified social media reports suggesting significant losses across several hedge fund trading pods.
• SPX -4.32% at 7,356, NDX -6.36% at 26,630, DJI -3.44% at 51,521, RUT -4.48% at 2,729

TARIFFS/TRADE

• US Democrats are targeting President Trump's tariffs on Canada as the first step in a broader effort to roll back his administration's trade policies, according to the WSJ. Senator Wyden (D) said there is overwhelming support for repealing the tariffs on Canadian products.
• BoC Governor Macklem said he is optimistic about lower US tariffs but can't rule out escalation before US trade gets better.

NOTABLE HEADLINES

• US President Trump posted that the stock market suffered one of the worst days ever but will be bigger and stronger than ever before.
• US Secretary of State Rubio is reportedly considering whether to leave the administration, according to Bloomberg citing sources. However, NewsNation reported that this is not true. Furthermore, US Secretary of State Rubio, in a NYT interview, denied the reports that he is considering stepping down and said that he will stay on till the end of the Trump term.
• US War Secretary Hegseth could face an impeachment vote as soon as next week, according to Fox.
• US War Secretary Hegseth is reportedly not currently being considered for the Tennessee Senate seat, according to the AP.
• US Texas Governor-elect said data centre development needs to be halted until measures are in place to protect Texans.
• US 15-Year Mortgage Rate (Nov/05) 6.57% (Prev. 6.60%).
• US 30-Year Mortgage Rate (Nov/05) 7.18% (Prev. 7.24%).
• A portfolio of c. USD 500mln in data centre loans is reportedly up for sale through a competitive auction following the Democratic sweep of the US midterms, according to Bloomberg citing sources. It was later reported that ING (INGA NA) put up the USD 500mln portfolio for sale.
• Banxico lowered its overnight rate to 6.25% (exp. 6.50%, prev. 6.50%). Said the board was split on the rate decision, Galia Borja and Jonathan Heath voting in favour of a hold.
• Canada proposes total borrowing of CAD 611bln in 2027/28 (prev. 587bln in 2026/27). Revises deficit forecasts lower to CAD 62.3bln in 2026/27 (prev. 65.3bln), 62.5bln in 2027/28 (prev. 63.1bln), 57.6bln in 2028/29 (prev. 57.7bln), 53.4bln in 2029/30 (prev. 56.2bln) and 52.9bln in 2030/31 (prev. 53.2bln). Lowers GDP growth forecasts for 2026 to 1.0% (prev. 1.1%) and 2027 to 1.7% (prev. 1.9%), while raising 2028/29 to 2.0% (prev. 1.9%).

APAC TRADE

EQUITIES

• Asia-Pac stocks were lower across the board, with the ASX 200 helped by the lack of tech names. However, the focus remained on semiconductor names and those that are key to the AI buildout, given the blue wave in the US midterms. The selloff appeared to reflect fears of an AI slowdown following the Democratic sweep in the midterms.
• ASX 200 printed losses but to a lesser degree, as its composition lacks tech names. Macquarie reported net profit that slightly beat estimates; however, losses were seen following news that the prudential regulator found a breach of the group’s non-bank businesses and will further review Macquarie’s capital settings.
• Nikkei 225 tracked the broader market lower, with its main tech names opening with double-digit losses (Tokyo Electron -13%, SoftBank -14%, Kioxia -14%). Sony was initially positive after its operating profit beat estimates and it raised its FY guidance, but succumbed to the broader risk tone (-1.3%). Outside of the tech giants, Japan Tobacco tumbled after four of its Russian units were placed under temporary administration.
• KOSPI was amongst the hardest hit, triggering multiple sidecars as SK Hynix and Samsung Electronics dragged the index lower. South Korean finance minister said the government will take necessary measures to prevent the stock market from overreacting and materially deviating from fundamentals.
• Hang Seng and Shanghai Comp followed their Asian peers lower. The PBoC injected CNY 226bln via overnight reverse repos for a CNY 52bln net drain, with the rate at 1.25%.
• US equity futures found a base following Thursday's selloff, with the NQ futures nearing the 27k handle.
• European equity futures indicate a negative cash market open with Euro Stoxx 50 futures -1.1% after the cash market closed with losses of 0.3% on Thursday.

