Market Overview
As we head into Friday’s trading session on November 8, 2025, global markets are navigating a complex landscape shaped by central bank policy uncertainty, mixed economic signals, and ongoing political developments. After a volatile week that saw the tech-heavy Nasdaq post its worst performance since April and the FTSE 100 reach new record highs, traders are carefully assessing whether recent pullbacks represent healthy profit-taking or the beginning of a deeper correction.
The ongoing US government shutdown—now the longest in American history—continues to create a data vacuum that’s forcing investors to rely more heavily on private sector indicators and central bank commentary. Meanwhile, expectations are building for potential Bank of England rate cuts in December, adding another layer of complexity to currency and equity markets.
US Stock Market Outlook
Recent Performance and Key Levels
The US equity markets closed out a challenging week with mixed results. The S&P 500 managed to eke out a 0.1% gain on Friday to close at 6,729 points, demonstrating resilience after erasing earlier losses. However, the index has pulled back from its record intraday high of 6,920 reached just before Halloween, retreating roughly 2.8% from those levels.
The Nasdaq Composite bore the brunt of selling pressure, falling 0.2% on Friday and posting a 3-4% decline for the week—its steepest weekly loss since the April tariff-induced selloff. The tech-heavy benchmark was weighed down by significant declines in mega-cap names including Alphabet, Tesla, and various semiconductor stocks, raising questions about whether the AI-driven rally has run out of steam.
What’s Driving the Markets
Several key factors are influencing market sentiment as we move into today’s session. The fragile US labor market remains front and center, with October’s nonfarm payrolls report showing a mere 22,000 jobs added—well below historical norms and consensus expectations. Even more concerning, downward revisions totaling 911,000 jobs over the past year suggest the employment picture has been weaker than previously thought.
The government shutdown has created additional uncertainty by postponing the release of key economic data, forcing traders to rely on private sector indicators. Recent data showed the economy shed jobs in October in the government and retail sectors, with cost-cutting measures and AI adoption contributing to a surge in layoffs. The ISM Manufacturing PMI remained in contraction territory at 48.7 for the eighth consecutive month, though the Services PMI held up better at 52.4, indicating continued expansion in the dominant services sector.
Federal Reserve Policy Outlook
The Federal Reserve’s next move has become increasingly uncertain. Chair Jerome Powell’s recent hawkish tilt, acknowledging the risky nature of further easing, has been tempered by weakening labor market data. Markets are now pricing the December Fed meeting as essentially a coin toss, with the decision crucially dependent on forthcoming labor market indicators.
Treasury yields have responded to this uncertainty, with the benchmark 10-year note falling 0.2 basis points to 4.091% on Friday. Analysts at Jefferies suggest the market may be overreacting to labor market hints, while TS Lombard maintains that US growth momentum remains strong despite relatively weak dollar sentiment.
Today’s Trading Strategy
For today’s session, I’d be watching the 6,700 level on the S&P 500 as critical support. A break below this threshold could signal further downside toward the 6,575 zone, which represents the November low and the 20-day simple moving average. On the upside, reclaiming 6,800 would be an encouraging sign that buyers are stepping back in.
The tech sector warrants particular attention given its recent underperformance. While the selloff may have created some attractive entry points in quality names, I’d wait for signs of stabilization before deploying capital. The concentration risk in mega-cap tech remains elevated, and any further weakness could drag broader indices lower.
Forex Market Outlook
Dollar Weakness Continues
The US dollar ended the week on a defensive footing, falling against major currencies including the euro and Swiss franc as investors balanced the Fed’s hawkish rhetoric against mounting concerns over the US economic outlook. The dollar index declined 0.12% to 99.56 on Friday and was set to fall 0.15% for the week, ending two consecutive weeks of gains.
This reversal comes despite the dollar regaining some of its safe-haven appeal earlier in the week. The greenback had started a five-day winning streak last week following Powell’s cautious comments on further easing, but dropped sharply on Thursday after soft labor market data emerged.
EUR/USD: Euro Finds Support
The euro rose 0.15% against the dollar on Friday to $1.15564, positioning itself for a 0.26% weekly gain and recovering from two consecutive weeks of losses. The single currency is drawing support from expectations of steady European Central Bank policy rates, while both the US and UK are expected to implement further rate cuts in 2026.
However, weak Chinese trade data—showing exports unexpectedly fell in October with the steepest drop since February—may spell trouble for the eurozone. The data suggests Beijing has struggled to diversify exports away from the US, a trend that could increase Chinese pressure on European markets and potentially weigh on the euro in the medium term.
For today’s trading, I’d be watching the $1.1560-1.1580 zone as near-term resistance for EUR/USD. A sustained break above this level could open the door to a test of $1.1650. On the downside, support lies at $1.1500, with a break below potentially signaling a return to the recent range lows.
GBP/USD: Pound Under Pressure
The British pound ticked lower to near 1.3110 against the dollar on Friday, though it continues to hold above its six-month low around 1.3000. The Bank of England’s decision to keep interest rates unchanged at 4% in a closely split 5-4 vote has created some uncertainty around the currency’s near-term direction.
Four MPC members pushed for an immediate 25 basis point cut, citing easing wage growth and mounting economic slack. While Governor Andrew Bailey stressed a “wait and see” approach, markets are now pricing in roughly a 60% probability of a December rate cut if upcoming data confirm the disinflationary trend.
