China Tech Jumps on Chip News; Tesla's Pay Vote in Focus

The EUR/USD pair steadied around 1.1490 on Wednesday, snapping a five-day losing streak as traders trimmed expectations for a Federal Reserve rate cut in December following stronger-than-expected US economic data.

Investor sentiment improved in the North American session despite robust US data. The ADP National Employment Report showed private-sector job growth of 42,000 in October, surpassing forecasts of 25,000 and recovering from September’s revised decline of 29,000. Meanwhile, the Institute for Supply Management (ISM) reported that Services PMI climbed to 52.4 from 50 in September, indicating stronger activity in the services sector.

The euro gained modest support as fresh data pointed to improving economic conditions across the Eurozone. The HCOB Eurozone Composite PMI rose to 52.5 in October, its fastest pace of growth since May 2023, driven by strong activity in Spain and a surprisingly resilient German economy. Services PMI also exceeded expectations, increasing to 53.0 from 52.6 in September.

On the policy front, the US Supreme Court appeared skeptical of President Donald Trump’s global tariffs, with several justices suggesting he may have exceeded his authority. A ruling against Trump could lead to over $100 billion in tariff refunds, Bloomberg reported.

Gold prices ticked higher early on Thursday as the U.S. dollar eased from a four-month peak, with investors weighing the impact of the prolonged U.S. government shutdown and uncertainty surrounding the broader economic outlook.

The U.S. dollar index slipped making gold more affordable for investors holding other currencies.

The latest ADP National Employment Report showed U.S. private employers added 42,000 jobs in October, outpacing expectations for a 28,000 gain. The stronger labor market data tempered hopes for further Federal Reserve interest rate cuts.

Investor sentiment remained cautious amid what has become the longest government shutdown in U.S. history, forcing both policymakers and market participants to rely more heavily on private-sector indicators.

The Federal Reserve reduced interest rates last week, but Chair Jerome Powell signaled it could be the final cut of 2025, citing persistent inflation risks. Non-yielding assets like gold typically perform better in low-interest-rate environments, as they become more attractive relative to interest-bearing securities.

Oil prices fell more than 1% on Wednesday, settling at two-week lows as fears of a potential global supply glut weighed on sentiment. However, signs of resilient U.S. fuel demand helped limit deeper losses.

Prices declined after U.S. government data showed a larger-than-expected increase in crude stockpiles. According to the Energy Information Administration (EIA), U.S. crude inventories rose by 5.2 million barrels to 421.2 million barrels last week, far exceeding analyst forecasts for a 603,000-barrel build.

Despite the inventory build, oil’s losses were tempered by stronger gasoline consumption. U.S. gasoline inventories fell by 4.7 million barrels to 206 million barrels, compared with expectations for a modest 1.1 million-barrel draw, suggesting robust demand from American drivers.

Further pressure came from Canada, where Prime Minister Mark Carney’s new budget proposal hinted that the government may abandon its oil and gas emissions cap, raising fears of higher output from one of the world’s largest crude producers.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Sunday to increase output by 137,000 barrels per day in December, while opting to pause additional hikes in early 2026.

U.S. stocks advanced on Wednesday as dip buyers returned to the technology sector, offsetting concerns over legal challenges to President Donald Trump’s tariff powers under the International Emergency Economic Powers Act (IEEPA).

Advanced Micro Devices pared earlier losses to trade more than 2% higher, buoyed by strong sales and profit growth in its AI chip division.

Meanwhile, Pinterest slumped after issuing weaker-than-expected revenue guidance, reigniting concerns about a slowdown in digital advertising. McDonald’s gained after reporting better-than-expected U.S. same-store sales.

The rebound in tech came a day after the CEOs of Morgan Stanley and Goldman Sachs warned about overheated valuations and speculative activity in large-cap technology stocks. Their comments stoked fears that Wall Street’s rally—driven by the so-called “Magnificent Seven” tech giants—may be nearing a breaking point.

Market sentiment improved after the ADP employment report showed U.S. private payrolls rose by 42,000 in October, exceeding forecasts for a 28,000 gain and rebounding from a 29,000-job decline in September.

The data helped ease concerns about the labor market’s strength as the Bureau of Labor Statistics’ official jobs report remains delayed due to the longest U.S. government shutdown on record.

On the political front, the U.S. Supreme Court began hearing arguments on Trump’s use of the 1977 IEEPA to impose global tariffs. Early proceedings suggested skepticism from several justices, who indicated that Congress—not the president—holds authority to levy tariffs. A ruling against Trump could have sweeping economic implications, including potential refunds exceeding $90 billion in tariff revenue.