Opening Bell - Morning Commentary
AI Optimism Lifts Nasdaq; Action Shifts to Smaller Stocks in Indian Markets.
Major U.S. stock indexes posted mixed performance on Monday. The Nasdaq and S&P 500 advanced, while the Dow declined.
The tech-heavy Nasdaq's gain was driven primarily by Amazon, which surged 6% to a record high following a $38 billion agreement with OpenAI. Under the deal, Amazon Web Services will provide infrastructure to run and scale OpenAI's core artificial intelligence workloads. The announcement extended Amazon's rally from Friday.
The Nasdaq rose 0.5% and the S&P 500 gained 0.2%, fueled by investor enthusiasm for artificial intelligence and cloud computing partnerships. Nvidia climbed 2.2% after Microsoft disclosed it had secured export licenses from the Trump administration to ship Nvidia chips to the United Arab Emirates.
The headline gains masked underlying weakness- most S&P 500 constituents declined, underscoring narrow market leadership dominated by the "Magnificent Seven" tech stocks. This concentration raises sustainability concerns if broader sector participation fails to materialise.
In the U.S., the Institute for Supply Management reported that manufacturing activity unexpectedly contracted at a slightly faster rate in October.
The dollar rose to a three-month high against the euro, driven by diminishing expectations for aggressive U.S. interest rate cuts. The Federal Reserve cut rates as expected last week, but Chair Jerome Powell stated that a December rate cut was "not a foregone conclusion," surprising investors who had viewed it as virtually inevitable.
Markets now await the Reserve Bank of Australia's policy meeting, where no change is anticipated.
Japan's manufacturing activity contracted in October at the fastest pace in 19 months, pressured by weakening demand in the automotive and semiconductor sectors, according to a private-sector survey released Tuesday.
Indian markets ended little changed on Monday after a choppy session. Caution prevailed ahead of a big week for earnings, with around 200 prominent companies scheduled to report their quarterly earnings results. After a weak start, the Nifty swiftly recovered, climbing 158 points from yesterday’s low of 25,645 to register an intraday high of 25,803. The index eventually settled with a modest gain of 41 points at 25,763
Nifty remains range-bound, oscillating between its short-term Averages, with no clear short-term directional bias. Immediate support is placed around 25,600, while resistance lies near 25,950.
Indian markets are likely to open subdued, though action is expected to shift to smaller stocks as the result season progresses.
