Asia has decided last week’s AI rout went too far, at least for one morning. Taiwan’s market jumped nearly 6 per cent after regulators clamped down on short sellers and waved a NT$500 billion support fund, Japan’s Nikkei added more than 3 per cent, and US futures climbed even after Nvidia confirmed its board is investigating whether chief executive Jensen Huang was targeted by a suspected Chinese spy. The bounce is real. Whether it lasts gets two tests this week: Nvidia’s first cash session since the admission later today, and US inflation on Tuesday.
The 60-Second Market View
Friday was a partial repair job on Wall Street. The Nasdaq Composite rose 1.09 per cent to 24,579.43 and the S&P 500 added 0.31 per cent to 7,376.86, while the Dow slipped 0.46 per cent to 51,285.73. That still left the S&P with its biggest weekly loss since April 2025. The VIX eased to 25.64 from 28.18. London did not get the memo in time: the FTSE 100 closed down 1.01 per cent at 10,673.94.
Into the London morning, S&P 500 futures are near 7,445, up about 0.6 per cent, and Nasdaq 100 futures are near 27,209, up about 0.5 per cent. Taiwan’s Taiex is up roughly 5.7 per cent, the Nikkei about 3.3 per cent, and Korea’s KOSPI close to 1 per cent. Brent is flat near $98.30, gold futures have climbed about 1.4 per cent to around $4,130, and the dollar index has eased to roughly 102.1. Sterling is near $1.3377.
What Happened Overnight?
The weekend gave markets two reasons to wobble and Asia shrugged off both. The first was Nvidia. On Sunday Jensen Huang told staff he had an affair with a senior executive at Megaspeed, a Singapore-based Nvidia customer whom US officials reportedly believe was working for Chinese intelligence. The board has opened an independent investigation, said it has no reason to believe national security or company secrets were compromised, and Huang remains chief executive. Nvidia traded about 3 per cent lower in out-of-hours venues against Friday’s $186.64 close, and Nasdaq futures briefly dipped about 1 per cent at the Asian open before reversing.
The second was rates. Friday’s US jobs report was far hotter than expected: payrolls rose 165,000 against forecasts near 60,000, unemployment slipped to 4.1 per cent and wages rose 0.4 per cent on the month. Traders now put the chance of a Federal Reserve hike by year-end at close to 80 per cent, and Fed officials including St Louis’s Alberto Musalem spent the weekend calling inflation the main problem.
Against that, Taiwan’s regulator cut the cap on intraday short sales of borrowed shares to 3 per cent of average volume from 30 per cent, raised short-selling margin requirements, and said the stabilisation fund is ready. TSMC rose more than 6 per cent and the Taiex ended a seven-session losing streak. In Tokyo, chip-equipment names such as Tokyo Electron led. China added colour of its own: factory-gate inflation hit 5.7 per cent, the highest in more than four years, while consumer inflation cooled to 0.7 per cent.
The Big Story: A Relief Rally With a Scandal in the Middle
Last week was the biggest selloff in Asian equities in more than 18 months. Japan and Taiwan both slipped into bear markets, and Samsung and SK Hynix lost more than 16 per cent. The trigger was political: a Democratic sweep of Congress raised the prospect of tighter rules on data centres, energy use and AI build-outs, landing on a trade that was already nervous about whether all that capital spending pays off.
This morning’s rally tells you how stretched the selling had become. When a regulator only has to restrict short sellers for a market to jump 6 per cent, a lot of the damage was positioning rather than fresh bad news. That is useful, but it is not the same as the story being fixed. Taiwan’s rally is partly engineered, and engineered rallies can fade once the support is priced in.
The Nvidia episode is the awkward middle piece. Nothing so far touches the company’s demand, supply or earnings, and Asia’s reaction suggests investors see it as noise for now. The risk is that it does not stay a governance headline. Congressional committee chairs have already asked for a briefing, and a Democrat-led Congress was the very thing the market feared last week. If the inquiry starts to touch Nvidia’s role in shaping chip policy or its access to China, the regulatory worry and the scandal could feed each other. Nvidia’s weight in the major US indices means its first proper session today matters well beyond one stock.
Then comes Tuesday. October consumer prices are due at 13:30 London time, with forecasts for a 0.3 per cent monthly rise after September’s 0.6 per cent. After a hot jobs report, a firm inflation number would cement a December hike and put pressure back on the very growth stocks that are bouncing this morning. A soft one would give the bounce some foundations.
