Economic Insights for November 4, 2025
⚠️ Caution: This content represents personal views based on publicly available economic indicators. All investment decisions should be made under your own judgment and responsibility.
https://www.cnbc.com/2025/11/03/nvidia-shares-rise-after-us-approves-chip-sales-to-the-uae.html
Global Market Status: Mixed Trend Amid AI Boom and Trade Tension Easing
On November 4, 2025, global financial markets generally showed a positive trend, driven by news of massive AI investments by big tech companies and the easing of US-China trade tensions. Specifically, a tariff exemption agreement between the US and China improved investor sentiment, while announcements of large-scale AI-related contracts led to a rise in technology stocks. However, sluggish US manufacturing data and the Federal Reserve's cautious monetary policy stance continue to be factors contributing to market volatility. Below, we analyze the latest market trends and economic indicators and present future outlooks.
1. Stock Market Trends
United States (S&P 500): The S&P 500 index rose by 0.3%, continuing its uptrend driven by news of large AI-related contracts. Nvidia rose 1.1%, and Amazon surged 3.6% after announcing a multi-year partnership with OpenAI worth approximately $38 billion. Microsoft fell 1.1% despite news of GPU export approval to the UAE, while Apple (-1.7%), Meta (-1.6%), and Broadcom (-2.9%) also weakened. Concerns about an economic slowdown were raised as the ISM Manufacturing Index came in at 48.7, missing expectations.
Japan (Nikkei 225): The Nikkei 225 index surged 2.12% to a new all-time high of 52,411 points. The positive atmosphere from strong earnings by US big tech firms spread to Japanese tech stocks. Tech companies like Advantest (3.9%) and SoftBank Group (2.9%) were strong, and Hitachi surged 7.2% after announcing a 62% increase in H1 net income. Conversely, Nissan Motor plummeted 4.1% on a forecast of a ¥275 billion operating loss.
China (Shanghai Composite): The Shanghai Composite Index rose 0.55% to 3,960 points. News of eased US-China trade tensions improved market sentiment. Investor concerns were partially alleviated after the White House announced an agreement on China halting rare earth export controls and the US suspending certain tariffs. Foxconn (4%), Sungrow Power (5.1%), and GigaDevice Semiconductor (4.6%) showed strength.
South Korea (KOSPI): The KOSPI index surged 2.78% to a new all-time high of 4,221 points. Defense and shipbuilding stocks led the rally. Hanwha Aerospace rose 3.68% after announcing Q3 net income of ₩712.2 billion (a 123.8% increase YoY). Samsung Heavy Industries also rose 0.68%, announcing a Q3 operating profit of ₩238.1 billion (a 99% increase YoY). The agreement between the Bank of Korea and the People's Bank of China to extend the $70 billion currency swap for 5 years also had a positive effect.
United Kingdom (FTSE 100): The FTSE 100 index declined due to a slump in Vodafone stock and weakness in mining stocks. Vodafone plunged about 5% after UBS downgraded its rating to 'Sell,' and Anglo American and Glencore fell about 2.5% and Rio Tinto over 2% due to sluggish Chinese economic indicators. However, BP rose 0.9% on plans to sell its US onshore assets, and financial stocks with large China exposure, such as HSBC and Standard Chartered, performed well.
Germany (DAX): The DAX index rose about 0.7% to 24,132 points, outperforming European stocks. Expectations of easing semiconductor shortages rose on reports of a potential relaxation of China's export ban on Nexperia, causing auto stocks like Mercedes-Benz, Volkswagen, Porsche, and BMW to rise 1-2.3%. Rheinmetall surged 4.2% on news of a contract to build a €500 million+ gunpowder factory in Romania.
Brazil (Bovespa): The Bovespa index rose about 0.5%, breaking 150,000 points to reach an all-time high. Expectations for next year's rate cuts strengthened after the central bank's Focus Report revised its 2025 inflation forecast down from 4.56% to 4.55%. Major bank stocks like Itaú and Bradesco rose, and WEG, Ambev (1%), and Natura (2%) showed strength.
