Most weeks the market gets its big events spread out. Today it gets them all at once. The Chancellor delivers the Budget at lunchtime, the Federal Reserve announces its rate decision at 18:00 UK time, and Microsoft and Alphabet report after Wall Street closes. Asia has not waited for any of it. South Korea’s KOSPI has surged more than 6 per cent after SK Hynix posted record results on the back of AI memory demand, and Tokyo, Taipei and Shanghai are all higher. The catch is that oil has climbed back above $115 and the US 10-year Treasury yield has crept over 5 per cent, so the day’s big tests arrive with borrowing costs already uncomfortable.
The 60-Second Market View
Wall Street finished Tuesday higher, led by technology. The S&P 500 rose 0.60 per cent to 7,722.60, the Nasdaq Composite gained 1.18 per cent to 26,477.81 and the Dow was virtually flat at 52,377.57. Smaller companies did well too, with the Russell 2000 up 1.16 per cent, and the VIX fear gauge eased to 17.52. London lagged, with the FTSE 100 down 0.75 per cent at 10,686.54.
This morning US futures are flat to slightly firmer, with Nasdaq futures up about 0.3 per cent. Brent crude is up 1.5 per cent at about $115.60 and US crude is back above $101. Gold has slipped about 0.6 per cent to around $4,051, the dollar index is a touch firmer near 102.4, sterling is just under $1.33 and the US 10-year yield is about 5.02 per cent. Bitcoin is steady near $80,800.
What Happened Overnight?
Seoul stole the show. SK Hynix reported quarterly revenue of more than 100 trillion won for the first time, with operating margins of about 80 per cent, and said its high-end memory is effectively sold out for years to come. Coming a day after strong Korean growth figures, that was enough to send the KOSPI up 6.2 per cent to just under 6,000. Taiwan’s market rose 1.7 per cent, Japan’s Nikkei added 1.1 per cent to almost 64,000, and Shanghai and Hong Kong also edged higher.
India was the exception, with the Nifty down about 1 per cent as high oil prices weigh on a big energy importer, even with Jio Platforms’ stock market debut grabbing local attention.
In the Gulf, the optimism of the start of the week has cooled. Iran’s Supreme Leader set out conditions, including control of the Strait of Hormuz, before any end to the standoff with the US, and President Trump told a rally that the conflict would end when he chose. Nothing about Qatar’s mediation has collapsed, but the market is no longer pricing a quick deal, and oil has bounced. Israel’s election, meanwhile, looks set to produce a hung parliament, with exit polls showing neither bloc near a majority. That points to weeks of coalition talks rather than a sudden change in policy.
The Big Story: Three Exams in One Afternoon
Each of today’s events could move markets on its own. Together they make this one of the busiest days of the year, and the order matters.
First comes the Budget. The Chancellor, John Healey, is expected to confirm a rise in the national living wage to about £13.20 an hour, along with tax changes such as higher alcohol duty. For markets, though, the giveaways and the duties are the side show. The question gilt investors will ask is simple: does the government borrow more than expected, and does the Office for Budget Responsibility believe the numbers? The UK already pays the highest long-term borrowing costs in the G7, with the 10-year gilt yield near 5.35 per cent and the 30-year above 5.7 per cent. A Budget that looks loose could push those yields higher and weigh on sterling. One that looks credible could give both some relief.
Then comes the Fed. Markets are almost certain it will keep rates at 3.75 to 4 per cent. The interest is in what Chair Kevin Warsh says afterwards. With oil above $100 and petrol prices a political issue a week before the US midterms, any sign that the Fed is more worried about inflation than about the jobs market would support the dollar and push Treasury yields higher still. A softer tone would do the opposite.
Finally, after the US close, Microsoft and Alphabet report. This is where the AI story gets marked. SK Hynix has just shown that the companies selling the hardware are making extraordinary money. Microsoft and Alphabet are the ones paying for it, and investors want to see that their cloud businesses are growing fast enough to justify the bill. Strong numbers would back up everything Seoul did overnight. Weak ones would raise the uncomfortable question of whether the chipmakers’ profits are someone else’s cost problem.
The second-order point is that all three exams share a common thread: the cost of money. A US 10-year yield above 5 per cent makes every future dollar of tech profit worth less today, and makes the UK’s borrowing sums harder to balance. That is why the bond market may matter more than any single headline.
FX
The dollar index is a little firmer at about 102.4. GBP/USD is around 1.329, slightly lower, as traders hold back ahead of the Chancellor’s statement. The pattern to watch is how sterling reacts if gilt yields rise. If the pound rises with them, the market is reading it as stronger growth or tighter policy. If the pound falls while yields rise, that is a sign of worry about the public finances. EUR/USD is near 1.112, still weighed down by worries over French public finances, and EUR/GBP is steady near 0.836. USD/JPY is close to 157.8, with the Bank of Japan deciding on Friday.
