On Wednesday, global stock markets rose, with investors temporarily putting aside concerns about further interest rate hikes by the Federal Reserve and turning their attention to the positives brought about by the renewed boom in artificial intelligence investments. CoreWeave Inc, a new type of cloud computing company in trouble, announced strong financial results, while Anthropic PBC's initial public offering (IPO) was warmly welcomed by investors, providing support for market sentiment.

As of press time, the Dow Jones futures rose by 0.13%, the S&P 500 index futures rose by 0.87%, and the Nasdaq futures rose by 1.93%.

European stocks are just one step away from their historical highs. In the European market, the Stoxx 600 index rose by 0.3%, just a step away from its historical high closing level set in August, with technology and energy sectors leading the performance. After the defense company CSG NV lowered its full-year profit forecasts, its stock price plummeted to its lowest level since its listing in January this year.

Jefferies strategist Mohit Kumar stated that a lower position allocation could provide further upward momentum for European stock markets. Currently, compared to the U.S. market, investors' allocation to European stocks is still relatively low.

Kumar indicates: "We have been paying attention to opportunities for capital rotation outside of technology themes, which includes not only sector rotation within the U.S. market but also diversification into Europe and emerging markets. Our position indicators show that our current allocation in both stocks and credit markets is nearly neutral, which is one of the reasons why we are optimistic about risk assets."

Bloomberg macro strategist Conor Cooper stated: "European stock markets are moving towards record closing levels, and there is reason to believe that the upward trend has room to continue. After another quarter of solid financial reports, corporate earnings continue to provide support. The economic outlook is another positive factor. Under the same conditions, a more hawkish policy stance by the Federal Reserve is not entirely bad news for European stock markets, as it could lead to a stronger dollar, which is beneficial for European export companies."

AI Trading Resumes, Driving Up U.S. Stock Futures

Traders are flocking back to artificial intelligence trading, and NVIDIA is expected to see its first daily increase since the exposure of controversies related to CEO.

Nasdaq 100 index futures continued the rebound that began from the previous sell-off of stocks related to AI. CoreWeave rose 15% in the morning session; the company's strong sales growth had alleviated market concerns regarding its high-debt business model. The stock prices of its peers Iren Ltd and Nebius Group NV also rose in tandem.

CoreWeave indicates that profitability is expected to be achieved in 2028, which alleviates concerns in the market regarding its reliance on debt to drive business expansion, as demand may not be sufficient to support this growth model.

The chief investment officer of Swiss wealth management firms LFG and ZEST, Alberto Conca, stated: "This performance once again proves that the market's demand for artificial intelligence remains very strong. However, there are still significant doubts as to whether the debt burden of CoreWeave can be sustained."

Multiple positive messages for AI trading

Another piece of evidence for the strong demand is from OpenAI. The company's quarterly revenue reached $10 billion for the first time. Meanwhile, according to The Financial Times, the underwriters of Anthropic are considering raising the valuation of their IPO.

After the results of the U.S. mid-term elections caused market turmoil, AI stocks are rebounding. The performance of CoreWeave indicates that despite the many challenges faced by the data center industry, sales growth remains strong. However, the market's expectations for the Federal Reserve to raise interest rates continue to rise, which is still limiting the overall increase in the U.S. stock market.

At Berenberg Bank, Ulrich Urbahn indicates that: “AI transactions are recovering based on real demand data, rather than merely relying on market sentiment. CoreWeave Third-quarter performance exceeded expectations, and the full-year performance forecast has been raised.” He noted that currently, the valuation of related stocks has significantly declined, and investors are repurchasing positions they had previously reduced.

Conca indicates that the current upward trend in the stock market is spreading from the AI related stocks that led the market in the past few years to a wider range of industries. Value-oriented sectors and the European market are attracting new funds. He added that corporate earnings growth remains strong enough to continue to support the stock market, even as the valuations of some AI sectors are under pressure.

In other markets, international oil prices ended their downward trend from the previous two trading days, with Brent crude oil rising back above $93 per barrel. A senior Iranian official ruled out the possibility of transporting enriched uranium abroad, indicating that there are still significant differences between the United States and Iran.

A 50-basis-point interest rate hike is still under discussion.

Due to the Veterans Day holiday in the United States, the U.S. Treasury bond spot market was closed on Wednesday, following a sell-off of U.S. Treasuries on Tuesday. The Asian bond market also faced pressure, with the yield on Japan's 10-year government bonds rising by 10 basis points to 2.793%. In contrast, the eurozone bond market tended to be stable, with the yield on Germany's 10-year benchmark government bonds remainingほぼ unchanged at around 3.3%.