India (BSE Sensex): The BSE Sensex index remained almost flat at 83,978.5 points. Investors took a breather after a strong rally in October. Buying in auto and public sector bank stocks offset selling in IT and private bank stocks. Mahindra & Mahindra recorded the highest gain, rising 1.7% after releasing its October sales figures, while Maruti Suzuki plunged 3.4%.
2. Commodity Trends
Crude Oil: WTI Crude Futures fluctuated around the $61 per barrel mark. Concerns about oversupply were partially alleviated as OPEC+ decided to suspend its plan to increase production in Q1 next year, but the 2026 oversupply forecast is limiting price gains. Potential supply disruption concerns have also been raised after a Russian Black Sea tanker was attacked by a Ukrainian drone and Rosneft's Tuapse refinery was damaged.
Gold: Gold prices stabilized around the $4,000 per ounce level. This is a retreat from the all-time high of $4,382 recorded in October. A strong US dollar and the Fed's cautious monetary policy stance are limiting gold price increases, and the US-China tariff exemption agreement reduced some safe-haven demand. China's decision to abolish gold sales tax incentives also raised concerns about slowing demand in one of the world's largest gold consumption markets.
Copper: Copper futures fell to $5.05 per pound. This is a retreat from the three-month high of $5.17 recorded on October 29. Concerns about slowing demand were raised as China's official PMI indicated a seventh consecutive month of manufacturing contraction. However, supply disruption concerns, such as production cuts by Glencore and Anglo American and operational halts due to a landslide at Freeport-McMoRan's Indonesian mine, are limiting the price decline.
Soybeans: Soybean futures broke the $11 per bushel mark, reaching their highest level since July 2024. This is due to rising expectations of normalized agricultural trade from the US-China trade agreement. China has agreed to suspend all tariffs on US agricultural products, including soybeans, announced since March 4, and the White House stated that China would purchase at least 12 million tons of US soybeans by the end of this year and at least 25 million tons annually over the next three years.
Steel: Chinese rebar futures fell to 3,080 yuan per tonne. This is a retreat from the two-month high of 3,120 yuan recorded on October 28. Demand weakness persists as China's official construction PMI showed a third consecutive month of contraction at 49.1. Low household purchasing power and government regulations on housing oversupply are pressuring the outlook for steel and construction materials.
Wheat: Wheat futures broke the $5.40 per bushel mark, reaching their highest level since July 22. Expectations of a rebound in Chinese demand led the rise. Key Chinese grain importers are reportedly inquiring about US wheat cargoes for December-February shipment over the past weekend. According to USDA data, China has not purchased US wheat since early October last year.
3. Bond Market Trends
US 10-Year Treasury Yield: Slightly fell to 4.1% but remained near a three-week high. The ISM Manufacturing PMI showed a sharper-than-expected contraction in October, and employment and price data also missed market expectations, supporting the views of dovish Fed members. While the Fed cut rates by 25 basis points (bp) as expected last week, Treasury prices generally fell after Chair Powell stated that a further cut next month was not certain.
Japan 10-Year Government Bond Yield: Stabilized around the 1.65% level. The Bank of Japan (BOJ) maintained its policy rate at 0.5%, as expected. However, board members Naoki Tamura and Hajime Takata again argued for a rate hike to 0.75%, following September. Governor Ueda warned that while the economy is recovering moderately, global trade policies could slow growth and corporate profits.
China 10-Year Government Bond Yield: Fell to the 1.75% level, hitting a two-month low. This follows the agreement between President Trump and President Xi Jinping to extend the temporary trade truce for another year. The US agreed to halt the implementation of the '50% rule' for export controls, and China agreed to stop restricting rare earth exports.
South Korea 10-Year Government Bond Yield: Rose 0.01 percentage point from the previous trading day to 3.07%. It has risen 0.11 percentage points over the past month but is 0.03 percentage points lower than a year ago.
Germany 10-Year Government Bond Yield: Stabilized around the 2.64% level, remaining near its highest level since October 9. The ECB kept rates on hold last week, maintaining a relatively optimistic growth outlook for the Eurozone and unchanged inflation projections. German inflation slightly less moderated than expected in October at 2.3%, and the economy remained stagnant due to declining exports.
