Closing Recap

U.S. stocks surged to new all-time highs as a positive start to Q3 earnings season and ongoing U.S.-China trade optimism fueled a powerful risk-on rally; the dollar weakened, Treasury yields held steady, while gold plunged on reduced safe-haven demand and oil prices were little changed. In the currency markets, the U.S. dollar weakened as risk sentiment improved, with the Euro firming above 1.1670, while the Japanese Yen saw a volatile session, strengthening on the back of Japan’s new pro-stimulus Prime Minister, and the British Pound was weighed down by a soft UK jobs report. Bitcoin, meanwhile, is attempting to find its footing after a massive flash crash. 

Key Takeaways 

• Tech-Led Rally Sends Stocks to New Record Highs: U.S. equities surged, with the S&P 500, Dow, and Nasdaq all closing at new all-time highs, driven by a powerful rally in mega-cap technology stocks ahead of key earnings reports. 
• Strong Earnings Boost Sentiment: Solid results from major banks and other companies are lifting investor sentiment and overshadowing concerns from the ongoing U.S. government shutdown. 
• “Buy the Dip” Mentality Remains Unbreakable: The market’s bullish conviction is on full display. Last week’s brief credit and trade fears are a distant memory as investors aggressively pile back into momentum names, sending the VIX volatility index crumbling. 
• Gold Tumbles as Risk Appetite Soars: Gold suffered a significant setback, falling nearly 3% as the renewed risk-on mood and hopes of a U.S.-China trade deal diminished its safe-haven appeal.
• Dollar Subdued, Yen Weakens Paused: The U.S. Dollar is treading water as traders await the Fed. The Japanese Yen has paused its slide, with USD/JPY pushing back below 152.00 after Japanese officials offered light verbal intervention against its weakness.
• Bitcoin Pauses: Bitcoin is attempting to stabilize around $113,760 after a massive flash crash last week that saw over $20 billion in liquidations and a plunge to near $102,000. 
• Oil Prices Flat: Crude oil prices were little changed as the market balances supply concerns with the demand impact of trade tensions. 
• Yields Steady: Treasury yields were flat, with the 10-year yield holding steady around 3.996%, as investors awaited the Fed’s decision next week. 

Market Overview

The brief period of market anxiety is already a distant memory. U.S. stocks opened strong on Monday and grinded relentlessly higher throughout the session, with the S&P 500, Dow, and Nasdaq all closing at fresh all-time highs. The “buy the dip” mentality was on full display as investors shrugged off the previous week’s regional bank scare and trade war jitters, piling back into the market’s leaders. The rally was spearheaded by a powerful surge in all seven of the mega-cap “Mag7” tech stocks, with names like Tesla and Google leading the charge ahead of their crucial earnings reports this week. 

Index	Last	Change	% Change
S&P 500	6875	83.44	0.0123
Nasdaq	23637	432.59	0.0186
Dow Jones	47544	337.47	0.0071
Russell 2000	2520	6.97	0.0028

The bullish sentiment is being fueled by a powerful combination of factors: optimism for a U.S.-China trade deal, unwavering expectations for a Fed rate cut on Wednesday, and the anticipation of strong corporate earnings. The CBOE Volatility Index (VIX), which spiked to nearly 29 just over a week ago, has since collapsed back below 16, a clear sign that fear has once again been banished from Wall Street.

The ongoing U.S. government shutdown, now in its 27th day, has been largely ignored by the market, as investors remain focused on the positive earnings and trade news. In major international news, Japan’s lower house elected Sanae T’akaichi to become the country’s next Prime Minister. As a known fiscal dove who supports “Abenomics”-style policies, her confirmation has sent the Japanese Yen lower on expectations that the Bank of Japan will delay any rate hikes. 

Economic Calendar

The U.S. economic calendar is light today. With the U.S. government shutdown ongoing, there were no major U.S. data releases. The market continues to be driven by corporate earnings, private surveys, and political headlines. The key data point of the European morning was a poor German consumer sentiment reading. 

