CME Futures Trading Halted; Trump Permanent Migration Ban | Horizons Middle East & Africa 11/28/2025

Key Concepts:

• CME Group Outage: Technical issues halting trading of commodities futures and options.
• OPEC+ Meeting: Discussion on oil production quotas and market supply.
• Federal Reserve Rate Cut: Market expectations and implications for global equities.
• Risk Assets: Investments with higher potential returns but also higher risk.
• Dovish/Hawkish Cut: Monetary policy stances regarding interest rate changes.
• Third World Countries: Outdated and ill-defined term for less developed nations, used in the context of immigration policy.
• Bamboo Scaffolding: Construction material implicated in the Hong Kong fire disaster.
• Narco-State: A country whose economy is heavily dependent on the trade of illegal drugs.
• Circular Deals (AI Industry): Investments flowing between companies that also buy each other's products/services, raising bubble concerns.
• High-Bandwidth Memory (HBM): Critical component for AI chips.

Market Overview and CME Outage

The global markets are experiencing a period of mixed signals. European stock futures are pointing to modest gains, extending a four-day winning streak, while the MSCI Asia Pacific index is slightly down by 0.2%. The Japanese Yen is at 156 this week, influenced by inflation data and anticipation of the Bank of Japan's (BOJ) next steps, with a potential interest rate hike in December being considered. Brent crude is trading at $63 per barrel, up 0.4%.

A significant technical issue has halted trading of commodities futures and options on the Chicago Mercantile Exchange (CME). The CME Group posted on X (formerly Twitter) that a cooling issue at one of CyrusOne's data centers is under investigation. This outage affects a wide range of assets, including WTI crude, palm oil contracts, U.S. Treasuries, and S&P 500 futures. The extent and duration of the impact are currently unknown, with the CME expected to issue a notice upon resolution.

OPEC+ Meeting and Oil Market Outlook

The upcoming OPEC+ meeting this weekend is a key focus for the oil market, which has been under pressure, experiencing its worst run since 2023. Delegates are expected to confirm the addition of two million barrels of oil per day to the market in 2026, despite concerns about a significant glut projected for that year. Compliance with existing quotas remains a long-standing issue, with Saudi Arabia being the member with the greatest capacity to increase production. Geopolitical factors, such as a potential peace plan in Ukraine, could also significantly impact oil prices, though not immediately.

Federal Reserve Rate Cut Expectations and Market Positioning

There are growing bets on an interest rate cut by the Federal Reserve, contributing to global equities being on track for their best week since June. Market probability for a December Fed rate cut has surged from 30% to 80% in just over a week, aligning with recent equity market rallies. This shift follows statements from Fed officials, including Jay Powell, suggesting a "live meeting" for a potential cut.

The Bank of Singapore anticipates the Fed will pause rate cuts in Q1-Q2 2026 due to uncertainty regarding the next Fed head. In terms of portfolio positioning, the Bank of Singapore is currently overweight risk assets, specifically Japanese equities, and has reduced but still maintains an overweight position in European equities. They emphasize diversification across asset classes, including fixed income, gold, and alternatives, to protect portfolios from potential downside risks and volatility over the next 12-18 months. This includes diversifying regional and factor exposure beyond U.S. tech and growth.

Regarding Asia-Pacific (APAC) equities, the overweight position is predominantly a China and Hong Kong equity story. This is attributed to favorable valuations compared to historical data and peers, potential benefits from a weaker U.S. dollar, and the easing cycles in developed markets. Gold is viewed as a valuable diversifier against higher inflation and geopolitical risks, especially given policy uncertainties from the U.S. administration.

Donald Trump's Immigration Policy Proposal

Donald Trump announced on social media that he would "permanently pause migration from all so-called Third World countries" to allow the U.S. system to "fully recover," claiming current immigration policy has "eroded national progress." The term "Third World" is noted as ill-defined and outdated, originating from the Cold War era and now often used pejoratively for poorer nations. The specific countries targeted remain unclear.

This announcement follows an anti-immigration campaign by the Trump administration and is linked to a recent incident in Washington involving the shooting death of a National Guardsman by an Afghan national. The administration is reportedly using this event to justify stricter immigration restrictions, building on previous measures like ICE raids. Further details on the enactment and scope of this proposed policy are awaited.

