Market navigator: week of 10 November 2025
US equities face sharp correction on valuation concerns while Hang Seng Index recovers after finding support. UK and China data take centre stage this week.
Summary
- What happened last week: US government shutdown becomes longest in history while mixed employment signals emerge. RBA and BoE hold rates and China's trade activities slow down.
- Markets in focus: US equities correct sharply on valuation concerns. Hang Seng finds support and EUR/USD shows recovery signals.
- The week ahead: UK growth data and China's October activity figures take centre stage as US earnings season concludes.
What happened last week
- Longest shut down in history: The US government shutdown has extended beyond five weeks, becoming the longest federal closure in American history. Operational disruptions intensified, with 40 major airports implementing 10% flight reductions due to staffing shortages. November food assistance distribution was uncertain until a federal judge mandated full disbursement. Trump attributed Republican electoral defeats, including the New York City mayoral race, to the prolonged shutdown.
- RBA and BoE on hold: The Reserve Bank of Australia (RBA) maintained rates at 3.6% as trimmed mean inflation accelerated to 3.0%, signalling cuts remain unlikely until second quarter 2026 as some indicators demonstrate labour market tightness. The Bank of England (BoE) delivered a dovish hold via 5-4 vote, indicating gradual easing ahead if disinflation continues. AUD and GBP returned -0.8% and 0.2% respectively against USD last week.
- Confusing labour market data: With official data suspended amid government shutdown, US investors shifted focus to private surveys. ADP reported 42,000 private sector additions in October following September's upwardly revised 29,000 contraction. However, Challenger disclosed 153,074 October layoffs and 35% year-on-year (YoY) hiring decline due to cost cutting and artificial intelligence (AI) adoption. Furloughed federal workers may push unemployment to 4.7% when official reporting resumes.
- China's trade data surprise: October exports contracted 1.1% YoY and 7.0% MoM, the first annual decline since February, as trade tensions intensified before the 30 October deal. Imports rose 1.0% YoY, below consensus, reflect sluggish domestic demand recovery.
Markets in focus
US equities correction: tactical pullback or structural shift?
US equity markets experienced substantial correction last week, driven by valuation concerns and unexpectedly elevated layoff statistics. Multiple Wall Street executives have assessed a significant probability of drawdowns exceeding 10% over the near to medium term. Technology stocks bore the brunt of the correction, with the Nasdaq 100 plunging 3.1% — the steepest weekly decline since 30 March — while the S&P 500 and Dow Jones Industrial Average retreated 1.6% and 1.2% respectively.
Equities trading at extreme valuations, such as Palantir, suffered pronounced declines despite robust earnings delivery. Market participants are demonstrating heightened sensitivity to earnings disappointments, applying disproportionate penalties relative to historical norms.
CNN's Fear & Greed Index declined to 21, indicating extreme fear sentiment. Certain investors regard this metric as a contrarian indicator, viewing extreme fear as potentially signalling market dislocation opportunities.
As highlighted in last week's market navigator, indicators of weakening bullish momentum had emerged, rendering this pullback unsurprising. The critical question centres on whether recent movements constitute a healthy correction or signal a bear market. Our view is that the former scenario appears more probable. Given that major indices have not experienced corrections exceeding 5% during the rapid rally since April, a drawdown of 5-10% represents normal market cycle behaviour and can establish a more robust foundation for sustainable uptrends. A decline extending beyond 15% would constitute an alarming signal.
From a technical perspective, the 20-day moving average (MA) has failed to provide support for the US Tech 100, implying the index maintains further downside potential. A 50% Fibonacci retracement of the recent upward wave could direct the index towards 24,635. The critical support zone resides around 23,000. Failure to maintain support at that level would materially increase the probability of bear market development. Recovery attempts may encounter resistance near 25,500.
Figure 1: US Tech 100 index (daily) price chart
Hopes reignited in Hang Seng Index
Although the Trump-Xi summit in Busan failed to catalyse market sentiment improvement in the previous week, the Hang Seng Index (HSI) appeared to establish support near 25,500 during recent consolidation, advancing 1.3% weekly. However, declaring the correction complete remains premature.
The macroeconomic environment remained mixed, as October trade activities disappointed just as market participants began responding positively to lower-than-anticipated US export dependence revealed in year-to-September data. Meanwhile, encouraging signs emerged on the inflation front. Consumer prices rose 0.2% YoY in October, the fastest pace since January. While producer prices continued declining, the contraction moderated from September's -2.3% to -2.1% in October, suggesting the government's efforts to combat 'involution' may be gaining traction.
Consumption-oriented equities registered the largest movements within the HSI last week. Beverage manufacturer Tingyi emerged as the best-performing constituent, gaining 11.4% on improved profit outlook. New Oriental Education declined 10.4% following management restructuring announcements, while Chow Tai Fook retreated 9.1%. Gold price volatility and China's value-added tax (VAT) policy modifications may substantially impact gold jewellery demand.
