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Despite a weekend brimming with US political drama, investors managed to steer their attention back to market favourites. Coming on the heels of the index’s worst weekly loss since April, the S&P 500 climbed to its best day since June, led by a tech sector resurgence spearheaded by Nvidia (NVDA).

Nvidia led the charge, surging 4.8% and recovering from last week's 8% slump. In true "follow-the-leader" fashion, other tech giants like Meta (META) Platforms and Alphabet (GOOGL) also saw gains of over 2%.

After Friday's sell-off, exacerbated by global cyber disruptions and a hefty dose of US political uncertainty, Monday's market action appears to be a mix of short covering and buy-the-dip enthusiasm, with some of the year’s biggest winners roaring back to life.

Nvidia’s jump came as Reuters reported the chipmaker is developing AI chips compatible with US export controls to China. Meanwhile, Tesla (TSLA) climbed 5.2% following Elon Musk's announcement that the company will have humanoid robots ready for internal use next year, with hopes for high production by 2026.

Political Chess and Market Moves

Traders have been keeping a keen eye on the US political landscape. Kamala Harris, emerging as the likely Democratic nominee following President Biden's exit from the race on Sunday, has turned the spotlight on her policy views and governing style. However, investors didn’t appear to alter their outlook on Monday drastically. Allies suggest Harris wouldn’t dramatically shift the Biden-Harris campaign's policy positions this close to the election. Meanwhile, betting odds still show Donald Trump as the front-runner for the White House.

We will likely witness a nuanced version of the so-called Trump trade since the former president still leads in the polls, albeit by a narrower margin than against Biden. This political see-saw will likely continue, but big tech and the Fed will maintain their influence above the fray. Regardless of who claims the White House, investing in generational technology seems to be a win-win scenario, with the Fed promising a “Goldilocks” economy for the victor.

FOREX

Don’t get me started on the Bank of Japan. Their intervention posturing is as compatible with their dovish cooing as oil and water.

Bank of Japan officials are reportedly seeing weakness in consumer spending, complicating their decision on whether to raise interest rates at an upcoming policy meeting.

It’s almost as if they purposely waffle to confuse market participants. Indeed, this is the third time they've deflated a nascent yen rally. But the issue for me anyway is that comments like this so close to the Central Banks rate decision have that little FX devil on my shoulder yelling, “ TWO WAY RISK ABOUNDS.” In other words, it dissuades folks from putting on a significant USDJPY short risk

Japan Senior LDP Official Motegi: BoJ Should More Clearly Indicate Its Policy Normalisation Path, Including Chance Of Several-Staged Rate Hikes - Nikkei

Heck, even government members understand it is a circus at the Japanese central bank. Good luck

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