Daily Market Outlook, November 5, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Missive - Chip Rout Spreads On Midterm AI Curbs As Crude Plunge Eases Yields

Global financial markets underwent a violent post-midterm rotation on Thursday as mounting concerns over US artificial intelligence regulatory oversight battered semiconductor hardware, while a dramatic collapse in crude oil sparked a powerful disinflationary rally across sovereign bonds. In Asia, South Korea’s Kospi plunged 5.2%, led by >7% drops in memory leaders Samsung Electronics and SK Hynix. Investors aggressively discounted risks that a Democratic-controlled Congress will push strict oversight on hyperscale data-center power consumption and AI infrastructure deployment. Nasdaq 100 futures slipped another 1.2%, signaling that the tech de-risking phase is expanding from capex return skepticism to legislative friction.

Conversely, the rotation fueled sharp gains across Chinese tech and Asian consumer cyclicals, supported by plunging US yields and a softer greenback. Hong Kong’s Hang Seng Tech Index surged 5.0%—driven by 6%+ rallies in Alibaba and Tencent—while regional consumer bellwethers like Toyota and Sony caught strong bids. Broader participation echoed improving US market breadth, with Japan’s Topix (+1.3%) and Australia’s ASX 200 (+2.5%) advancing even as narrow tech-heavy benchmarks lagged.

Energy markets delivered the session's defining macro shock. Brent crude extended Wednesday’s 8%+ liquidation with another drop to $93.94/bbl as desks priced in prospects that a divided US government will accelerate diplomatic off-ramps to the nine-month Iran conflict. The break below $95/bbl removes an acute stagflationary tax, pulling the benchmark US 10-year Treasury yield down 5 bps to 4.84%—its lowest print since September 10. Yields fell across the curve as political gridlock trimmed fiscal deficit expansion bets, dragging the US Dollar lower across all G10 peers.

In Europe, preliminary October Eurozone CPI printed largely in line at 4.0% y/y headline (from 3.8%) and 2.5% core. However, underlying price dynamics remain stubborn: services inflation ticked up to 3.3% and food inflation rose to 1.6%. While sub-$95 oil offers welcome relief, sticky domestic services validate European Central Bank President Christine Lagarde’s hawkish stance, keeping a 25 bps December rate hike followed by a pause firmly on the table.

Stateside activity data highlighted stark transatlantic economic divergence. The S&P Global US Composite PMI printed at a robust 55.9 in October (vs. Eurozone’s 51.7), consistent with annualized Q4 GDP tracking north of 4.0%. Growth was exceptionally broad—Financials hit 58.4 and Consumer Goods printed 57.6—yet persistent cost pressures, the fastest rise in selling prices since August 2022, and record services backlogs ensure the Federal Reserve retains an active tightening bias into year-end.

All eyes in London turn to the Bank of England's rate decision at midday, where the MPC is widely expected to deliver a 25 bps hike, lifting Bank Rate to 4.0%. With October DMP survey data revealing realized and expected inflation sticky near 4%, the BoE must defend credibility, though cooling employment indicators and post-Budget gilt supply relief point toward a divided vote and guidance emphasizing that the terminal rate is near.

Macro to Micro: The macro landscape is pivoting from indiscriminate tech de-risking into an aggressive cross-asset rotation. While prospective US AI regulatory constraints are punishing hardware valuations, the collapse of Brent crude below $94/bbl and 10-year Treasuries testing 4.84% provide genuine disinflationary oxygen to broader equities. For traders, immediate tactical focus centers on Samsung and SK Hynix stabilization, post-midterm US tech policy commentary, the Bank of England’s vote split, and Friday’s US employment report to confirm whether lower bond yields can sustain broader equity breadth.

Overnight Headlines

  • IRGC Reports Two Tankers And A Tug Caught Fire In Strait Of Hormuz

  • Wall Street Warns Of Potential US Debt Ceiling Showdown In 2027

  • BoE Poised For Insurance Hike As Inflation Risks Intensify

  • SNB’s Schlegel: Will Adjust Mon Policy If Price Stability Is Threatened

  • ECB’s Kazaks: Rates Need To Rise If Inflation Risks Are Spreading

  • French National Assembly Unanimously Rejects 2027 Budget Bill

  • China’s Bank Funding Costs Hit Record Low, Post-PBoC Policy Shift

  • BoJ Boards Saw The Need To Keep Raising Rates, Sept Minutes Show

  • RBA Board Tensions Rise Over Pre-Meeting Rate Signals

  • Australia’s Sep Trade Surplus Widens To A$2.83B, Beating Forecast

  • Labour 'To Outlaw New North Sea Drilling' Under New Legislation

  • Citrini Research Calls Peak On AI Infrastructure Spending

  • Qualcomm’s Push Into New Markets Helps Make Up For Phone Slump

  • Arm Holdings Sales Climb 27% On AI Demand

  • Microsoft Rejects Multibillion-Dollar AI Deal With UK’s Nscale

  • AstraZeneca Reportedly Makes $10B Offer For Rhythm Pharmaceuticals

  • Rheinmetall Cuts Sales Guidance Again Amid Boxer Vehicle Delays

  • Toyota Posts First Profit Rise In Six Quarters, Lifts Annual Outlook

  • China Blocks SoftBank’s $5.4B Acquisition Of ABB’s Robotics Division

Technical & Trade Views

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