Fundamental Overview
Financial markets are ending October under increasing pressure as disappointing technology earnings, rising oil prices and uncertainty surrounding central bank policy weigh on investor confidence.
US economic growth remains strong, with quarterly GDP increasing to 3.4%, above expectations. However, inflation continues to present challenges. Core PCE inflation has been edging higher, raising questions about the Federal Reserve’s decision to maintain interest rates at 4%.
The European Central Bank also held rates unchanged at 2.65%, while the Bank of Japan maintained its existing policy, disappointing expectations of a possible move towards tighter monetary conditions.
Meanwhile, corporate earnings are challenging the optimism surrounding artificial intelligence. Amazon reported results below expectations, while Microsoft and Alphabet delivered revenue growth without fully reassuring investors about the sustainability of AI-related expenditure.
Risk Sentiment
Risk-off sentiment has strengthened, with the S&P 500 and NASDAQ extending their declines while US oil prices continue to rise.
Concerns about potential further military action involving Iran following the US midterm elections are supporting oil prices and reinforcing inflation risks.
However, the US dollar has also shown weakness, while gold continues to decline. These conflicting signals suggest that traditional risk-off correlations are not operating consistently.
Technical Overview
S&P 500 and NASDAQ: Both indices have rejected recent resistance levels, with the NASDAQ breaking below the important 28,800 area. The developing pattern of lower highs and weakening support favours further downside, although confirmation remains important.
EUR/USD: Trading remains largely sideways, with substantial support around 1.1100–1.1113. A sustained directional move has yet to develop.
USD/JPY: Downside expectations remain, but repeated failures to break below 156.33 highlight the lack of momentum following the Bank of Japan’s decision.
Gold: Selling pressure persists despite recent dollar weakness, creating an unusual divergence that warrants caution.
US Oil: Prices are showing renewed upward momentum as geopolitical uncertainty increases, with further upside possible if tensions escalate.
Focus for Today
Attention is concentrated on the S&P 500, NASDAQ and US oil, where directional opportunities appear more developed than in currencies or gold.
The final trading day of October may also bring additional volatility as institutional portfolios and trading accounts undergo month-end adjustments.
With important support levels under pressure and market correlations remaining inconsistent, selective execution, capital protection and patience are essential.
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