Semiconductor stocks tumble as AI trade fears grip markets

Intel and major tech firms lead market decline

Intel shares suffered a major crash, with reports citing a 29% decline in one source and a 30% decline in another. Meta's $145 billion AI expenditure has negatively impacted semiconductor stocks.

Micron Technology shares fell 7.00% to 795.23, and Nvidia shares dropped 3.17% to 200.13. Moody's Corporation shares fell 13.74%, Nasdaq, Inc. fell 9.25%, MSCI Inc. fell 7.39%, Coinbase Global, Inc. fell 6.05%, and Cboe Global Markets, Inc. fell 5.43%.

Dow Jones surges following midterm election results

The Dow Jones Industrial Average experienced a jump, rising by 1,500 points following a Democratic election victory. Fears that a Democratic sweep in the midterm elections would negatively impact tech stocks did not materialise.

An equity rally is currently being fuelled by relief that the midterm risk event has passed and by a significant drop in oil prices.

Nasdaq hits three-month low amid AI spending concerns

The Nasdaq reached a nearly three-month low due to concerns regarding AI spending. SK Hynix shares dropped by nearly 8%.

Global energy prices and military tensions impact markets

Crude oil prices rose to $106.61 following military strikes between the US and Iran. Separately, crude oil prices dropped 8% yesterday, which contributed to a decline in two-year USD swap rates by 5bp.

The spike in global energy prices is also a factor attributed to rising inflation in Japan.

Bank of Japan considers interest rate hikes

Minutes from the Bank of Japan's September meeting, released on 5 November 2026, indicate that most policymakers support further interest rate hikes as inflation nears the 2% target. Japanese inflation has now risen above the Bank of Japan's 2% target.

One board member suggested that interest rate increases might need to be accelerated, citing factors including Middle East developments, AI-related demand, and foreign exchange movements. The prospect of rising salaries in Japan is another factor contributing to the country's inflation.

The Bank of Japan began an ultra-loose monetary policy in 2013, introduced negative interest rates and yield control in 2016, and raised interest rates in March 2024.

European Central Bank signals potential December rate increase

ECB Governing Council member Joachim Nagel stated on Tuesday, 3 November 2026, that the central bank will likely raise borrowing costs next month due to a deteriorating inflation outlook. Nagel, who received an FXS Speechtracker score of 8.2 compared to a historic 7.0, described a December rate hike as "very likely to be necessary".

Standard Chartered analysts noted that Eurostat data for October showed headline inflation at 4.0% y/y, which is higher than the bank's 3.8% expectation and the ECB's September projection of 3.6% for Q4.

Excluding Ireland, euro area GDP growth was 0.2%, with momentum in growth steadily falling since Q4-2025, according to Standard Chartered. Standard Chartered expects the ECB to implement a 25bps rate hike at the December meeting, driven by the conflict between rising inflation and weakening growth momentum.

Analysts look to future IPOs to stabilize tech sector

Peck of New York Angels stated that an Anthropic IPO could potentially lift the tech sector following recent AI-related selloffs. The S&P 500 index has displayed a market signal that has not been observed in 36 years.

The ISM services index remains in expansionary territory despite being slightly softer than expected, with the employment subindex rising to 51.4, the highest level since February. ADP payrolls were reported at 86k, while the consensus for tomorrow's payroll print is 65k, with a whisper number of 70k.

The Bank of England is expected to hike rates by 25bp to 4.0% today, with analysts anticipating a 7-2 vote. Regarding the European Central Bank presidency, Klaas Knot is considered hawkish, while Pablo Hernández de Cos is a long-standing dove. In Sweden, the CPIF slowed to 1.1% in October, and the core measure excluding energy fell to 0.1% year-on-year, leading to expectations of a rate hike in February 2027.

EUR/JPY currency pair remains in bearish phase

The currency pair has fallen below 178.00 and maintains a bearish outlook while trading under the 100-day simple moving average.

The pair remains in a bearish phase with the Relative Strength Index at 53.4. Immediate support for the EUR/JPY is at 176.90, with the first upside resistance barrier at 178.45.