Closing Recap 

U.S. stocks finished mixed after a volatile session where an initial sell-off was once again met by dip-buyers in mega-cap tech, pushing the S&P 500 and Nasdaq into the green by the close. However, the Asian session saw a cautious risk tone, with most major indices trading lower. Market breadth was decidedly negative, with decliners outpacing advancers and most sectors finishing lower, highlighting the narrow, top-heavy nature of the current rally. This caution comes as the U.S. government shutdown entered Day 34 with no resolution in sight.

The U.S. dollar climbed towards the 100.00 level on the DXY as traders continued to price out the likelihood of a December Fed rate cut. This dollar strength weighed on foreign currencies, though the Australian dollar was the main focus, weakening after the RBA held rates as expected. In commodities, crude oil and gold were little changed. The crypto market endured another brutal session, with a massive $1.3 billion liquidation wave sending Bitcoin tumbling below $105,000. 

Key Takeaways 

• Narrow Rally Continues: The S&P 500 and Nasdaq closed higher, but the gains were driven almost exclusively by mega-cap tech, masking broad weakness across the rest of the market. 
• Fed’s Hawkish Stance Dominates: The market remains fixated on the Fed’s cautious outlook, with the probability of a December rate cut falling to 65%, providing a strong tailwind for the U.S. dollar. 
• Shutdown Enters Critical Phase: The U.S. government shutdown is now on Day 34, nearing the all-time record, with no signs of a deal and increasing concerns about its economic impact. The ongoing data vacuum is forcing the market to fly blind into a crucial period for the economy. 
• Dollar Firms as Fed Cut Bets Wane: The U.S. Dollar is trading near three-month highs as the market continues to pare back expectations for a December rate cut, with odds falling to 65% following the Fed’s hawkish tilt last week.
• Aussie Dollar Slips Post-RBA: The AUD weakened after the Reserve Bank of Australia held its policy rate at 3.6% as expected, offering a cautiously hawkish tone but failing to provide a fresh catalyst for bulls. 
• Yen Strengthens After Hawkish Intervention Talk: The Japanese Yen is back in the spot light, with USD/JPY falling, after the Japanese Finance Minister’s verbal intervention scared buyers.
• Gold Holds Steady, Oil Edges Up: Gold settled around $4,014, supported by some safe-haven demand, while crude oil was largely unchanged as the market digests recent OPEC+ news. 
• Crypto Carnage Continues: Bitcoin plunged below $105,000 after a massive $1.3 billion liquidation wave swept through crypto markets, fueled by the broader risk-off sentiment and a less dovish Fed. 
• ISM Data Disappoints: The U.S. ISM Manufacturing PMI unexpectedly fell to 48.7 in October, remaining in contractionary territory and missing forecasts, though the market’s reaction was muted. 

Market Overview 

Monday’s trading session was a classic example of the market’s current split personality. While the Nasdaq 100 notched its ninth straight weekly closing high, the underlying health of the market appears increasingly fragile. The rally is almost entirely dependent on the outperformance of a handful of mega-cap technology stocks, a concentration that has pushed the S&P 500 Equal Weight index to dramatically underperform its market-cap-weighted counterpart. 

Index	Up/Down	%	Last
DJ Industrials	-225.64	-0.0047	47337
S&P 500	11.9	0.0017	6852
Nasdaq	109.77	0.0046	23834
Russell 2000	-8.17	-0.0033	2471

This nervousness is being fueled by a confluence of macroeconomic headwinds. The Federal Reserve’s hawkish turn last week continues to be the dominant theme, forcing a repricing of interest rate expectations and driving capital into the U.S. dollar. Compounding this is the prolonged government shutdown, now just one day away from becoming the longest in U.S. history. With key economic data on jobs and inflation still unavailable, both the Fed and investors are “flying blind,” increasing uncertainty and defensive positioning. Yesterday’s weaker-than-expected ISM Manufacturing PMI only added to the growth concerns, showing the factory sector remains mired in contraction.

Economic Calendar 

With the U.S. government shutdown disrupting the official data schedule, today’s calendar is exceptionally light. The market will continue to trade based on risk sentiment, central bank commentary, and geopolitical headlines. 

Data Released Earlier / Overnight: 

• Reserve Bank of Australia (RBA) Rate Decision: Left the cash rate unchanged at 3.6%, as widely expected. The statement leaned slightly hawkish, lifting inflation forecasts and signaling a prolonged hold, but failed to provide a strong bid for the AUD. 
• Japan Final Manufacturing PMI (Oct): Fell to 48.2, its sharpest pace of contraction in 19 months, highlighting weakening global demand. 
• U.S. ISM Manufacturing PMI (Oct): Unexpectedly dropped to 48.7 from 49.1, missing the 49.5 forecast and marking its eighth straight month in contraction. 

