Markets Today: How Investors Should Act

🚫 Global markets remain in a heightened caution mode. Yesterday’s sharp pullback, triggered by a cooling of momentum in the AI leader segment, forced participants to revise expectations regarding the Fed’s next rate cut. Confidence in a soft policy has weakened, putting pressure on risky assets and making the market more sensitive to macroeconomic data.

Key factors affecting the market today:

1. Japan announced a large stimulus package worth 21.3 trillion yen (reported here).
   This decision increases the likelihood of heightened volatility in the Japanese currency and potential intervention by the Bank of Japan in case of excessive exchange rate fluctuations. The USD/JPY pair may become one of the most dynamic in the coming days, so traders and investors should closely watch market reactions and regulator comments.
2. Bitcoin dropped to around $85–86k.
   Capital outflows continue in the crypto market, indicating caution among major players. The asset does not yet show a stable recovery signal, and attempts to rise are quickly suppressed. In such an environment, any aggressive buying appears premature.
3. The AI and semiconductor segment pulled back almost immediately after strong reports.
   Despite positive earnings from several companies, the market overestimated expectations and quickly moved to profit-taking. This suggests that participants consider current levels too high for confident entry without confirmation of demand. Investments in this sector require extremely careful risk management.

What investors can do:

1. Reduce risk exposure.
   If your portfolio includes leverage or a high proportion of volatile assets, it’s reasonable to reduce positions or move part of the funds into more defensive instruments. Amid uncertainty regarding Fed policy, this helps smooth potential fluctuations.
2. Regarding AI and chip company stocks
   Avoid trying to buy assets amid sharp noise or short-term inflated expectations. It is important to wait for trend confirmation — such as a retest of support levels and an increase in trading volumes. Without these elements, entering carries additional risk.
3. Regarding Bitcoin
   The most rational approach is to wait for consolidation to form and for stable volumes to confirm buyer interest. An alternative scenario is trading with small positions and mandatory protective stop-losses. In the current phase, momentum is unstable, so a cautious strategy is justified.
4. Monitor PMI and manufacturing data releases.
   These indicators can determine the mood of the next trading session and provide insight into the state of the economy, which is especially important in an environment of uncertain rate expectations.