The pound is also facing headwinds from the upcoming Autumn Budget on November 26, with speculation mounting about potential tax hikes to address a £20-50 billion fiscal shortfall. Prime Minister Keir Starmer and Chancellor Rachel Reeves have refused to rule out breaking Labour’s manifesto pledge not to raise income tax, VAT, or National Insurance, with hints of a possible “two up, two down” approach—raising income tax by 2p while cutting National Insurance by the same amount.
For GBP/USD, I’d be watching the 1.3100 level as immediate support. A break below could accelerate selling toward 1.3000, while a recovery above 1.3160 would suggest the recent consolidation is holding and could target 1.3200.
USD/JPY: Yen as Defensive Play
The dollar rose 0.25% against the yen to 153.44 on Friday, but remained on track to fall 0.39% for the week, snapping two straight weeks of gains. The Japanese yen has emerged as the market’s preferred defensive hedge amid recent volatility, with the rolling 20-day correlation coefficient between USD/JPY and risk assets hitting levels not seen since early 2025.
UK Market Outlook
FTSE 100 at Record Highs
In contrast to US markets, the FTSE 100 surged to a new record high this week, buoyed by strong gains in energy and financials sectors and optimism around global technology earnings. By mid-session Friday, the index was down just 0.3% from its weekly highs, demonstrating impressive resilience.
The rally has been supported by expectations that the Bank of England may cut interest rates in December despite holding them at 4% at its most recent meeting. Upbeat corporate updates from heavyweights such as HSBC and AstraZeneca have also bolstered sentiment, while Goldman Sachs raised its 12-month prediction for the FTSE 100 and other European stock indices to reflect increased earnings growth expectations.
Earnings Season Resilience
The UK’s third-quarter earnings season has painted a picture of resilience amid macroeconomic uncertainty, with most blue-chip companies delivering results broadly in line with or ahead of expectations. Retail names including J Sainsbury and Marks & Spencer surprised positively, helped by cost controls and steady grocery volumes, though discretionary spending remains under pressure.
Financials have held up particularly well thanks to stable credit quality and healthy margins, while utilities like National Grid reaffirmed guidance despite inflationary headwinds. Overall, earnings momentum is solid, though management commentary signals caution on input costs and geopolitical risks.
Economic Data and Policy Outlook
Recent UK economic data has shown encouraging signs of improvement. The Composite PMI jumped to 52.2 in October from 50.1—its highest reading in five months—as services rebounded strongly to 52.3. Manufacturing remained in contraction at 49.7, but survey respondents cited better domestic demand, easing cost pressures, and stabilizing employment.
The Bank of England’s latest projections show CPI inflation falling toward 3% early next year from 3.8% in September, with GDP growth trimmed to 0.75% for 2025. The closely split 5-4 vote to hold rates unchanged signals growing divisions within the Monetary Policy Committee, reinforcing expectations of a December cut if upcoming data confirm the disinflationary trend.
Today’s Trading Approach
For the FTSE 100, immediate support lies at the 9,690 zone, with a break below bringing 9,575—the November low and the 20-day SMA—into focus. The more UK-focused FTSE 250 has pulled back 1.4% from its weekly highs, suggesting some caution around domestic growth prospects ahead of the Autumn Budget.
I’d be watching energy and financial stocks for continued leadership, while remaining cautious on consumer discretionary names given the ongoing pressure on household spending. The upcoming Budget on November 26 represents a key risk event that could introduce significant volatility, particularly if tax hike speculation proves accurate.
Key Risks and Opportunities
Several factors warrant close attention as we navigate today’s trading session. The US government shutdown continues to create uncertainty and could extend into mid-November according to betting markets, with Barclays forecasting a 60% chance of resolution between November 11-21. Until normal data flows resume, markets will likely remain sensitive to any economic hints from private sector indicators.
The divergence between US and UK equity performance highlights the importance of regional allocation decisions. While the FTSE 100’s energy and financial exposure has proven beneficial in the current environment, the Nasdaq’s tech concentration has become a vulnerability. This suggests opportunities may exist in rotating toward more defensive, value-oriented sectors.
Currency markets are likely to remain volatile as traders navigate conflicting signals from central banks and economic data. The dollar’s recent weakness despite its safe-haven status suggests underlying concerns about US growth are outweighing Fed hawkishness—a dynamic that could persist if labor market data continues to disappoint.
Conclusion
Today’s trading session promises to be another test of market resilience as investors weigh slowing growth signals against still-elevated valuations and policy uncertainty. The key will be monitoring how equity markets respond to support levels and whether the dollar’s weakness accelerates or finds a floor around current levels.
For stock traders, I’d maintain a cautious stance with tight risk management, focusing on quality names with solid fundamentals rather than chasing momentum. The recent tech selloff may have created opportunities, but patience is warranted until clearer signs of stabilization emerge.
In forex markets, the path of least resistance for the dollar appears to be lower in the near term, supporting EUR/USD and potentially pressuring GBP/USD if BoE rate cut expectations firm up. However, any escalation in global risk aversion could quickly reverse these trends as safe-haven flows return.
As always, stay disciplined, manage your risk carefully, and be prepared to adapt as new information emerges throughout the trading day.