Today’s Economic Calendar: 

• European Session: An extremely quiet session with only low-tier data like the French budget balance on the docket. 
• U.S. Session: The calendar is bare, with only the weekly Redbook report scheduled. The market will likely remain in a state of consolidation as traders await Wednesday’s ADP employment report, which has taken on greater importance in the absence of official jobs data. 
• Central Bank Speakers: A heavy slate of speakers from the ECB, including President Lagarde, and the Fed’s Bowman are on the docket.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities has been the stabilization of Gold. The precious metal has found a floor above the key $4,000 level, settling at $4,014 after its recent sharp correction. The metal benefited from some safe-haven flows amid the risk-off tone in the broader market, but gains were capped by the strong U.S. dollar. Crude oil prices were largely flat, with WTI settling at $61.05 a barrel as the market balanced the supportive OPEC+ news against concerns over global growth.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.07	0.0011	61.05
Gold	17.5	0.0043	4014
EUR/USD	-0.0012	-0.001	1.1522
USD/JPY	0.19	0.0012	154.19
Bitcoin	-2600	-0.024	104956
10-Year Note Yield	0.011	0.0027	0.04112

The U.S. dollar continued its advance, pressuring its G10 peers as traders favored the greenback’s yield advantage and safe-haven qualities. 

• AUD/USD: The Aussie was the main focus overnight, weakening towards 0.6500 after the RBA’s on-hold decision. While the central bank’s tone was somewhat hawkish, it wasn’t enough to counter the broad strength of the U.S. dollar, and the pair remains on the back foot. 
• EUR/USD: The pair kicked off November with its fourth straight daily loss, slipping towards a multi-week low near 1.1520 level. With the ECB expected to remain on the sidelines and the Fed sounding cautious, the path of least resistance for the common currency appears lower. A large $1.3B options expiry at the 1.1525 level could act as a magnet for price action today.
• GBP/USD: Cable found a temporary floor near 1.3150 but remains highly vulnerable. The market is anxiously awaiting the Bank of England’s rate decision on Thursday, with growing expectations for a rate cut likely to keep any rebound attempts limited. 
• USD/JPY: The pair saw some two-way action as verbal intervention from Japanese officials sparked a minor yen recovery. However, with Japan’s Prime Minister Takaichi continuing to call for accommodative policy, the fundamental divergence with the U.S. remains stark, keeping the pair elevated. The pair is trading down around the 153.50 level in fear of BOJ intervention.

U.S. Treasury yields inched higher despite the weak ISM data. The benchmark 10-year yield rose slightly to 4.107% as the market continues to prioritize the Fed’s hawkish rhetoric over single data points. The Treasury also announced a lower Q4 borrowing estimate, which had a minimal market impact. The crypto market experienced a significant sell-off. A massive wave of liquidations, totaling over $1.27 billion in the last 24 hours, sent Bitcoin prices tumbling below $105,000. The sharp drop reflects souring risk appetite across global markets and a less favorable macro backdrop with the Fed signaling a slower path to policy easing.

Looking Ahead 

With a barren economic calendar today, market sentiment will likely be driven by ongoing political headlines related to the U.S. government shutdown and any commentary from central bank officials. The next major data point for markets will be Wednesday’s U.S. ADP employment report, which will be scrutinized for clues on the health of the labor market. Until then, traders will be watching to see if the “buy the dip” mentality in mega-cap tech can continue to prop up the headline indices, or if the underlying weakness in the broader market will finally take hold. What to watch: 

• The Narrowing Rally: The market’s performance is becoming increasingly dependent on a handful of mega-cap tech stocks. The fact that the equal-weighted S&P 500 is underperforming is a significant warning sign. Watch to see if this divergence continues or if the rally broadens out. 
• The Shutdown Endgame: Now poised to be the longest in history, the government shutdown’s economic impact is growing. Any signs of a breakthrough in negotiations could provide a significant boost to risk sentiment. Conversely, a further hardening of positions would be a major headwind. 
• The Hawkish RBA and the Aussie: The RBA’s hawkish stance is a new development. Traders will be watching to see if this provides a floor for the Australian Dollar or if the currency continues to be dragged down by the strong U.S. Dollar and global risk sentiment. 
• Bitcoin’s Liquidation Cascade: The massive liquidation event in crypto is a major technical blow. Traders will be watching to see if dip-buyers emerge to defend the key $100,000 level or if the path is now open for a deeper correction.