Buoyed by gains in tech stocks and further declines in oil prices, Asian stock markets are set to post their largest two-day gains since early August.
MSCI regional equity indices rose by as much as 2.3%, following Wall Street’s rally after the U.S. benchmark indices posted their best single-day performance in nearly seven months. South Korea’s KOSPI surged 4.3%, making it the best-performing index in Asia, followed by major indices in Taiwan and Japan. S&P 500 and Nasdaq 100 futures were little changed.
Overnight, the Nasdaq 100 rose 3.4%, while the U.S. semiconductor index surged nearly 7%. However, Nvidia shares fell 4.3% after the company’s CEO was embroiled in an extramarital affair, triggering an investigation.
The sharp drop in oil prices has provided the market with much-needed breathing room. After last week’s brutal sell-off, investors have also begun buying stocks again. However, whether the buying momentum can sustain itself remains to be seen.
U.S. President Donald Trump said there was no need for further strikes against Iran, suggesting that he is gradually winding down the conflict after the results of the U.S. midterm elections highlighted his unpopularity.
Separately, Saudi Arabia’s Al Arabiya, citing Arab sources, reported that a proposal put forward by Qatar and Pakistan has reactivated substantive negotiations between the United States and Iran. The two sides are expected to reach a preliminary agreement on Iran’s uranium enrichment. Sources said Washington has allowed Iran to enrich uranium domestically at a concentration of 3.67%, and Tehran has agreed. Although Iran later said the report was untrue, oil prices continued to remain low.
The U.S. will release the seasonally adjusted October CPI tonight. The monthly rate is currently expected to fall sharply from 0.6% to 0.3%, while the core monthly rate is also expected to drop from 0.3% to 0.2%. If inflation data falls as expected, it will continue to support the corrective rebound in gold and the Nasdaq.
Plugin Case Studies
Gold: After yesterday’s price fell below the yellow zone highlighted by our plugin alert, a V-shaped reversal occurred as expected, reaching a high of 4148 and delivering a risk-reward ratio of around 4:1. Today, we will continue to watch for signals of liquidity sweeps in the yellow zone, as well as signals of a momentum breakout above.
(Gold 15-minute chart)
Nasdaq: Yesterday, price fell to the yellow zone highlighted by our plugin alert. After completing a liquidity sweep, it staged a strong V-shaped reversal and continued higher to above 28,000. Today, we will continue to watch for liquidity sweep signals in the yellow zone, which could lead to a further upward corrective rebound.
(Nasdaq 15-minute chart)
Crude Oil: As expected, price broke below the triangle convergence and fell in one wave to the 85 level. Today, we will watch for a liquidity sweep near 89, after which we will look to short again.
(Crude Oil 15-minute chart)
Key Financial Data and Events to Watch Today:
21:30 U.S. Seasonally Adjusted October CPI MoM
