US stocks extended their record-setting run on Tuesday, with renewed enthusiasm for the artificial intelligence trade helping to lift the major indices ahead of the Federal Reserve’s interest rate decision. Sentiment was supported by strong gains in heavyweight technology names, particularly Nvidia, as investors continued to position for a busy stretch of earnings from the largest companies in the market. Optimism around easing US–China tensions also contributed to the day’s tone, with traders encouraged by signs of progress ahead of high-level talks later in the week. Attention now turns squarely to the Fed, where policymakers are widely expected to deliver another rate cut and potentially signal whether further easing remains possible before the end of the year.

Key Takeaways:

  • Dow Climbs Ahead of Fed Decision: The Dow Jones Industrial Average gained 161.78 points, or 0.34%, to close at 47,706.37 as investors positioned for Wednesday’s Federal Reserve interest rate announcement, with traders expecting a second rate cut this year.
  • S&P 500 Hits Another Record as Earnings Lead: The S&P 500 rose 0.23% to 6,890.89, extending its advance after briefly surpassing the 6,900 level earlier in the day. Roughly one-third of companies have reported so far this season, and 83% have beaten earnings expectations.
  • Nasdaq Rallies on AI Strength: The Nasdaq Composite gained 0.80% to finish at 23,827.49, boosted by Nvidia’s nearly 5% surge after new announcements at its GTC conference, including a strategic stake in Nokia. Microsoft also advanced ahead of Wednesday’s earnings release, helped by confirmation that it will hold roughly 27% of the restructured OpenAI for-profit entity.
  • European Markets Show Divergence as FTSE 100 Marks Fresh Record: European equities delivered a mixed performance on Tuesday as investors balanced corporate earnings, central bank expectations, and evolving US–China relations. The FTSE 100 climbed 0.4% to a new all-time high above 9,700, supported by strength in large-cap defensives and continued easing in UK shop price inflation, with food prices recording their sharpest monthly drop in nearly five years. Spain’s IBEX 35 briefly surpassed its 2007 pre-financial crisis peak before closing up 0.5%, continuing a year-long run driven by banking and energy sectors. France’s CAC 40 slipped 0.4% to 8,208, while Italy’s FTSE MIB rose 0.51% to extend recent outperformance in financials and industrials. Germany’s DAX ended marginally lower as investors weighed corporate results alongside broader monetary policy uncertainty. Meanwhile, eurozone consumer inflation expectations eased to 2.7% for the coming year, reinforcing the ECB’s view that price growth is stabilising close to target.
  • Asian Markets Drift as Investors Await Trump–Takaichi Summit: Asian markets traded mostly lower as participants turned cautious ahead of a high-profile meeting between US President Donald Trump and newly appointed Japanese Prime Minister Sanae Takaichi. Japan’s Nikkei 225 fell 0.74% and the broader Topix declined 1.18% after touching record territory in recent weeks. South Korea’s Kospi slid 0.8% after retreating from its own record high, though the latest GDP print showed the economy expanding at the fastest pace in more than a year, driven by resilient consumer demand and strong semiconductor export volumes. The Kosdaq edged slightly higher to its strongest level since April 2024, supported by renewed interest in mid-cap tech and biotech names. Australia’s ASX 200 declined 0.48% as expectations for near-term rate cuts from the RBA diminished following comments that labour markets remain “a little tight.” Hong Kong’s Hang Seng slipped 0.51% and the CSI 300 in mainland China fell 0.48%, with sentiment still constrained by weak property market confidence. One bright spot was the Hong Kong debut of Sany Heavy Industry, which raised HK$12.36 billion (US$1.59 billion).
  • Oil Pulls Back on OPEC+ Uncertainty: Brent crude fell 1.9% to $64.40, while WTI dropped 1.9% to $60.15, marking a third consecutive session of declines. Markets weighed the impact of new US sanctions on major Russian exporters alongside expectations that OPEC+ may approve a modest output increase in December.
  • Treasury Yields Edge Lower Ahead of Fed Guidance: The US 10-year Treasury yield slipped to 3.978% as traders positioned for Wednesday’s rate decision, while the 2-year held near 3.488%. Consumer confidence fell to 94.6, the lowest reading since April, reflecting caution as the US government shutdown continues to limit data visibility.