FX
The dollar has slipped against most major currencies overnight, with the dollar index near 102.1, down about 0.2 per cent. That looks more like risk appetite returning than a change of view on the Fed, because Treasury yields have edged higher. Sterling has recovered to around $1.3377 after a soft finish on Friday, the euro is near $1.1159, and the yen is around 158.2 per dollar. Barclays strategists have argued that solid US growth makes dips in the dollar worth watching rather than chasing, which is a fair reminder that a hike-bound Fed tends to support the currency.
Equities
The relief is broad in Asia but uneven. Taiwan and Japan, the two markets hit hardest last week, are leading. Hong Kong and mainland China are only modestly higher, which fits last week’s pattern of money rotating from AI-heavy markets towards China and India. Memory names bounced, with SK Hynix and Samsung both higher, although a Goldman Sachs basket of AI memory stocks is still down about half from its June peak.
For London, the set-up is a firmer open after Friday’s 1 per cent drop, helped by US futures and calmer oil. The FTSE 100 has less AI exposure than the Nasdaq, so its bigger swing factors this week are likely to be the dollar, oil and miners, with China’s firmer factory prices and copper’s overnight gains offering some support to the mining names.
Bonds
Treasuries have edged lower. The US 10-year yield is near 4.88 per cent and the 2-year near 4.54 per cent, both slightly higher overnight as the jobs report keeps hike pricing firm. UK 10-year gilt yields are steady near 5.16 per cent. Last week’s flight to safety pulled yields lower, but a strong labour market and a Fed talking about inflation limit how far that haven bid can run. Japan’s 10-year yield is near 2.69 per cent and a 30-year auction later today will test appetite at the long end.
Commodities
Oil is calm. Brent is near $98.30 after President Trump told CNN it was “highly unlikely” he would order further strikes on Iran if talks made progress, which took some heat out of a weekend of Middle East headlines. US crude is near $91.30. Gold futures are up about 1.4 per cent to around $4,130 and silver about 2 per cent, helped by a softer dollar. Copper is up nearly 1.8 per cent, which sits neatly alongside China’s factory-price jump.
Crypto has not joined the party. Bitcoin is down about 1.4 per cent near $74,600 and ether about 4 per cent, as weekend trading in Nvidia-linked products leaned on risk appetite in the only markets that were open.
Today’s Economic Calendar
07:00 — German trade balance (September) — An early read on Europe’s export engine; a miss would add to worries about European growth.
09:30 — Eurozone Sentix investor confidence (November) — The first European sentiment check after last week’s AI selloff.
All day — Eurogroup and ECOFIN meetings — Finance ministers meet; usually low impact unless budget or defence spending headlines surface.
13:40 — Fed Vice Chair for Supervision Michelle Bowman speaks — Any sign she is leaning towards a December hike after the jobs data would matter for yields and the dollar.
14:30 — US cash open — Nvidia’s first proper session since the Huang admission; the reaction will set the tone for the AI trade.
15:00 — Chicago Fed’s Austan Goolsbee Q&A and US wholesale inventories — Goolsbee has called inflation the economy’s biggest problem; watch whether he repeats it.
16:00 — New York Fed consumer inflation expectations (October) — Household inflation expectations feed directly into the hike debate before Tuesday’s CPI.
17:15 — Richmond Fed’s Tom Barkin speaks — Another voice on whether December is live.
17:25 — Bank of England Governor Andrew Bailey speaks in Zurich on central bank independence — Mostly a structural speech, but any comment on the path after the recent hike could move sterling.
23:50 — Bank of Japan summary of opinions — Clues on how close the BoJ is to its next move, with the yen near 158.
Levels Traders Are Watching
These are reference points, not targets. On the S&P 500, Friday’s 7,376.86 close and Thursday’s 7,353.73 low close mark the floor the market is trying to build on. For Nasdaq 100 futures, 27,000 is the round number the bounce needs to hold. Nvidia’s $186.64 Friday close is the line for today’s session. Sterling’s $1.3350 area was Friday’s low zone. Brent’s $100 remains the psychological oil marker, and gold’s $4,100 area is the level its rebound is working around.
Where This Leaves Us
The honest read is that this is a relief rally built on exhausted selling and a helping hand from Taipei, not a verdict that last week’s worries were wrong. The AI regulation risk has not gone away, and the Nvidia inquiry adds a political thread that a new Congress could pull on. Meanwhile, the hot jobs report means the Fed is more likely to tighten than rescue anyone.
That view would change if Nvidia trades through today’s session without lasting damage and Nasdaq futures hold above 27,000, if Tuesday’s inflation figure comes in soft enough to cool December hike bets, or if Taiwan holds its gains once the short-selling curbs are priced in. Watch Nvidia, Nasdaq futures, the Taiex, US 2-year yields and sterling. For beginners, the lesson is that a big bounce after a big fall often says more about positioning than about the news itself, so the second day of a rally usually tells you more than the first.
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