Markets Rally as Tech Leads, Bitcoin Tests Highs, and Gold Shines Amid Global Risks

Tech has dominated, with the S&P500 tech sector +1.2%, driven predominantly by a near 5% gain in Nvidia, with the market seemingly happy to run long exposures into the upcoming Q325 earnings. Whether these buying flows and increasingly bullish pre-positioning sufficiently raise the risk of disappointment is now a clear consideration, with expectations from the buy-side firms (hedge funds) for Q425 sales guidance now above $40b, higher than where the sell-side (investment banks) see revenue Q425 guidance at $37-$38b.

Either way, options traders’ price high volatility for the day of earnings, but remain positive on the near-term upside, with heavy call buying in the $150 strikes and upwards for the 22 Nov expiry.

S&P500 Communication Services plays also add points with Alphabet, Netflix, and Meta working. Energy and financials underperform, with value areas of the US equity market shunned on the day – once again we see rotation playing out, where the frequency of the rotational flows from money managers should be taken as a sign of a bullish market, and today all the action has been in momentum and growth plays.

Momentum is also a key factor many are focused on in the crypto scene, which is again getting a solid working over by clients. Looking across the various coins there have been dispersions in the moves on the day, with Bitcoin and Doge initially breaking out of their recent consolidation phase with Bitcoin at new ATH. Conversely, many of the alt and meme coins are lower on the day,

Our flows continue to home in on Bitcoin, and while some focus on the speculation that surrounds Trump’s pick of US Treasury Secretary, and there remains a great interest in the level of inflows into the IBIT ETF, most are myopically price-focused and see price as the best guide for sentiment and the aggregation of news.

Unfortunately for the Bitcoin bulls, the initial break out above the consolidation highs of $92k didn’t hold for long, and sellers have kicked into the mix. That said, there is real underlying buying pressure, and another kick higher should bring in a fresh chase from those who like to buy what’s strong.

Gold also gets good attention from traders, and while pockets of traders may be drawn to the trend and vol in crypto, if you’re a gold trader you typically stay a gold trader and won't flip just because crypto is mooning – there is a place for both.

Having recently found strong support at the 100-day MA, gold pushed through Monday’s high of $2615 and while the headlines from Russia/Ukraine offer a compelling tactical reason to own gold, in the absence of any real movement in the USD, and with US 10yr real rates falling 3bp, gold pushed into a session high of $2639 – although after hitting the highs, the price action through US trade has been whippy and any intraday session trend broke down.

Turning to Asia our calls for the various Asia equity bourses suggest modest weakness for the respective opens. The positive net change in the S&P500 is a psychological tailwind, but S&P500 futures are largely unchanged from the levels seen in late Asian trade yesterday. Aus SPI futures had some ride from the overnight session, trading lower into 8313 before following S&P500 futures higher, and currently sit -0.1% on the session.

After the ASX200 cash (XJO) hit a new ATH yesterday, the index tailed off into the close, so we’ll see if market players support the early modest dip or continue to take length off the table – with a lacklustre lead from US banks, energy and materials plays, we’ll need to see something emphatic from ASX tech to support.

Economic data due out in the session ahead is on the light side, with UK CPI (due 18:00 AEDT / 07:00 GMT) the main event. The consensus sees UK core CPI falling to 3.1% (from 3.2%) with headline CPI expected to lift to 2.2%. UK swaps price just 4bp of cuts for the 19 December BoE meeting, with 75bp of cuts priced over the coming 12 months, so we’ll see if the CPI print has any impact here, and by extension the GBP. GBPUSD found good support at 1.2600 but is looking to consolidate in the near term in a range of 1.2700 to 1.2600. Good luck to all.