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Stock Markets Lower, Japanese Yen Gains on Selloff; RBA Holds Rates, Says Possible No More Cuts; US Dollar Retreats from 3-Month High; Case on Legality of US President's Tariffs Due Wednesday

The Daily Breakdown takes a closer look at the week ahead, with Palantir and AMD earnings due up. Amazon breaks out to record highs. Before we dive in, let’s make sure you’re set to receive The Daily Breakdown each morning. To keep getting our daily insights, all you need to do is log in to…

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Analyst Weekly,  November 3, 2025 Trade Diplomacy: US’s “Asia Blitz” Targets China While D.C. argued over spending, the US administration was busy redrawing Asia’s trade map. Deals were done with Malaysia, Cambodia, Vietnam, and Thailand, all carrying provisions designed to curb China’s influence, from banning goods made with forced labor to tightening export controls on…

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As expected, the Federal Reserve yesterday cut the Federal Funds Rate from 4.25% to 4.00%

US Federal Reserve, Bank of Canada Both Strongly Expected to Cut by 0.25%; Bank of Japan Policy Meeting Tomorrow; Stocks Advance to New Record Highs; Australian Inflation Rises Unexpectedly; President Trump Departs Japan for Korea

The US 500 index rebounded from its previous decline and set a new all-time high following U.S. inflation data. The forecast for US 500 today is positive.

US 500 forecast: key trading points

• Recent data: U.S. S&P Global Composite PMI (preliminary, October) came in at 54.8
• Market impact: the data are generally positive for the U.S. equity market

US 500 fundamental analysis

The U.S. S&P Global Composite PMI rose to 54.8, exceeding both the forecast (53.5) and the previous reading (53.9). This indicates an acceleration in overall economic activity across both manufacturing and services sectors.

For the stock market, such data represent a pro-cyclical signal: stronger growth supports expectations for corporate revenues and operating leverage, reduces the probability of a recession scenario, and typically contributes to narrowing credit spreads. At the same time, the acceleration in PMI carries a potential inflationary risk through stronger employment and wage dynamics.

For the US 500 index, the conclusion is moderately positive, though with possible sector rotation within the index. In a scenario of “strong PMI without a significant rise in bond yields,” the main beneficiaries are likely to be cyclical sectors — industrials, materials, consumer discretionary, and financials — benefiting from improved demand outlook and margin expansion.

US 500 technical analysis

The US 500 index has renewed its all-time high for three consecutive sessions — marking the 34th record high this year. Support has formed at 6,655.0, while resistance at 6,760.0 has been broken, with a new resistance level yet to form. Prices continue to rise confidently, though a short-term correction without a trend reversal remains possible. The next potential upside target is near 6,955.0.

Scenarios for the US 500 price forecast:

• Pessimistic forecast for US 500: if the support level at 6,655.0 is broken, prices may fall to 6,540.0
• Optimistic forecast for US 500: if consolidation above the recently broken resistance at 6,760.0 holds, prices may rise toward 6,955.0

Summary

Overall, the stronger-than-expected PMI release lowers the recession risk premium and supports US 500 valuations through improved profit expectations. However, the index’s near-term trajectory will depend on whether stronger activity translates into higher inflation expectations and yields, which directly affect the cost of capital.

If reports confirming the end of the U.S. government shutdown coincide with favorable data on prices and wages, the index could gain further momentum on improving market sentiment. From a technical standpoint, the US 500 may rise toward 6,955.0.

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  How Interest Rates Shape Global Markets Interest Rates Today Interest rates are one of the most powerful forces in global financial markets. They influence...

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After a correction, the JP 225 stock index resumed its upward movement and reached a new all-time high. The JP 225 forecast for today is positive.

JP 225 forecast: key trading points

• Recent data: Japan’s balance of trade for September came in at –234.6 billion JPY
• Market impact: the effect on the Japanese equity market is moderately negative

JP 225 fundamental analysis

Japan’s latest trade balance data for October 2025 showed a deficit of –234.6 billion JPY, compared with expectations for a 22 billion JPY surplus and a slightly smaller deficit in the previous period. This indicates that imports continue to outpace exports and that the trade gap is not narrowing. Such dynamics are typically interpreted as a sign of weakening external demand for Japanese goods and high sensitivity of the economy to imported energy resources. This raises the likelihood of lower industrial production figures and slower performance in export-oriented industries.

The release will likely send the JP 225 index lower. However, the downside potential is expected to be limited, as the negative trade data will be balanced by the Bank of Japan’s commitment to maintain ultra-loose monetary policy. Overall, these results increase the risk premium associated with external trade imbalances.

JP 225 technical analysis

The JP 225 index has reached a new all-time high and is currently undergoing a correction, while the overall trend remains bullish. The support level is located at 47,735.0, while resistance lies at 49,770.0.

The following scenarios are considered for the JP 225 price forecast:

• Pessimistic JP 225 scenario: a breakout below the 47,735.0 support level could send the index down to 46,370.0
• Optimistic JP 225 scenario: a breakout above the 49,770.0 resistance level could drive the index to 51,565.0

Summary

For the stock market, the initial reaction to the trade balance report is typically moderately negative, reflecting weaker macroeconomic expectations and downward revisions to revenue forecasts in cyclical sectors such as automotive, electronics, and industrial equipment. However, the stable monetary policy stance and optimism surrounding Japan’s new political leadership continue to support investor sentiment. The next upside target for the JP 225 could be at 51,565.0.

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Canadian Prime Minister Mark Carney is delivering a major speech ahead of his first budget to be

• The US has fundamentally changed its approach to trade
• It's not a smooth transition, it's a rupture
• The decades-long process of economic integration with the US is over
• Our relationship with the United States will never be the same
• Now is not the time to be cautious

Carney reportedly met with opposition leader Pierre Poilivre earlier and described Carney's proposals as “very reasonable" but called for lower deficits. Estimates for the deficit range from C$50-$100 billion. Canada's debt is relatively manageable with deficits about half of those in the US vs GDP and total debt to GDP at about 42%.

The budget is slated to be delivered November 4 and he said it will be about:

• Building
• Taking control
• Winning

Carney said they will be making 'generational investments'.

• There is no prosperity without security
• Promises largest defense spending in generations
• Mentions high-speed rail
• Our next tranche of major projects will be announced before Nov 16
• 80% of European steel is manufactured in Europe but only 40% of the steel we use is made here
• Budget will include prioritizing Buy Canadian provisions on steel, aluminum and other industries
• We will be our own best customer
• Federal spending has risen 7% y/y for the past decade

More to come, as we update live.

• Prior was -¥242.B
• Exports +4.2% y/y vs +4.6% expected
• Imports +3.3% y/y vs +0.6% expected

There was a surprise rise in imports that kept Japan in a trade deficit.

• Exports to USA -13.3% y/y
• Exports to Asia +9.2% y/y
• Exports to EU +5% y/y
• Exports to China +5.8% y/y