US equities extended their losing streak as investors fretted over stretched AI valuations and reacted to hawkish Fed commentary, with several FOMC members pushing back against expectations of a December rate cut.1 A rotation out of AI-linked, risk-on exposures into low-beta and defensive sectors dominated the week, leaving cryptocurrencies and frothier tech names among the worst performers. Meanwhile, S&P 500 earnings continue to show strong growth, yet investor reaction has been muted—the average one-day move post-earnings is flat at 0% despite an aggregate earnings surprise of +6.7% as of November 18th.2
In Australia, equity markets tracked the US lower as rate-cut expectations were similarly unwound following a surprisingly strong labour market report, with 42,000 jobs added versus expectations of just 20,000.3 The unemployment rate fell to 4.3%, beating forecasts of 4.4%.4 With employment conditions still tight and inflation hovering near the upper end of the RBA’s target range, the central bank now has ample justification to hold off on rate cuts for the remainder of the year.
Cryptocurrencies (BTXX, CRYP, EBTC, EETH, IBTC, QBTC, QETH, VBTC) were the worst performing asset class of the week. Bitcoin, which is both a growth-tilted asset with high beta to tech thematics and a non-yielding asset that benefits from lower rates, was hit on both sides of its narrative, triggering a sharp sell-off that pushed prices toward US$93,000.
In the world of commodities:
- Precious metals (ETPMPM) ended the week lower as prospects for a December rate cut faded following hawkish FOMC commentary. As non-yielding assets, precious metals typically perform better in lower-rate environments.
- AI-related energy transition thematics such as hydrogen (HGEN) and uranium (ATOM) were sold-off as fears around AI-valuation bled into surrounding exposures.5
- Platinum (ETPMPT) and palladium (ETPMPD) markets will have improved data clarity after the Guangzhou Futures Exchange won approval to host China’s futures market for the metals.6The exchange will issue daily updates of the warehouse inventories on warrant.
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