Gold surges past $4,135 as Asian shares diverge

Highlights of the session:

• AI and chip shares continued falling in Asia. South Korea's Kospi dropped roughly 4.8% after a sidecar shut program trading, and the Nikkei slid around 1.5%.
• The broader Topix gained around 1.4%. Meanwhile, China's Shanghai Composite rose about 3.6% and Hong Kong's Hang Seng climbed roughly 3%.
• SoftBank dropped nearly 6%, weighed by Arm's decline, the AI selloff, and a Financial Times report that China blocked its $5.4 billion acquisition of ABB's robotics business.
• Oil prices remained lower on optimism over US-Iran talks, although the IRGC reported new tanker incidents in the Strait of Hormuz.
• Gold built on Wednesday's 3% surge, reaching about $4,135.
• Minutes from the Bank of Japan indicated board support for more rate increases. The Bank of England is forecast to lift rates to 4% at 12:00 GMT.

Stock markets

Asian markets diverged sharply on Thursday. The rotation away from AI and chip stocks, which started on Wall Street overnight, intensified, while most other sectors gained on falling oil prices after Democrats secured both houses in the US midterm elections.

South Korea took the worst hit. The Kospi fell approximately 4.8% and the Kosdaq around 4.3%. The selling was severe enough to trigger a sidecar—a five-minute halt in program trading linked to sharp fluctuations in KOSPI 200 futures. The exchange added that trading will start an hour later on November 19 to clear roads for the national college entrance exam.

Tokyo's market split similarly. The broader Topix gained roughly 1.4%, driven by real estate, retail, and pharmaceutical stocks, while the tech-focused Nikkei dropped about 1.5% as chip equipment makers Advantest and Tokyo Electron declined. Most Nikkei components advanced, but declines in a few heavily weighted tech shares pushed the index down. Sony and Nintendo are reporting after the market close.

SoftBank Group dropped roughly 5.8% to about ¥4,020. It had already fallen around 5% in the morning, pressured by a decline in Arm after its earnings and the AI selloff, before the Financial Times reported during the midday break that Chinese regulators had informed the company they would not approve its $5.4 billion purchase of ABB's robotics unit. The National Development and Reform Commission delivered the decision, the report said, and SoftBank is evaluating whether to reapply.

Chinese markets went in the opposite direction. The Shanghai Composite surged about 3.6% and Hong Kong's Hang Seng climbed roughly 3%.

US stock index futures stood at about 7,705 for the S&P 500 and 28,271 for the Nasdaq 100.

Crude and the Strait of Hormuz

Oil prices remained depressed, with Brent near $97 a barrel and WTI around $88, as the midterm outcome boosted expectations of a diplomatic resolution with Iran. President Trump stated the US has no immediate plans for military action, and Qatar increased its mediation efforts, but an Iranian official noted the two sides are still far from an agreement.

Late in the day, Iran's Islamic Revolutionary Guard Corps asserted that two tankers and a tugboat had caught fire in the Strait of Hormuz, and separately claimed that a tanker traveling on an unauthorized route had hit a mine. The allegations could not be independently confirmed. They follow several similar IRGC statements in recent weeks and serve as a reminder of the threat to the diplomacy-led decline in oil.

A separate Bloomberg report said Abu Dhabi National Oil Co. is exploring a third pipeline to circumvent the Strait of Hormuz, which could be accessible to other producers. ADNOC dismissed the report as incorrect and entirely speculative.

Gold prices

Gold continued its advance to about $4,135 an ounce, extending Wednesday's approximately 3% surge, the largest one-day gain since August. The rise has occurred alongside lower oil, a weaker dollar, and softer Treasury yields, not rising geopolitical tensions. This aligns with a thesis from Citi, which contends that a sustained drop in oil could prompt the Federal Reserve to pivot from tightening to easing, reigniting gold's uptrend, with price targets of $4,500 in three months and $5,000 in six to twelve months. Fed funds futures still indicate a high probability of a rate hike in December, though.

Central bank updates

The minutes of the Bank of Japan's September session, during which it lifted rates to 1.25% by a 7-2 vote, indicated that officials agreed to continue raising borrowing costs. One member noted the pace may need to quicken if inflation exceeds expectations, while others highlighted a nearly 50% spike in crude oil since July as a major inflation risk. The government's representative advised the bank to consider the cumulative impact of earlier increases. A private survey revealed that Japan's services sector grew at a slightly quicker pace in October, but hiring decelerated and cost pressures remained acute.

Swiss National Bank Chairman Martin Schlegel stated that October's 1.5% inflation rate took the central bank by surprise and that it would not hesitate to alter policy as necessary, boosting expectations of a rate increase in December.

The Bank of England is broadly forecast to increase its Bank Rate by 25 basis points to 4% at 12:00 GMT (07:00 ET), marking its first rate increase of this cycle. Attention will also be on its forward guidance and updated inflation projections.

Currency markets

The USD/JPY pair traded near 157.80, AUD/USD around 0.7013, and EUR/USD around 1.1263. Australia's merchandise trade surplus expanded to roughly A$2.8 billion in September, the highest in seven months, driven by increased LNG and metals exports and a significant decrease in gold imports.

Other items in focus

According to the Wall Street Journal, AstraZeneca has proposed to buy obesity drug developer Rhythm Pharmaceuticals for approximately $10 billion, which pushed Rhythm's stock up 28%.

Goldman Sachs estimates that states expected to tighten regulations on data centers account for roughly 45% of planned US capacity, but it anticipates any halts to be temporary. UBS increased its predictions for AI capital expenditure, while Citrini Research stated that expansion in AI infrastructure investment has already topped out.

In US corporate results, Qualcomm topped expectations but fell on weaker profit outlook, while Snap exceeded profit estimates but fell short on user numbers.