The Bank of England delivered its first rate hike in more than three years on November 5, lifting its policy rate to 4.0% with a unanimous MPC vote, citing Middle East conflict risks and a forecast for UK inflation approaching 5% by mid-2027. The ECB held steady but explicitly flagged a potential December move after eurozone inflation surged to a three-year high of 4.0% in October, driven by energy and food, while the RBA's fifth hike of 2026 this week signals Australian tightening is nearing its terminal phase. Geopolitical risk around the Iran conflict and Strait of Hormuz restrictions continued to underpin energy markets even as oil pulled back sharply on diplomatic progress hopes following the US midterm results. The VIX collapsing 20.26% to 16.61 reflects the relief rally of November 4, but the subsequent November 5 sell-off in US tech suggests post-election optimism is already fading and sentiment remains fragile.
For Asia-Pacific markets opening today, the overnight data presents a bifurcated picture: the strong November 4 US session — S&P 500 +1.58%, Dow +3.03% — provides a constructive backdrop that already fed through into the ASX 200's 2.61% gain and Shanghai's 2.16% advance, but the sharp November 5 US reversal (S&P –4.36%, Nasdaq –5.52%) has not yet been priced into Australian markets. The Nikkei's 1.42% decline and Korea's KOSPI weakness on November 5 signal that Asian markets are beginning to absorb the tech-led US selloff. Gold above US$4,097/oz and iron ore holding near US$91.95/t provide support for Australian resource names, while a softer AUD at 0.6934 adds a currency tailwind for miners reporting in USD. The key question for the ASX open is whether the materials and gold strength of the prior session can offset emerging pressure on technology and energy stocks from the US reversal.