Daily News Analysis By Ultima Markets

[Ultima markets]

Policy Pause and Valuation Concerns: Market Sentiment Shifts to Caution​

Expectations for a December Fed rate cut have cooled significantly, with market sentiment shifting from risk-on to risk-averse. Technology stock valuations are under pressure, and investors are focused on Nvidia’s earnings report and delayed US core data.

The market opened cautiously today, reflecting the impact of last week’s sharp stock market correction and rising expectations that the Federal Reserve (Fed) may pause its easing cycle in December. Investor sentiment has clearly shifted from a previous “risk-on” to a more defensive “risk-off” mode.

• Fed Policy Shift : The probability of a 25 basis point rate cut in December has plummeted to only about 50% (compared to nearly 95% a month ago). Several Fed officials have made noticeably hawkish statements; for example, Cleveland Fed President Beth Hammack stated, “There is no clear need for further easing at this time.”
• Market Impact : The declining probability of an interest rate cut poses structural headwinds for risk assets, while supporting the dollar and putting pressure on overvalued assets.

Equities & Risk Assets: Strengthening Correction Signals​

Last week’s sharp decline highlighted valuation fragility and technical weakness.

• Valuation Nervousness: The Nasdaq’s over 2% drop was primarily driven by renewed concerns about a valuation bubble in AI concept stocks.
• Key Events: This week will see high-risk events, including delayed NFP and CPI data and Nvidia’s earnings report (Wednesday, November 19). Any disappointing earnings report or data could exacerbate valuation concerns and trigger a deeper correction.

Dollar Outlook: 99 Level Support Remains Strong​

The US Dollar Index (USDX) is currently in a tug-of-war. Hawkish comments from the Federal Reserve remain the dominant force, maintaining the dollar’s structural upward trend.

• Technical Analysis: The dollar remains stable above the 99.00 support level.
• Market Outlook: As long as the 99.00 support level holds, there is still a chance to retest 100.00 in the short term.

USDX, H4 Chart | Ultima Markets MT5

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