The index's swift Wednesday rebound demonstrates significant support at the 25,000 level. Nevertheless, declaring the correction complete remains premature, as a death cross between the 20-day and 50-day MA has materialised. Additionally, a typical corrective Wave C within Elliott Wave theory has not fully developed. Usually, this downward leg's magnitude would minimally equal corrective Wave A, targeting approximately 24,316. Conversely, should recovery persist towards the ascending channel pattern established since mid-April, the recent peak of 27,382 will provide key resistance.
Figure 2: Hang Seng Index (daily) price chart
EUR/USD demonstrates technical recovery signals
The US Dollar Index rally exhibits fatigue signals following three consecutive weeks of appreciation. The DXY retreated after briefly breaching the 100 level. Following the Federal Reserve's (Fed) October meeting statement, market participants have substantially reduced December rate reduction expectations. Probability pricing via bond futures markets fluctuated between 60% and 70% last week. US Treasury yields have correspondingly risen.
Fed governors maintain divided stances, with certain members emphasising inflation risks while others express concern regarding labour market deceleration. Material volatility in risky assets could provide additional rationale for monetary policy loosening.
Conversely, the European Central Bank (ECB) expressed satisfaction with current monetary conditions, noting inflation has stabilised around the 2% target while economic downside risks have diminished, suggesting rate reductions are unlikely in the near term.
EUR/USD depreciated as much as 4% since peaking at 1.1918 in September, but the bearish movement appears to have found support from the 200-day MA around 1.1468. The moving average convergence divergence (MACD) indicator approaches a positive crossover, though recovery momentum sustainability depends upon EUR/USD's capacity to overcome 20-day MA resistance at 1.16. Breakthrough may suggest further upside potential towards 1.18. However, should the rebound prove unsuccessful, a deeper downtrend could trigger if the pair breaches August's low at 1.1391.
Figure 3: EUR/USD (daily) price chart
The week ahead
This week's economic calendar continues facing disruption as the ongoing US government shutdown threatens critical inflation data releases. The White House has indicated October's consumer price index (CPI) report may not be published, depriving markets of key inputs ahead of the Fed's December policy meeting. This uncertainty redirects focus toward growth indicators from the UK and China, alongside the final phase of US corporate earnings season.
UK growth dynamics assume prominence following the BoE's dovish hold at its November meeting. Unemployment data on Tuesday and third-quarter gross domestic product (GDP) data scheduled for Thursday will prove crucial in determining whether policymakers proceed with a December rate reduction. Market participants will scrutinise the quarterly growth figure, with weakness below the previous 0.3% reading potentially reinforcing monetary easing expectations.
China's October activity data on Friday presents another focal point, particularly following weak manufacturing purchasing managers' index (PMI) readings and deteriorating trade statistics. Industrial production and retail sales figures will reveal whether additional stimulus measures are required amid persistent economic headwinds. Markets anticipate industrial output moderating to 5.6% YoY, while retail sales growth below 3% would mark the fifth consecutive month of deceleration.
On the corporate front, the US earnings season approaches its finale with AI infrastructure providers CoreWeave, Nebius and Cisco reporting. Attention then pivots to Chinese technology giants Tencent and JD.com on Thursday, whose results will illuminate consumer spending patterns and cloud computing demand. Major Japanese financial institutions including MUFG and Sumitomo Mitsui also report, offering insights into Japan's economic health.
Figure 4: UK economy weakens as unemployment trends up while growth slows down
Key macro events this week
Potential data release from delay caused by the US government shutdown
- US non-farm payrolls (September): previous 22K, consensus 50K
- US unemployment rate (September): previous 4.3%, consensus 4.3%
- US non-farm payrolls (October)
- US unemployment rate (October)
- US trade balance (August): previous -$78.3B, consensus -$60.4B
- US producer price index (PPI) MoM (September): previous -0.1%, consensus 0.3%
- US retail sales MoM (September): previous 0.6%, consensus 0.4%
Tuesday 11 November 2025
- 7.30am (HK time) – Australia Westpac consumer confidence change (November): previous -3.5%
- 8.30am (HK time) – Australia NAB business confidence (October): previous 7
- 3.00pm (HK time) – UK unemployment rate (September): previous 4.8%, consensus 4.9%
Thursday 13 November 2025
- 8.30am (HK time) – Australia unemployment rate (October): previous 4.5%, consensus 4.4%
- 3.00pm (HK time) – UK GDP growth rate QoQ preliminary (Q3): previous 0.3%, consensus 0.2%
- Subject to resolution of shutdown – US core inflation rate MoM (October): previous 0.2%, consensus 0.3%
- Subject to resolution of shutdown – US inflation rate MoM (October): previous 0.3%, consensus 0.2%
Friday 14 November 2025
- 10.00am (HK time) – China industrial production YoY (October): previous 6.5%, consensus 5.6%
- 10.00am (HK time) – China retail sales YoY (October): previous 3%, consensus 2.7%
- Subject to resolution of shutdown – US PPI MoM (October)
- Subject to resolution of shutdown – US retail sales MoM (October)
Key corporate earnings
(in local exchange time)
Monday 10 November 2025
Tuesday 11 November 2025
Wednesday 12 November 2025
Thursday 13 November 2025
Source: Trading Economics, Nasdaq, LSEG (as of 9 November 2025)
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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