Data released on Tuesday showed that the U.S. core inflation rate rose 0.3% month-on-month in October, higher than the market's expectation of 0.2%. Before the release of the data, Federal Reserve governor Christopher Waller ( Christopher Waller ) stated that if the core inflation rate reached 0.3%, he would consider supporting a 50-basis-point interest rate hike at the next policy meeting in December.

Dallas Fed Chairman Logan stated that the Federal Reserve still needs to raise interest rates twice more; Chicago Fed Chairman Gulsby warned that there is currently a "real inflation problem"; Philadelphia Fed Chairman Paulson, on the other hand, called for gradual interest rate hikes.

A series of hawkish remarks have driven a significant re-pricing of federal funds rate futures. Currently, the market is largely certain that the Federal Reserve will raise interest rates by 25 basis points in December, while the probability of a 50 basis point increase is estimated to be around 10%. By the middle of next year, the market has fully incorporated the expectation of a total interest rate hike of 75 basis points.

The chief interest rate strategist at an Australian financial institution, Barrenjoey, Andrew Lilley, stated: "This Fed has finally begun to take the actions that any other Fed would take in this situation, which is to raise interest rates, and to do so quickly."

He added, "I think that at least four to five officials would prefer to take such action (raising interest rates by 50 basis points)... Therefore, we cannot rule out this possibility."

The US dollar is strengthening.

Interest rate expectations and repricing drove the US dollar stronger. The US dollar rose by 0.5% on Tuesday and further by 0.2% on Wednesday, climbing to 102.45 against major currencies.

The Australian dollar, which is more sensitive to risk sentiment, tends to be stable. Previously, the Australian dollar fell by nearly 0.9% due to traders betting that after the Reserve Bank of Australia's five interest rate hikes this year, it might have ended its tightening cycle and would begin to cut rates in 2027.

Gold rose by 0.4% to $4,049, regaining some of its losses after falling 2.6% on the previous trading day. Previously, a stronger U.S. dollar put pressure on precious metals.

Hedge Fund Giant Warns: Crowded ‘Diversified Trading’ May Become a ‘Amplifier’ of Market Volatility

As global tech stocks experience severe volatility, a popular trading strategy on Wall Street that relies on the differentiation of individual stocks is facing the risk of being affected by the market's resynchronized fluctuations.

Parallax Volatility Advisers CEO Will Bartlett warns that diversified stock trading has become a 'time bomb'.

He said, "Diversified trading is a time bomb with a countdown. It's only a matter of time before it really explodes."

This top Wall Street hedge fund manager stated that investors who are enjoying the golden age of trading gold with diversified stock portfolios should be prepared to face potential losses in the event of a sudden market reversal.

Bank of America casts a cold shower: Don't count on the S&P 500 in 2027; it will be the world's most crowded market for trading.

Bank of America analysts believe that by 2027, the S&P 500 index may struggle to serve as a basis for market bullish sentiment.

Savitra Subramanian, head of U.S. equities and quantitative strategies at Bank of America, stated in the program: "We are not particularly bullish on this index. I think there are inherent risks in the index itself. Another concern for me is that over the past thirty to forty years, the S&P index has seen net inflows of funds every year; we have never experienced a market environment where there is a net outflow of funds from the index. Therefore, I am somewhat worried about this, as investors are now quite saturated with stocks across various assets. Just look at individual investors and asset owners; what is the most crowded stock code in the world? It's the S&P 500 index."

Focus on Individual Stocks

New cloud provider CoreWeave sees a 15% surge in stock price. The company released financial reports showing revenue that exceeded analysts' expectations, and the loss margin was also lower than the market's forecasts.

NVIDIA rose by 5%. Earlier this week, its stock price suffered a significant decline, but this rise helped to recover some of the lost ground. Entering the trading session on Wednesday, the stock's annual weekly cumulative decline was close to 10%.

As the service provider for the GPS ground backup positioning system, NextNav's stock price has risen by 9%. The company's revenue in the third quarter nearly doubled year-on-year, and the quarterly loss per share narrowed from $0.12 last year to $0.04. The company disclosed that as of September 30, cash on hand had increased from $152.1 million on December 31 last year to $264.1 million.

Talen Energy The stock price is up nearly 5% at the current time. This power producer and energy infrastructure company has signed a seven-year agreement to sell 750 megawatts of generating capacity to an investment-grade counterparty.