• German GfK Consumer Sentiment (Nov): Deteriorated to -24.1, worse than the -22.0 forecast, as rising inflation fears and job security concerns weighed on households.

Today’s agenda and trading focus remains light due to the U.S. shutdown, but a few mid-tier reports are still scheduled for release. 

• 14:00 GMT – U.S. Consumer Confidence (Oct). 
• 14:00 GMT – U.S. Richmond Fed Manufacturing Index (Oct). 
• Central Bank Meetings This Week: Fed (Wednesday), BoC (Wednesday), BoJ (Thursday), ECB (Thursday).

Commodities, Treasuries and Currencies 

The big story in commodities is the sharp reversal in Gold. After a historic run, the precious metal has pulled back sharply, with futures settling down 2.86% at $4,019.70. The sell-off was driven by the surging risk appetite and a significant improvement in risk sentiment following the U.S.-China trade news, which reduced demand for safe-haven assets, coupled with a stable U.S. dollar. During the overnight session, the Gold sell-off accelerated, pushing the price down by over $67 for the second consecutive day this week. Crude oil prices were little changed, with WTI settling down $0.19 (-0.31%) on the day.

Asset	Change	Unit	Last
WTI Crude	-0.19	USD/bbl	61.31
Gold	-118.1	USD/oz	4019.7
EUR/USD	0.0014	USD	1.1639
USD/JPY	-0.03	JPY	152.83
US 10-Yr Yield	+0.0 bps	%	0.03996

The currency market is seeing the U.S. Dollar struggle for direction ahead of the Fed meeting, while the Japanese Yen’s weakness is the main thematic driver. 

• USD/JPY: The pair is dribbling lower towards 152.00, but the broader trend remains upward. The Yen is being pressured by the confirmation of a pro-stimulus government under PM Takaichi, which pushes back the timeline for any BoJ tightening. Verbal intervention from Japanese officials has been light and so far has stabilized the Yen free fall. A notable $897M options expiry at the 153.00 level could act as a resistance cap today. 
• EUR/USD: The Euro has found its footing and is on a five-day winning streak, trading near a fresh weekly high of 1.1670. The pair is benefiting from the broad weakness in the U.S. Dollar as traders position for a dovish Fed. 
• GBP/USD: Sterling has halted its six-day losing streak, bouncing back above 1.3350. The move is primarily driven by the softer U.S. dollar, as domestic UK fundamentals remain mixed.

U.S. Treasury yields gapped lower at the open as the risk-on mood reduced demand for safe-haven bonds. Bitcoin’s recent rebound has stalled, with the price falling 1.6% as traders grow cautious ahead of the Trump-Xi meeting and the Fed decision.

Looking Ahead 

The market will be keenly focused on Q3 earnings reports this week, particularly from major tech names like Amazon and Netflix. Any guidance from these companies on the impact of trade tensions and the economic outlook will be critical. The primary macro focus remains on the U.S. government shutdown and any progress toward a resolution. The upcoming meeting between Presidents Trump and Xi will be a major event for the market. Fed Chair Powell’s speech tomorrow will also be a key event.What to watch: 

• The Mega-Cap Tech Earnings Gauntlet: This is the main event of the week. Five of the “Mag7” stocks report this Wednesday and Thursday. Their results and, more importantly, their forward guidance on AI spending and cloud demand will be critical in determining if the market’s powerful rally can be sustained. 
• A Huge Central Bank Week: With the market flying blind on official jobs and inflation data, the forward guidance from the Fed (Wednesday), BoC (Wednesday), BoJ (Thursday), and ECB (Thursday) will be scrutinized with even greater intensity. The Fed’s commentary on the “labor-consumption conundrum” will be key. 
• Gold’s Major Correction: The sharp, multi-day pullback in gold is a significant technical development. Traders will be watching to see if dip-buyers emerge to defend the key $4,000 psychological level or if the correction has further to run. 
• The Shutdown Endgame: While the market is currently ignoring it, the shutdown is now forecast to be the longest in U.S. history. Any signs of a breakthrough in negotiations could provide an additional boost to risk sentiment.