FX

• DXY was slightly higher, supported as initially US Treasury yields initially rebounded from Thursday's decline. Focus will be on the US Jobs Report, with non-farm payrolls expected to rise to 65K for October, from the prior 29K, while the unemployment rate expected to hold steady at 4.2%.
• EUR extended on Thursday's low of 1.1203 and finished Asia-Pac trade at the lower end of its 1.1191-1.1235 range. Light docket for Europe, as markets will wait for the US data.
• GBP was modestly lower. BoE's Pill is expected to speak later today, and with the member seen as hawkish, it will be key to see his view on the future rate path. Pill was with the majority at Thursday's policy meeting, voting to hike rates by 25bps to 4.00%.
• JPY saw some initial strength at the beginning of equity futures trade, with USD/JPY falling to a low of 157.26 before reversing to the 158.00 handle as US equity futures found a steady footing.
• Antipodeans extended on Thursday's losses, as AUD/USD slipped below the 0.6900 mark.

FIXED INCOME

• USTs peaked at 107-16 in Thursday's session but came off slightly in the light volume Asia-Pac session, higher by around a tick or two heading into the European session. Focus will be on the US Jobs Report, with non-farm payrolls expected to rise to 65K for October, from the prior 29K, while the unemployment rate is expected to hold steady at 4.2%.
• Bunds tracked their US counterparts, and neared the 123.00 mark. EGBs had been helped by the recent selloff across the energy complex, but with crude rebounding on Thursday and Brent hovering around USD 100/bbl, further upside may be limited.
• JGBs gapped higher and printed a high above the 128.00 handle, as they play catch-up to the bid across fixed income in Thursday's session.

COMMODITIES

• Energy benchmarks extended on Thursday's gains, with WTI and Brent in USD 90.89-92.53/bbl and USD 98.87-100.83/bbl ranges, respectively. Geopolitical newsflow has been light thus far, with most of the focus being on the price action in equities. Earlier, Sabereen reported explosions in the Strait of Hormuz; however, this did not get wider coverage, while Saudi Civil Defence issued warnings for Najran. US President Trump continued to seem indecisive on potential next steps in Iran, while Axios reported that the President met with the national security team before his comments on Iran in the Oval Office. More upbeat commentary was made regarding Russia-Ukraine peace talks, after Trump met with Russian Envoy Dmitriev and said they are close to settling the war.
• Spot gold is on track to end the week with its biggest gains since August; however, on the day, the yellow metal traded at the lower end of its USD 4,035-4,107/oz range. This week's gains have been supported by lower Treasury yields and a weaker dollar.
• 3M LME Copper was softer, at the bottom end of its intraday band. The red metal has not benefited from the Democratic win, as it removed two key bullish catalysts: rapid buildout of AI infrastructure and the risk of US import tariffs on the metal.
• QatarEnergy is in talks for more long-term deals to buy LNG from US firms, planning to purchase 3-6mln tonnes of LNG annually, according to Bloomberg.
• Saudi Aramco cuts its December Arab Light OSP to Asia by USD 2/bbl to a USD 6.50/bbl discount to the Oman/Dubai average, the lowest since May 2020.
• Energy Aspects cut its forecasts for diesel shipments in November from Chinese state-run refiners to 580k tonnes (prev. 980k tonnes).
• Goldman Sachs lowered its end-2026 gold price forecast to USD 4,150/oz and end-2027 forecast to USD 4,800/oz.

CRYPTO

• Bitcoin hovered just above the USD 75k handle as the crypto searched for a base following Thursday's selloff.
• The US White House is reviewing the SEC’s proposed crypto broker rule changes, according to Bloomberg.

NOTABLE ASIA-PAC HEADLINES

• Japan's PM Takaichi said the government is considering support payments for over 30% of workers, with eligibility potentially expanded beyond the JPY 3.5mln annual income threshold. She said global market volatility is being closely monitored and proceeds from BoJ ETF sales should be used to promote further economic growth and a virtuous economic cycle.
• South Korean Finance Minister said the government will take necessary measures to prevent excessive stock market reactions and significant deviations from fundamentals, attributing recent volatility to external factors. Pledged to monitor markets with the highest level of caution, while South Korea will ease margin requirements for three months.
• Taiwan ordered the regulator to closely monitor the stock market and take measures flexibly to stabilise the market. Furthermore, Taiwan is to unveil stock stabilisation measures this afternoon, according to Paper.