UK 10-Year Gilt Yield: Fell below 4.4%, hitting its lowest level since December 2024. Concerns were raised that the fiscal gap could widen by about £20 billion following reports that the Office for Budget Responsibility (OBR) would downgrade the UK's productivity growth forecast by about 0.3 percentage points. Easing inflation data reinforced the change in sentiment, with traders pricing in about a 68% chance of a 25bp rate cut in December.
Brazil 10-Year Government Bond Yield: Fell to about 13.8%. Eased inflation expectations and reduced risk premium led to the decline. The unemployment rate remains low at 5.6%, and the Selic rate is near 15%, but the market anticipates a stable policy path rather than further tightening.
India 10-Year Government Bond Yield: Fell to 6.54%. The Reserve Bank of India (RBI) signaled discomfort with high yields by canceling a 7-year bond auction. However, a weaker rupee, tight liquidity, and weak demand limited the decline. Most market participants anticipate an RBI rate cut in December, expecting about 20bp of easing over the coming months.
4. Currency Trends
US Dollar: The Dollar Index maintained near a three-month high around the 99.9 level. Although the ISM Manufacturing PMI showed a sharper-than-expected contraction and easing price pressures, Chair Powell's cautious remarks kept the possibility of a 25bp rate cut in December at about 70%, supporting the dollar's strength.
Japanese Yen: Traded around ¥154 per dollar, maintaining its weakest level in nine months. The yen's depreciation continued as the Bank of Japan takes a cautious approach to rate hikes while the US Federal Reserve turned more hawkish. Finance Minister Satsuki Katayama stated that she no longer supports her March view that the yen's appropriate value is ¥120-130 per dollar.
Chinese Yuan: The offshore yuan weakened to the 7.12 per dollar level, hitting a one-week low. A strong dollar and weak Chinese manufacturing data were pressure factors. A private survey showed that China's manufacturing PMI slowed more than expected in October.
South Korean Won: Traded around ₩1,427 per dollar, slightly recovering from losses in the previous trading day. The October trade balance surplus of $6.06 billion exceeded market expectations, showing export resilience. This was supported by robust exports of semiconductors, automobiles, and shipbuilding products.
British Pound: Fell below $1.32, hitting its weakest level since April. The dollar's strength, driven by the Fed's cautious monetary policy stance, and concerns that the November budget could significantly impact economic growth pressured the pound. Traders slightly increased the likelihood of a Bank of England rate cut.
Euro: Fell to the $1.15 level, hitting a three-month low. While the ECB kept rates on hold and maintained a relatively optimistic growth outlook for the Eurozone, expectations for further Fed rate cuts narrowed after Chair Powell stated that an additional cut in December was not certain.
Brazilian Real: Weakened past R$5.39 per US dollar. This was influenced by the dollar's strength after the Fed's 25bp rate cut and Chair Powell's warning that a further cut in December was not certain. Domestically, however, the Q3 unemployment rate remained low at 5.6%, supporting consumption and tax revenues.
Indian Rupee: Weakened to the ₹88.8 per dollar level in November, hovering near an all-time low. The rupee was pressured by the continued strength of the dollar after Chair Powell downplayed the possibility of further rate cuts. The Reserve Bank of India appears to be curbing sharp losses through support via state-run banks and intervention in the offshore market.
Future Outlook: Cautious Optimism Amid AI Investment Boom and Trade Easing
1. Sustained Tech Stock Rally Driven by AI Investment, Focus on Sustainability Massive AI investments by big tech companies, such as the $38 billion partnership between Amazon and OpenAI and Microsoft's GPU export approval to the UAE, are major market headlines. These investments are expected to positively impact semiconductor companies like Nvidia and cloud service providers in the medium to long term. However, given the already high valuations of tech stocks, close monitoring is required to see if these investments translate into actual profitability improvements. Earnings announcements from AI-related companies like Palantir are scheduled this week, which may provide further direction.
