Markets steady cautiously after AI-led selloff, Fed hike bets firm

what happened

Asian shares rebounded on Monday and US equity futures edged higher after the Democrats' sweeping election win set off a chaotic week of selling in AI-related stocks. According to Reuters, markets are calming after Wall Street finished higher on Friday.

Reuters analysts say it is still too early to call the danger over. This week brings tech earnings, including from cloud-computing firm CoreWeave, which has drawn investor worries about AI profitability, massive build-out costs and heavy debt. Investors will also watch US CPI data due on Tuesday.

why it matters

A strong jobs report has boosted expectations that the Federal Reserve will raise rates at its next meeting, with markets pricing in an 80% chance of at least a 25-basis-point increase. That backdrop supports the dollar and weighs on highly indebted companies. Oil prices have also steadied after the US president said he was highly unlikely to order fresh attacks while talks continue to make progress.

market impact

Dollar and growth stocks: Fed hike bets and inflation data set the market mood

• ▲US dollar pressure up — higher odds of a Fed rate hike lift yields on dollar assets
• ↔US stocks mixed — index rebound clashes with AI-stock selling and possible tighter Fed policy
• ▼Brent pressure down — prices calm as fears of fresh strikes in the conflict region ease

instruments