Chip rally lifts Asia as Wall Street weighs hot CPI and Fed hike talk

Wall Street ended Tuesday lower. The S&P 500 closed down 0.38% at 7,520.93, the Nasdaq Composite fell 0.74% to 25,065.88 and the Dow slipped 0.30% to 52,231.89. The Nasdaq did finish well off its intraday lows. US cash markets are shut, so futures are the only live read on the American day, and they point to a rebound: S&P 500 futures are up 0.58% and Nasdaq 100 futures 1.33%.

Asia was split. Taiwan's index closed up 3.62% at 44,257.15, the Kospi rose 2.6% to 5,375.36 and the Nikkei 225 gained 1.31% to 61,248.59. Greater China lagged: the Hang Seng is trading 0.98% lower, while the Shanghai Composite is up 0.46%. In Europe on Tuesday, the FTSE 100 closed down 0.29% at 10,751.59, while the DAX rose 0.31%, the CAC 40 0.55% and the Euro Stoxx 50 0.59%.

The story is US inflation. October consumer prices rose 0.4% on the month against the 0.3% economists expected, and core inflation, which strips out food and energy, rose 0.3% against 0.2%. Markets now take a December rate rise from the Federal Reserve almost for granted. Fed Governor Christopher Waller then said a half-point increase 'should be considered', and traders began pricing a small chance of that bigger move. Chicago Fed President Austan Goolsbee called the report 'disturbing'. Short and medium yields jumped most, with the 5-year up 14.8bp, the clearest sign the market is pricing a near-term Fed response rather than a long-term growth story.

Higher yields hurt long-duration growth stocks most, because their value rests on profits far in the future, which are worth less when discounted at higher rates. Technology took the brunt, and Nvidia fell more than 5% for a second day of losses. That followed the board's independent inquiry into reports that chief executive Jensen Huang was the target of a foreign intelligence effort.

Asia took the other side of the AI trade. Chip stocks rebounded, and TSMC's October revenue, up 59.7% on a year earlier, helped lift Taipei and Seoul. Hong Kong was held back by subdued Singles' Day spending. London's slip on Tuesday came mostly from miners, which fell with metals prices.

Rates are the strain, not equities. The MOVE index of bond volatility closed up 7.5% at 92.43, while the VIX of equity volatility actually eased to 19.46. US breadth was poor, with 2,166 advancers against 3,918 decliners in PrimerIQ's universe. Sector dispersion pointed to rotation rather than outright selling: technology fell 1.15% while financials rose 0.52% and energy 0.44%. Asia was broadly bid, with 8,968 risers to 3,378 fallers on our count. Gold is trading up 1.05% at $4,072.40 and copper up 1.72%. The dollar index is flat at 102.29, but sterling is trading at $1.3338, down 0.77%.

There was no headline ONS release at 07:00. Today's UK calendar carries only weekly mortality data. The big UK print is tomorrow at 07:00 GMT: the first estimate of third-quarter GDP, alongside September's monthly GDP, trade and production figures. Germany's final October inflation reading was due at 07:00 GMT, with consensus at 2.8% year on year, unchanged on the flash estimate.

The US bond market is closed for Veterans Day while stocks trade normally, so yields will not reprice until Thursday. No US data is scheduled. Central-bank speakers fill the gap: the Bundesbank's Joachim Nagel speaks at 08:15 GMT, ECB President Christine Lagarde at 08:45 GMT, and OPEC's monthly oil market report lands at 13:00 GMT. Several Fed officials are on this week's diary, though listings disagree on the exact days.

Siemens Energy reported this morning what it called a record year. It raised its dividend to €2.30 from €0.70 and added up to €9bn of buybacks through 2030. Its 2027 guidance fell short, however: net income of about €5bn against consensus near €5.5bn, a weak outlook for the Siemens Gamesa wind unit, and a 2030 margin target of 20–22%, below some analysts' hopes. How the shares open is the first test of whether the cash return outweighs the softer outlook.