MPC Morning Call 27th November 2025 – Turkey Trap Rally continues on recycled “rate cut” optimism
The “Turkey Trap” rally continued on rate cut optimism news from 3 days ago as the repeating media cycle and light volume have combined to exaggerate the rally
Overnight – Turkey Trap Rally continues on recycled “rate cut” optimism The “Turkey Trap” rally continued on rate cut optimism news from 3 days ago as the repeating media cycle and light volume have combined to exaggerate the rally AI-focused tech stocks advanced as investors regained some confidence in the sector, with NVIDIA Corporation and Oracle Corporation rebounding after recent losses on optimism around Oracle’s AI partnership with OpenAI. Dell Technologies shares jumped after the company issued a strong outlook, highlighting surging demand for its AI servers that frequently use Nvidia chips. At the same time, broader tech and AI-linked shares remain volatile after steep November declines amid ongoing worries about stretched valuations. Dell now expects fourth-quarter revenue between $31 billion and $32 billion, well above earlier market estimates of about $27.6 billion, and has raised its fiscal 2026 revenue target to a range of $111.2 billion to $112.2 billion, alongside a higher adjusted earnings-per-share forecast of $9.92. In contrast, HP slid after issuing weak guidance and announcing plans to cut around 10% of its workforce. Outside tech, Deere & Company shares fell on softer fourth-quarter profits pressured by weaker margins in core farm machinery, while Urban Outfitters surged on third-quarter sales growth of over 12% to a record $1.53 billion. Macro sentiment improved as traders increasingly bet that the Federal Reserve will cut interest rates by 25 basis points at its December 9–10 meeting, with market pricing suggesting an implied probability above 80%, up sharply from roughly 40% a week earlier. Softer September retail sales and a spike in initial jobless claims above 200,000 have reinforced the view that growth is cooling, putting extra focus on the Fed’s Beige Book, which previously flagged stable overall activity but signs of softening via more layoffs and weaker spending among lower- and middle-income households. Investors are also watching for the delayed PCE price index data on December 5 and speculation about a new Fed chair, with officials indicating President Donald Trump may name a successor to Jerome Powell before Christmas, and Kevin Hassett seen as a leading candidate favouring lower rates. None of this is new and the movement in the broader market now runs the risk of outsized bet on rate cuts. ASX Overnight: SPI 8646 (+0.23%)
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