Opening Bell - Morning Commentary
US Markets Rebound on Strong Data as AI Concerns Ease
U.S. markets rebounded on Wednesday from Tuesday's steepest single-day decline in nearly a month. Surging semiconductor stocks and robust jobs and services data restored investor confidence after sharp losses triggered by concerns over AI sector valuations.
Chipmakers led the recovery, with Seagate surging 11%, Micron 8%, and Western Digital 7%—reversing losses from Tuesday's AI-bubble-driven selloff. Super Micro Computer fell 8% after missing revenue forecasts, while Palantir declined further despite beating earnings estimates, reflecting sector rotation and profit-taking pressures.
Wednesday's economic data showed that U.S. services sector activity reached an eight-month high in October on solid new-order growth, while private payrolls added 233,000 jobs, exceeding forecasts.
The stronger-than-expected data drew investors back into markets, which were trading near record levels. U.S. Treasury yields maintained overnight gains as traders reduced expectations for a December Federal Reserve rate cut, supporting the dollar near a five-month peak.
Japan's services sector maintained strong growth in October despite the slowest new order expansion in 16 months and rising inflationary pressures, according to Thursday's private-sector survey.
The dollar held just below multi-month highs on Thursday as renewed risk appetite pulled it off recent peaks, while sterling weakened ahead of a Bank of England meeting where investors expect dovish guidance.
Gold climbed 1.3% to $2,982/oz, buoyed by risk-off sentiment and diminished expectations for additional U.S. rate cuts. However, fading rate-cut prospects and easing U.S.-China trade tensions have capped gains following October's rally.
WTI crude edged up 0.2% to stabilise near $70/barrel as a substantial U.S. inventory build and dollar strength offset concerns over Russian supply disruptions and OPEC+ production decisions. Risk aversion and forecasts of a 2025 supply surplus continue to limit upside.
Bitcoin briefly dropped below $100,000 for the first time since June, then recovered to $103,000, but it remains 20-25% below recent highs. Heavy ETF outflows, macroeconomic uncertainty, and the ongoing U.S. government shutdown have fuelled the downturn, with sentiment indicators near yearly lows.
Broader earnings trends indicate moderate profit growth for Indian corporates and continued *sectoral divergence, with renewables, banking and select consumption leaders showing notable momentum.
Nifty closed below its 20-day exponential moving average (25,608) on Tuesday for the first time since October 3, 2025. The next support is seen near the previous swing high of 25,448, while resistance has shifted downward to 25,718.
Indian markets are poised to open modestly higher on strong global cues.