Market sentiment stays downbeat early Friday as investors remain cautious amid rising employment worries, hawkish Federal Reserve signals, and concerns over a prolonged U.S. government shutdown. A strong rise in Challenger job cuts raised fears of labor market weakness, while Vice President JD Vance warned Americans would soon face “very real consequences” from the ongoing shutdown. The combination of slightly hawkish Fed commentary, corporate and policy developments, and global geopolitical tensions weighed on overall risk appetite.
In U.S. data, employers announced 153,074 job cuts in October, a sharp increase from a year earlier, taking total layoffs in 2025 to over one million. The weak data reinforced economic concerns as the government shutdown continues to disrupt air travel and food aid. Transportation Secretary Sean Duffy said operations at 40 major airports would be reduced by up to 10% due to unpaid air-traffic controllers and security agents, causing long lines, including three-hour waits in Houston. A court ordered President Donald Trump to resume food-aid payments, though he is appealing the decision.
On monetary policy, several Federal Reserve officials shared mixed views, mostly hawkish. Governor Stephen Miran, one of President Trump’s more dovish appointees, expects a rate cut in December and supports moving toward a neutral policy stance in 50-basis-point (bp) increments, while most colleagues favor smaller 25-point steps.
Vice Chair Michael Barr said inflation progress continues but remains incomplete. New York Fed President John Williams noted the natural rate of interest is difficult to define, estimating it near 1%, and highlighted the importance of considering the effective lower bound in policy setting.
Chicago Fed President Austan Goolsbee expressed reluctance to extend the rate-cutting cycle, citing uncertainty in inflation data and a still-resilient labor market. Cleveland Fed President Beth Hammack reiterated that inflation is still the top concern, saying policy remains only “barely restrictive.” Her comments reflected a cautious tone heading into year-end, hinting the Fed may slow its pace of easing in 2026.
St. Louis Fed President Alberto Musalem said tariffs and fiscal deficits continue to fuel inflation but predicted growth will rebound in 2026 after a soft fourth quarter. He added that the balance sheet strategy remains independent of interest rate policy.
In corporate developments, Tesla shareholders overwhelmingly approved a 10-year, $1 trillion performance-based compensation plan for CEO Elon Musk. The decision initially boosted tech sentiment and lifted E-mini Nasdaq futures in early U.S. evening trade, though optimism faded after reports confirmed the White House will block Nvidia’s sale of scaled-down artificial intelligence chips to China. This move reversed earlier signals from President Trump that such exports might be allowed. Sources confirmed no export licenses will be granted for the China-specific chips, sending Nasdaq futures lower.
In government and policy updates, the U.S. continues efforts to secure rare earth supplies from outside China, focusing on building reserves and new explorations. President Trump announced plans to strengthen ties with Central Asian nations — Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan — to reduce reliance on China for critical minerals.
However, discrepancies have emerged in the recent U.S.-China understanding over rare earth exports. Washington claimed progress on easing restrictions, but Beijing has not confirmed participation.
Abroad, Japan’s new Prime Minister Sanae Takaichi met market expectations by appointing Abe-era policymakers, signaling a return to Abenomics-style stimulus. She has filled key economic panels with reflationist economists and big-spending advocates to support growth and maintain loose monetary policy, complicating the Bank of Japan’s rate hike outlook.
In geopolitics, North Korea fired another ballistic missile that reportedly fell outside Japan’s exclusive economic zone, according to South Korea’s military.
In the UK, the Bank of England (BoE) held its Bank Rate steady at 4.00% in a tight 5–4 vote, with Deputy Governors Sarah Breeden and Dave Ramsden, along with Swati Dhingra and Catherine Mann, favoring a 25-basis-point cut. The Committee noted that inflation has peaked and underlying disinflation is advancing, but warned of weaker demand pressures.
Governor Andrew Bailey said the outlook is more balanced, but preferred to wait for additional data before easing. The close vote suggests room for a December cut, though the autumn budget could influence the decision.
China’s October trade data showed exports down 0.8% year-on-year after an 8.4% rise previously, while imports grew 1.4% after a 7.5% gain. The U.S. Dollar trade surplus stood at $90.07 billion, below expectations of $95.60 billion, and the surplus with the U.S. rose to $24.76 billion from $22.82 billion in September.
In global markets, U.S. equities fell as the S&P 500 dropped 1.1%, the Nasdaq Composite declined 1.9%, and the Dow Jones Industrial Average slipped 0.8%. Treasury yields also retreated, with the 10-year down 7 basis points to 4.087%, the 2-year down 7.3 bps to 3.559%, and the 30-year down 5.7 bps to 4.679%.
In the currency and commodity markets, the U.S. Dollar Index remains pressured after recording its steepest fall in four weeks, allowing Gold to rebound from recent lows and test the 21-day simple moving average near $4,000. EURUSD and GBPUSD pulled back after recent rallies. USDJPY fluctuated after its biggest drop since October 10, AUDUSD stayed weak, and NZDUSD fell to a seven-month low. USDCAD extended its seven-day uptrend as crude oil bounced from a weekly low after a three-day decline. Bitcoin and Ethereum remained range-bound with mild gains, while Asia-Pacific equities mirrored Wall Street’s losses.
EURUSD and GBPUSD both ended their two-day winning streak early Friday, even as the U.S. Dollar stayed weak, as fragile market sentiment and cautious comments from European Central Bank and Bank of England officials weighed on demand. At the same time, USDJPY traded sideways after Thursday’s sharp drop, with growing uncertainty over the Bank of Japan’s rate hike outlook following Prime Minister Takaichi’s appointment of dovish policymakers.
AUDUSD stays pressured after weak data, while NZDUSD drops to its lowest level since early April despite mixed U.S. Dollar and China trade figures, as broad risk aversion and renewed concerns over the Sino-American trade deal weigh on sentiment. Meanwhile, USDCAD extends its seven-day rally even as crude oil, Canada’s key export, struggles to recover from a three-day decline near a two-week low.
Bitcoin (BTC) and Ethereum (ETH) remain stuck in a three-day trading range, trimming the previous day’s losses as traders await fresh catalysts to revive the early October rebound. Meanwhile, crude oil stays near recent lows after a three-day slide, with traders cautious amid demand-supply uncertainty, rising trade protectionism, the ongoing U.S. government shutdown, and persistent hawkish Federal Reserve expectations.
Even as market sentiment stays uncertain and the U.S. Dollar weakens, Gold edges higher, supported by softer Treasury yields and mixed headlines on China, the U.S. government shutdown, and the Federal Reserve. The rise reflects investors’ traditional move toward the safe-haven metal during times of market uncertainty.
As the U.S. Dollar extends its pullback from the 200-day Simple Moving Average and hopes of a U.S. reopening remain distant, Gold, cryptocurrencies, and equities are likely to gain further amid a lack of major catalysts. Upcoming Federal Reserve speeches, along with preliminary readings of the University of Michigan Consumer Sentiment Index and inflation expectations, will guide near-term moves ahead of the weekend’s China Consumer Price Index and Producer Price Index data. Markets will also stay focused on headlines related to Trump’s tariff policies, the ongoing government shutdown, and broader geopolitical developments.
If incoming data turns positive and Fed officials maintain a slightly hawkish tone, the U.S. Dollar could trim some weekly losses, limiting the recent strength in major currencies while adding pressure on the Antipodeans, crude oil, and cryptocurrencies. Equities may rebound if sentiment improves and third-quarter earnings from mid-tier companies come in stronger than expected. Meanwhile, Gold is poised to extend its recent recovery, potentially marking its first weekly gain in three weeks if current uncertainty persists.
May the trading luck be with you!
