Daily Market Outlook - Tuesday, Nov. 4

By Patrick Munnelly of Tickmill

Tuesday, November 4, 2025 7:00 AM EST

macbook pro on black table

Image Source: Unsplash

U.S. stock futures took a dip, reflecting a cautious mood on Wall Street as investors reevaluated the high valuations of tech stocks and mulled over mixed messages from Federal Reserve officials. S&P 500 futures slid 0.9%, following a modest gain in the main index on Monday, despite over 300 of its components ending in the red. Nasdaq 100 futures saw a sharper drop of 1.2%, with Palantir Technologies Inc. losing more than 4% in after-hours trading as concerns over its lofty valuation reemerged after a record-setting rally. Meanwhile, European markets prepared for a subdued start, and Asian equities fell 0.8%. In South Korea, regulators issued a rare “investment caution” on SK Hynix Inc., whose stock has skyrocketed 240% this year. The U.S. dollar extended its winning streak to a fifth session, climbing to its highest level since August against most major currencies. This came as traders digested conflicting signals from Federal Reserve officials. Fed Chair Jerome Powell reiterated that a December rate cut is far from certain, dampening hopes for immediate monetary easing. The Institute for Supply Management (ISM) reported that its manufacturing index dipped to 48.7, marking the 16th straight month of contraction. With the U.S. government shutdown delaying official economic data, policymakers have increasingly relied on private surveys like the ISM report to assess economic activity and labor-market trends. The release of Friday’s employment report is also expected to be postponed. Elsewhere in the markets, gold declined for the third consecutive session, Treasury yields held steady, and oil prices fell following OPEC+’s decision to pause production hikes. The yen gained strength after Japan’s finance minister issued another verbal warning about currency moves, while the Australian dollar weakened after the Reserve Bank of Australia held interest rates steady. On the other hand, India’s rupee rebounded from near-record lows, likely due to suspected intervention by the country’s central bank. On the policy front, Federal Reserve Governor Lisa Cook highlighted that the risks of further labor-market softening outweigh concerns about reigniting inflation, though she stopped short of endorsing another rate cut. "Policy is not on a predetermined path," she said, adding that December remains an open discussion. Her sentiment was echoed by San Francisco Fed President Mary Daly, who urged policymakers to keep an open mind about potential easing. Meanwhile, Fed Governor Stephen Miran emphasized that monetary policy continues to be restrictive.

Chancellor Reeves is set to hold a press conference at the Treasury this week, the address seems to confirm that the government will breach its manifesto pledges not to raise the main rates for income tax, National Insurance, or VAT in the upcoming Budget, just three weeks away. But the real question is: will this actually shake the gilt market? Markets remain concerned about Reeve’s ability to meet fiscal rules without bending—if not outright breaking—the spirit or letter of those manifesto promises. Recent market movements suggest investors have already priced in the likelihood of tough fiscal measures. Over the last three weeks, the ~30 basis point tightening of gilt spreads against US Treasuries in the 10-year sector appears to reflect expectations of the government’s commitment to fiscal discipline. Additionally, the drop in shorter-term gilt yields may indicate growing confidence that a stricter fiscal stance could pave the way for the Bank of England to implement further rate cuts, offering monetary stimulus as a counterbalance. In essence, much of what Reeves unveiled today regarding fiscal consolidation may already be baked into market sentiment. However, the less predictable factor remains the potential political fallout—whether in opinion polls or among MPs—and how that could influence the long-term trajectory of the current fiscal strategy.