2. US-China Trade Truce Extension: Coexistence of Short-Term Relief and Long-Term Uncertainty The agreement between the US and China to extend the temporary trade truce for another year, halt rare earth export restrictions, and suspend tariffs, has improved short-term market sentiment. China's commitment to purchasing US agricultural products (12 million tons this year, 25 million tons annually for the next three years) is particularly positive for the agricultural market (especially soybeans). However, the market views this as a temporary measure, and substantial time is expected before structural trade conflicts are resolved. Countries in the semiconductor supply chain, such as South Korea and Japan, must consider both the opportunities and risks arising from these changes in the trade environment.
3. Manufacturing Slump and Fed's Cautious Monetary Policy: Increased Uncertainty in the Rate Path The US ISM Manufacturing Index came in at 48.7, missing expectations, indicating a continued manufacturing slump. The Fed cut rates by 25bp as expected, but Chair Powell's statement that a further cut in December was not certain narrowed market expectations for rate cuts. The market currently prices in about a 70% chance of a 25bp rate cut in December. The ADP employment report and other labor market indicators to be released this week will be critical to the Fed's December decision. Investors must closely monitor economic data and statements from Fed officials.
4. Strength in Korean Defense and Shipbuilding Stocks: Sustained Earnings Improvement is Key The KOSPI is showing strength, hitting an all-time high, with notable earnings improvements in the defense and shipbuilding sectors, such as Hanwha Aerospace's 123.8% increase in Q3 net income and Samsung Heavy Industries' 99% increase in operating profit. Earnings announcements from HD Hyundai Heavy Industries (5.33%), HD Korea Shipbuilding & Offshore Engineering (3.27%), and others are scheduled, so attention is focused on whether the sector's momentum will continue. However, intensified global order competition and volatile raw material prices remain risk factors.
5. OPEC+ Production Halt and Supply Disruption Concerns: Potential for Increased Oil Price Volatility OPEC+'s decision to suspend its plan to increase production in Q1 next year is limiting oil price gains due to the 2026 oversupply forecast. While Ukraine's attacks on Russian tankers and refineries raise short-term supply disruption concerns, OPEC's spare production capacity (about 1.2 million barrels/day) is expected to cushion the supply shock. With WTI crude fluctuating around the $61 per barrel mark, key variables determining future oil price direction are geopolitical risks in the Middle East and the recovery of Chinese demand.
6. Investment Strategy: Selective Approach and Enhanced Risk Management The current market is characterized by a mix of positive factors, such as expanded AI investment and eased trade tensions, and negative factors, including manufacturing sluggishness and monetary policy uncertainty. Selective investment in tech stocks is needed, focusing on those supported by AI-related earnings improvement, and defense/shipbuilding stocks require close examination of their earnings momentum. Bond markets may see increased volatility depending on the Fed's monetary policy path, so careful duration management is advised. In commodities, the US-China trade agreement may boost interest in agricultural products (especially soybeans), but a cautious approach is needed for copper and steel, considering slowing Chinese demand.
Conclusion
Global markets are showing a short-term positive trend due to massive AI investments by big tech companies and the easing of US-China trade tensions. The Korean stock market, in particular, hit an all-time high, supported by earnings improvement in the defense and shipbuilding sectors and the extension of the Korea-China currency swap. However, sluggish US manufacturing, the Fed's cautious monetary policy stance, and concerns about a Chinese economic slowdown remain key risk factors.
Investors should pay attention to the ADP employment report and major corporate earnings releases this week. Instead of chasing the short-term rally, it seems advisable to build a portfolio centered on stocks and sectors with strong fundamentals. It is time to prepare a flexible response strategy by closely monitoring whether expanded AI investment leads to actual profitability improvements, whether the US-China trade agreement is sustainable, and how the monetary policy direction of major central banks unfolds.
For Korean investors, in particular, investment decisions need to consider whether the earnings momentum of the domestic defense and shipbuilding sectors continues, whether signs of recovery in the semiconductor industry emerge, and the impact of the KRW-USD exchange rate volatility and US interest rate trends on the domestic market. In the commodity market, a differentiated approach is required between agricultural products that can benefit from the US-China trade agreement and industrial metals sensitive to Chinese demand.
In a highly volatile market environment, diversification and risk management are paramount. It is advisable to avoid excessive leverage and pursue stable returns from a long-term perspective by constructing a portfolio aligned with one's investment goals and risk tolerance.
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