DATA RECAP

• Japanese Average Cash Earnings (Sep YY) 4.6% vs. Exp. 3.8% (Prev. 3.9%).
• Japanese Overtime Pay (Sep YY) 3.60% (Prev. 4.90%).
• Japanese Stock Investment by Foreigners (Oct/31) 1129.3B (Prev. 1182.2B).
• Japanese Foreign Bond Investment (Oct/31) 1312.0B (Prev. -81.8B).

GEOPOLITICS

MIDDLE EAST

• US President Trump said Iran is not doing anything without US approval. Need to decide whether to go further or "certify it" and would rather not destroy the rest of Iran if possible, but maybe will have to.
• US President Trump reportedly met with the national security team before his comments on Iran in the Oval Office, Axios reported citing sources. The sources added that CENTCOM is finalising preparations to potentially resume major combat operations in Iran, but has not received a new directive.
• Iran has sent a new response regarding the nuclear file to the US through mediators, according to Journalist Mallick.
• Iran is reportedly reviewing concrete proposals from mediators concerning its nuclear programme, potentially paving the way for renewed negotiations to end the war with the US, according to the NYT citing officials. US VP Vance has emerged as a key supporter of Qatari-led mediation efforts, while Iran's Supreme National Security Council head Rezaei has reportedly shown greater openness to nuclear discussions alongside Foreign Minister Araghchi and Parliament Speaker Ghalibaf.
• Iran has passed a nuclear proposal to the US through Qatar, which will only be discussed once Washington meets its seven demands, a senior Iranian official told Reuters.
• Iran does not envisage any further steps to advance diplomacy until all seven conditions are met, according to Fars citing a senior security source.
• Iran's response to Qatar's proposal regarding its nuclear capabilities remains pending, with the next step in negotiations dependent on Tehran's decision, Arabic TV reported citing Al Arabiya sources.
• US officials say military strikes against Iran remain an option, with Trump potentially considering a limited attack targeting nuclear facilities rather than broader strikes on energy infrastructure, according to i24NEWS. Regional diplomats say Qatar has renewed mediation efforts, urging Iran to offer concessions on its nuclear programme to secure an agreement.
• The US administration is reviewing plans to resume military operations against Iran, The Hill reported citing sources.
• US President Trump’s administration held secret talks with Iran on deporting Iranians even as the war dragged on, according to the AP citing court documents.
• At least four Iranian vessels have been hovering over subsea cables in the Gulf of Oman, the FT reported citing data from Windward. It comes after Iran warned of disruption to digital infrastructure if the US escalated the conflict.
• Iraqi foreign minister said that a return of military operations between the US and Iran is likely and is no longer a secret, Al Hadath reported.
• Western media outlets are spreading false news about the details of Iran’s Supreme National Security Council head Rezaei’s meeting with Russian President Putin, Al-Mayadeen reported citing a high-ranking Iranian security and political source.
• Explosions were heard in the Strait of Hormuz, Sabereen reported.
• Saudi Civil Defence issued a warning for the Najran Province while explosions were heard in the area, Sabereen reported.

RUSSIA-UKRAINE

• US President Trump said he met with Russian Envoy Dmitriev and that they are close to settling the Russia-Ukraine war. It is going to be a big agreement and will involve more than Ukraine and all of Europe. He added that he did not meet with the Ukrainian delegation.
• US Envoy Kushner said the US held productive and substantive discussions with Ukraine, NATO and European partners, covering security guarantees for Ukraine and a broader European security architecture.
• Russia's Defence Ministry claims Russian forces struck an energy facility in Ukraine's Kyiv region, an electrical substation near Sumy and a cargo vessel at Odessa port, according to Interfax and TASS.

EU/UK

NOTABLE HEADLINES

• UK cabinet ministers are reportedly lobbying PM Burnham and Energy Secretary Fahnbulleh to approve drilling at the Rosebank oil and gas field in the North Sea, with a majority of the cabinet and some senior advisers backing the project, according to Bloomberg citing officials.