Key takeaway:
The overnight sell-off in AI stocks has spread to Asian markets. Today, attention is on whether the decline in tech stocks can stabilize and how U.S. employment data released this evening will affect interest rate expectations.
【Today’s Key Themes】
First key theme: Regulatory expectations are rising after the U.S. midterm elections, prompting markets to reassess the pace of AI infrastructure construction, financing costs, and investment returns.
Second key theme: Losses in U.S. chip and memory stocks spread to Japan and South Korea. South Korea’s stock index triggered a circuit breaker, and volatility in Asian tech stocks intensified.
Third key theme: International oil prices rebounded overnight. Shipping safety in the Strait of Hormuz and progress in U.S.-Iran negotiations remain key variables.
Fourth theme: Financing balances on the Shanghai and Shenzhen exchanges increased, while market-stabilization mechanisms and mergers and acquisitions drew attention; Hong Kong cash equities and Hang Seng Index futures diverged in overnight trading.
Fifth theme: Tonight’s U.S. nonfarm payrolls, unemployment rate and wage data will provide new clues for markets assessing the Federal Reserve’s rate path in December.
【U.S. stocks】
Overnight, the three major U.S. stock indices posted their largest single-day declines since April 2025.
The Dow fell 3.44% to 51,523.06; the S&P 500 fell 4.35% to 7,353.83, with the combined market capitalization of its constituents shrinking by about $3 trillion; and the Nasdaq fell 5.52% to 24,315, down 11.9% from its October 6 closing record high and entering correction territory.
Markets are concerned that AI and data center construction could face stricter regulation after the U.S. midterm elections. Selling spread from chip stocks to cloud computing, optical communications and data center power suppliers, with the VIX rising above 28 intraday. The Nasdaq Golden Dragon China Index bucked the trend, closing up 0.42%. Early Friday, Nasdaq futures briefly fell more than 1% before turning higher.
【Macro】
The U.S. Dollar Index edged down 0.02% to 101.546 in late New York trading. U.S. 10-year and 2-year Treasury yields fell intraday to around 4.88% and 4.558%, respectively.
U.S. initial jobless claims totaled 189,000 last week, below the forecast of 196,000. The October Global Supply Chain Pressure Index was 1.28, unchanged from the previous reading.
Federal Reserve’s Barkin said gradual rate hikes remained reasonable, while Hammack favored more frequent, smaller hikes. CME data showed markets pricing in a 68.7% probability of a 25-basis-point Fed rate hike in December.
The Bank of England raised rates by 25 basis points to 4.00%, as expected, while the Bank of Mexico unexpectedly cut rates by 25 basis points to 6.25%. Japan’s real wages rose 2.2% year over year in September, marking a ninth consecutive month of growth.
【AI memory chain】
The Philadelphia Semiconductor Index fell 12.5%, its biggest single-day drop since March 2020. SanDisk fell 22%, Micron Technology dropped 17%, and SK Hynix’s U.S.-listed shares fell 13%; Nvidia lost more than 9%, while AMD fell 17%. Storage equipment makers Western Digital and Seagate both fell more than 14% intraday.
Areas to watch in A-shares: memory chips, semiconductor equipment, optical communications and data center power equipment. Key factors include whether the overseas selloff spills over and the order and delivery schedules of related companies.
【Technology and industry】
The outlook for U.S. data center construction is diverging. Texas’s governor-elect has called for a pause on current construction until measures to protect local residents are put forward. Amazon still plans to build a data center campus near Glen Rose, Texas, adjacent to the Comanche Peak nuclear power plant. IREN said delivery of the relevant project has been delayed due to changes requested by Microsoft.
Other reports say Google plans to invest $17 billion in building a data center in Wyoming.
OpenAI launched the GPT-6 Cyber cybersecurity model, Baidu open-sourced ERNIE 5.5 Flash Base, and Huawei Cloud plans to update the open-source version of its Pangu model in mid-November.
Cloudflare raised its full-year adjusted earnings-per-share forecast to $1.35, above the market estimate of $1.27. Its shares briefly rose nearly 20% after hours.
【Crude oil】
WTI crude futures settled up 2.72% at $90.52 per barrel, while Brent crude futures settled up 3.88% at $98.29 per barrel. The domestic SC crude oil front-month contract closed up 0.22% in overnight trading at 640 yuan per barrel.
U.S. natural gas inventories increased by 77 billion cubic feet last week, below the forecast increase of 81 billion cubic feet.
【Precious metals】
In early Asian trading, spot gold rose 0.4% to $4,101.80 per ounce. Spot silver fell as much as 1% overnight to $51.68 per ounce. In domestic overnight trading, the Shanghai gold front-month contract closed up 0.27% at 882 yuan per gram, while the Shanghai silver front-month contract closed down 0.06% at 12,584 yuan per kilogram.
According to the World Gold Council, global gold ETFs saw net inflows of $2.7 billion in October, with holdings increasing by 19 tons to 4,275 tons. The National Bank of Poland added 28 tons of gold over the same period. Goldman Sachs lowered its year-end 2026 and year-end 2027 gold price forecasts to $4,150 and $4,800 per ounce, respectively.
【Domestic developments】
On November 5, the Shanghai Composite Index closed up 0.10%, the Shenzhen Component Index rose 1.19%, and the STAR 50 gained 1.68%. Hong Kong’s Hang Seng Index rose 3.67% and the Hang Seng Tech Index gained 5.55%, before Hang Seng Index futures closed down 1.58% in overnight trading.
As of November 5, the combined financing balance on the Shanghai and Shenzhen stock exchanges stood at 2,270.977 billion yuan, up 6.622 billion yuan from the previous trading day.
A State Council report proposed supporting Central Huijin in playing a role similar to a market-stabilization fund and improving mechanisms to stabilize the capital market. The Shanghai Stock Exchange held a symposium on mergers and acquisitions and restructuring. The Ministry of Commerce said it was open to expanding purchases of agricultural products from the U.S., provided that reciprocal tariff reductions by both sides are implemented.
On the morning of November 6, the yield on the interbank 10-year government bond “26 Interest-Bearing Treasury Bond 16” fell to 1.58%.
In commodities, domestic propylene futures fell more than 5% in overnight trading, while liquefied petroleum gas, plastics and polypropylene fell more than 4%; coke rose nearly 3%. Three-month LME copper fell intraday to $13,816.50 per ton, with more than 70% of LME copper inventories held in U.S. warehouses. The Baltic Dry Index rose 1.78% to 2,740 points.
【Key events】
02:00 ECB President Lagarde and Governing Council member Dolenc speak.
08:00 Federal Reserve’s Logan speaks.
15:00 Germany releases September seasonally adjusted monthly industrial production; the UK releases the October Halifax seasonally adjusted monthly house price index.
15:45 France releases its September trade balance.
16:00 Switzerland releases its October consumer confidence index.
17:30 Federal Reserve’s Williams takes part in a discussion.
18:00 Eurozone releases September monthly retail sales.
21:30 The U.S. releases October seasonally adjusted nonfarm payrolls, unemployment rate, and average hourly earnings (monthly and annual); Canada releases October employment figures.
22:10 Federal Reserve’s Musalem speaks.
23:00 The U.S. releases the preliminary November one-year inflation expectations and the University of Michigan preliminary consumer sentiment index.
【Risk warning】
Changes in Japanese and South Korean stock indices and some individual stocks are based on early trading and may still change. U.S. employment and wage data that significantly deviate from expectations could increase volatility in the dollar, U.S. Treasuries and precious metals. Middle East shipping and negotiation news could also trigger a sharp reversal in oil prices.
For research and educational purposes only; this does not constitute investment advice.