Morning Bid: Tech bounce stalls

U.S. markets saw a tech-led rebound, with Nvidia gaining 6% on government funding news, though momentum stalled and Nvidia-backed CoreWeave trimmed its revenue forecast. SoftBank doubled quarterly profits to 2.5 trillion yen from OpenAI holdings but divested its remaining Nvidia stake for $6 billion, while Japanese investors offloaded $12.2 billion in foreign stocks to realize AI-fueled gains. Concurrently, the dollar firmed against the yen amid Japanese policy shifts, UK bond yields and the pound declined on rising unemployment, and Swiss markets rose on news of potential U.S. tariff reductions.

Analysis

The U.S. market experienced a tech-led rebound, with the S&P500 surging 1.5% and Nasdaq rallying over 2% following the Senate's passage of a government funding bill. Key tech stocks like Nvidia (NVDA) rose 6%, Palantir (PLTR) jumped 9%, and Tesla (TSLA) climbed 4%. This recovery, however, only reclaimed approximately two-thirds of recent losses, with futures stalling into the Veterans Day holiday, indicating cautious underlying sentiment.

Despite Nvidia's daily gain, the broader AI sector showed mixed signals. Nvidia-backed CoreWeave (CRWV) shares dropped over 7% after trimming its annual revenue forecast, suggesting potential headwinds in AI cloud services demand. SoftBank (TRI) reported doubled quarterly profits from OpenAI holdings but simultaneously divested its remaining Nvidia stake for nearly $6 billion, signaling strategic profit-taking.

Globally, Japanese investors sold 1.84 trillion yen ($12.20 billion) in foreign stocks in October, the largest net sales since June, to lock in AI-fueled profits amid valuation concerns. The dollar firmed against the yen following new Japanese Prime Minister Takaichi's comments against Bank of Japan tightening. UK bond yields and the pound fell on rising unemployment, increasing Bank of England rate cut speculation.

Key Decisions for Investors

• Investors should closely monitor the sustainability of the recent tech-led rebound, especially for high-beta names like NVDA, given the mixed signals from CoreWeave's trimmed forecast and SoftBank's strategic divestment.
• Re-evaluate exposure to AI-related assets, considering the significant profit-taking by Japanese investors and potential valuation concerns in the sector.
• Track global monetary policy shifts, particularly the Bank of Japan's stance and the increasing speculation of Bank of England rate cuts, as these will influence FX and fixed income strategies.