FX Today:

  • EUR/USD Holds in Tight Range Beneath 1.1700: EUR/USD closed at 1.16565, up 0.10%, after trading between 1.16690 and 1.16256, with price settling mid-range as the recent upswing pauses. The pair continues to trade just below the 50-day SMA at 1.16870 and near the 100-day SMA at 1.16638, while the 200-day SMA at 1.13013 maintains the broader recovery structure. The 1.1700 region remains a firm ceiling where sellers have consistently emerged. Immediate resistance is located at 1.16690 and then the 50-day average at 1.16870. Initial support sits at 1.16256 and then 1.1580. Holding above 1.16256 keeps the tone constructive, while a close above 1.16870 would open the way toward 1.1750.
  • GBP/USD Trades Heavy Near 200-Day Support: GBP/USD closed at 1.3276, down 0.45%, following a session high of 1.3369 and a low of 1.3248. The candle reflects continued pressure beneath the recent lower-high structure, with intraday buying attempts capped below the descending short-term swings. Price is currently positioned near the 200-day SMA at 1.3237, while the 50-day sits at 1.3452 and the 100-day at 1.3476 above, highlighting a downward-sloping bias in the medium-term profile. Immediate resistance lies at 1.3369 and then toward the cluster around the falling 50- and 100-day SMAs. Initial support is seen at 1.3248 and then near 1.3180. A daily close above 1.3369 would be needed to ease the downward bias; below 1.3248 risks continuation toward 1.3100.
  • EUR/GBP Continues to Lean Toward Range High: EUR/GBP closed at 0.8780, up 0.56%, after trading between 0.8790 and 0.8725. The session continued the recent series of higher lows as buyers persisted on dips. Price remains above the 50-day SMA at 0.8686 and the 100-day at 0.8652, while the 200-day at 0.8532 reinforces the broader trend recovery. Immediate resistance stands at 0.8790, with initial support at 0.8725 and then 0.8686. A close above 0.8790 would open scope toward 0.8860.
  • USD/JPY Softens After Testing Upper Resistance Zone: USD/JPY closed at 152.02, down 0.55%, after trading between 152.87 and 151.76. Price remains above the 50-day SMA at 149.08, the 100-day at 147.83, and the 200-day at 147.76, keeping the broader trend biased to the upside. The recent advance has been characterised by higher lows since early September, though upside momentum has slowed near the 152.80–153.00 region. This zone now acts as immediate resistance and is a key reference for whether the trend extends or pauses. Initial support is seen near 151.50 and then at 150.80, where buyers previously stepped in. Holding above 151.50 keeps the structure constructive and suggests the pullback is corrective rather than a shift in trend. A daily close above 152.87 would reopen the pathway toward the next measured resistance levels higher. However, a sustained move below 151.50 would weaken the near-term bias and raise the risk of a deeper retracement toward the 50-day average near 149.08.
  • Gold Stabilises as $4,000 Remains the Pivot Zone: Gold closed at $3,962, down 0.51%, after moving between a high of $4,019 and a low of $3,886. The session produced another lower high under the $4,000 area, showing selling interest remains concentrated near this round-number region. Price continues to trade above the 50-day SMA at $3,779, the 100-day at $3,563, and the 200-day at $3,313, which keeps the broader uptrend intact despite the recent pullback from the peak. The underlying trend structure remains defined by higher highs and higher lows, although momentum has eased. Immediate resistance is located at $4,000 and then $4,060. Initial support sits around $3,900 and then $3,886. A daily close above $4,000 would re-establish bullish control and open the way toward the recent peak, while a sustained move below $3,886 would expose the 50-day SMA.

Market Movers:

  • Nvidia Extends AI Leadership: Nvidia jumped nearly 5% after unveiling new system capabilities and announcing a strategic stake in Nokia, reinforcing its dominant position in AI infrastructure.
  • Microsoft Benefits from OpenAI Restructuring: Microsoft rose almost 2% after confirmation that it will hold roughly 27% of the restructured for-profit OpenAI unit.
  • Intel Gains Alongside Chip Rally: Intel advanced around 5% as enthusiasm around AI hardware demand supported the broader semiconductor segment.
  • PayPal Rises on ChatGPT Integration News: PayPal gained 4% after reports that its digital wallet will be embedded into ChatGPT, boosting expectations for higher transaction engagement.
  • Regeneron Surges on Revenue Beat: Regeneron rallied more than 11% after reporting stronger-than-expected revenue performance.
  • UPS Advances on Solid Earnings: UPS rose nearly 8% after delivering better-than-expected adjusted earnings, easing concerns about volume trends.
  • Royal Caribbean Sinks on Guidance Concerns: Royal Caribbean fell more than 8% after issuing a softer forward outlook, prompting a sharp selloff.

The market now moves into a pivotal phase where earnings and policy guidance will determine whether the current momentum can continue. With several of the market’s largest companies reporting and the Federal Reserve expected to deliver a further rate cut, investors will be looking for confirmation that profit growth can sustain index strength at record levels. Progress in US–China discussions also remains important to near-term sentiment. Overall, while the tone remains constructive, upcoming catalysts will be key in shaping direction as the year progresses.