Equities
Tuesday’s US rally was led by technology and smaller companies, which is usually a sign that investors are willing to take a bit more risk. Today’s Asian session went further, but it was concentrated in chip-heavy markets. That is a strength and a weakness: the gains are built on real earnings, but they all lean on the same theme.
The FTSE 100 fell on Tuesday, partly because the index has few technology names and partly because UK investors are cautious before the Budget. Housebuilders, banks and retailers are the sectors most likely to react to what the Chancellor says. Energy companies may get some support from higher oil prices.
Bonds
The US 10-year yield is about 5.02 per cent, just above the 5 per cent line that has acted as a ceiling for much of the month. The 2-year is near 4.75 per cent and the 30-year about 5.33 per cent. If the 10-year holds above 5 per cent after the Fed, that is a meaningful headwind for shares. A move back below would ease the pressure.
In the UK, the 10-year gilt yield is about 5.35 per cent and the 30-year about 5.74 per cent. Today is about the gilt market’s verdict on the Budget, and the reaction in the first hour after the Chancellor sits down is usually the most telling. German 10-year yields are near 3.36 per cent and French yields near 4.92 per cent.
Commodities
Brent is up about 1.5 per cent at $115.59 and US crude is up a similar amount at $101.42, as the market takes back some of the hope it priced in earlier in the week about a Hormuz deal. Gold futures are about 0.6 per cent lower near $4,051 and silver has eased to about $54. Gold remains above $4,000, but it has struggled to go further while yields are this high, because gold pays no interest. Copper is little changed.
Crypto
Bitcoin is near $80,800 and ether around $2,350, both broadly flat. Crypto has largely sat out the AI rally and is waiting on the Fed, like everything else. The $80,000 level remains the nearby reference.
Today’s Economic Calendar
Morning, UK time — Israel’s election results continue to come in — a hung parliament means long coalition talks; it matters for how the conflict with Iran is handled and so for oil.
After Prime Minister’s Questions, usually around 12:30 — UK Budget statement and the Office for Budget Responsibility forecasts — the main event for gilts, sterling and UK-focused shares.
14:30 — US weekly crude oil inventories — a read on whether high prices are starting to dent US fuel demand.
18:00 — Federal Reserve rate decision, with Chair Kevin Warsh’s press conference at 18:30 — a hold is expected, so the tone on inflation is what moves the dollar and yields.
After the US close — Microsoft and Alphabet quarterly results — the clearest test yet of whether the AI spending is paying off for the companies writing the cheques.
Levels Traders Are Watching
These are reference points, not predictions. On the S&P 500, Tuesday’s close near 7,723 is the marker, with 7,700 the round number below and 7,800 the one above. The Nasdaq Composite is holding above 26,000. For the US 10-year yield, 5 per cent is the line that matters most today. Brent’s recent high around $116.70 is the level above, with $110 below. Gold’s $4,000 remains the psychological floor. For sterling, $1.32 to $1.34 is the range into the Budget, and the FTSE 100’s 10,700 area, now just above the market, is the level to reclaim. On the KOSPI, 6,000 is the obvious round number after the overnight surge.
Where This Leaves Traders
The fair read this morning is that the AI story has strong evidence behind it, but the market is walking into its biggest tests of the month with oil and bond yields moving the wrong way. SK Hynix gave investors every reason to stay optimistic about the industry. The rising cost of money is the reason not to get carried away, and today the Budget, the Fed and two of the biggest buyers of AI hardware all get to speak before the day is out.
What would change the view is fairly clear. A Budget that the gilt market takes badly would hit sterling and UK shares together. A hawkish Fed that keeps the 10-year above 5 per cent would put pressure on technology valuations. Disappointing cloud numbers or rising spending without matching revenue from Microsoft and Alphabet would test the whole AI rally, including the chip names that soared overnight. On the other side, a credible Budget, a calm Fed and strong cloud growth would give the market room to push on. The markets worth keeping on screen are the 10-year gilt and GBP/USD around lunchtime, the US 10-year and the dollar into 18:00, Nasdaq 100 futures into the evening, and Brent throughout.
Days like this reward preparation more than prediction. Nobody knows which way three separate events will break, but you can know in advance how much risk you are carrying into each of them. For beginners, the lesson is that big days are where position size matters most. If you want to see how you would handle a session like today, the free Samuel & Co Trading Trader Assessment is a sensible place to start.