Hong Kong Fire Disaster and Safety Concerns

Hong Kong experienced one of its deadliest fires in decades, with at least 94 confirmed deaths and 76 injuries across seven burnt-out apartment towers. Hundreds more are left homeless. A criminal investigation is ongoing into the cause.

Legislative Council Member Regina Epp raised concerns about the continued use of bamboo scaffolding for large-scale renovations, suggesting it should be restricted to smaller projects. The Labor Department had previously found some materials used in the renovation were non-compliant with government standards. The combination of bamboo scaffolding, non-fire retardant mesh netting, dry weather, and wind is believed to have caused the rapid spread and colossal loss of life and property.

Bloomberg's China correspondent, Minmin Low, reported from near the scene, highlighting the chaotic situation and the organic emergence of resident-led donation centers. Many survivors are anxious to return home or secure transitional housing, with the government working to find a thousand units across Hong Kong and hotels offering temporary accommodation. The Labor Department had conducted 16 inspections at the renovation site, issued multiple warning letters about substandard materials, yet "nothing was done to prevent the worst tragedy." This raises questions of accountability for officials and contractors, with a task force investigating potential corruption in oversight.

Ukraine War Peace Talks

Russian President Vladimir Putin stated that Donald Trump's proposals for ending the war in Ukraine "could be the basis of future negotiations," though he cautioned that no final draft exists. Putin acknowledged that the proposal had evolved after talks with the U.S. and Ukraine, and that the U.S. side was considering Russia's interests. However, he also maintained Russia's position, stating that hostilities would only cease if Ukraine cedes territory in the eastern Donbas region.

Despite the White House suggesting progress, European leaders remain skeptical, assessing that Putin is not yet ready for a ceasefire and may be dragging out the process to buy time. A U.S. delegation, including Steve Witkoff, is expected to visit Moscow for further negotiations. Hungarian Prime Minister Viktor Orban, who has maintained ties with Moscow and been an impediment to a more aggressive EU stance on Russia, also plans to visit Putin to discuss oil and gas supplies and the conflict.

China's Mega Ports and Geopolitical Strategy

China has invested billions of dollars in building a network of over 100 ports across every continent except Antarctica, strategically clustered around key maritime choke points crucial to global trade. An example cited is a China-funded mega-port in Peru, expected to triple Peru's exports and cut shipping times by 10 days for goods like avocados.

This extensive port network provides China with a strategic advantage amidst rising global trade tensions. However, it also sparks security concerns, as some of these commercial ports have the capacity to host naval vessels, raising questions about their dual-use potential.

India's GDP, Trade Deficit, and US Tariffs

India's Q2 GDP data is expected to show a 7.4% expansion, making it the fastest-growing major economy. However, economists express concern that this growth masks underlying weaknesses. The growth is primarily fueled by government expenditure and investments, while private investments remain sluggish and consumption growth, though spurred by recent government measures, is not ideally exceeding GDP growth.

The economy faces challenges from a sharp drop in exports, a plunging Rupee, and a ballooning trade deficit. The lack of a trade deal with the U.S. and the impact of tariffs are significant factors. Estimates suggest that the absence of a U.S. trade deal could shave off 0.8 percentage points from India's GDP this year, with export orders from the U.S. already declining for two consecutive months (October and September). The widening trade deficit has pushed the Rupee to an all-time low. The IMF has cut India's fiscal growth projections for the next financial year to 6.2% from 6.4%, though Indian officials remain optimistic about a future deal.

Guinea-Bissau Coup and Regional Instability

Guinea-Bissau's new military leader was sworn in following a coup, a day after soldiers arrested the president and suspended election results. The general, flanked by high-ranking military officials, declared sufficient evidence to justify the coup and vowed to fight drug trafficking and corruption. The ousted president has reportedly arrived in Senegal.

Guinea-Bissau, a small nation of 2.5 million, has a history of political instability, experiencing close to 17 coups and only one elected president completing their term. It is labeled a "narco-state" due to its role as a transit point for drug traffickers between Latin America and Europe. This latest coup marks the fifth successfully completed coup in the country. Regional bodies like ECOWAS have had limited success in preventing such power grabs, as seen with Niger, Mali, and Burkina Faso, where military leaders have remained in power for extended periods without significant pushback.

AI Industry: Bubble Concerns and Key Players

The AI industry is under scrutiny for signs of a potential bubble, with concerns about "circular deals" and the sustainability of multi-billion-dollar spending. While some analysts acknowledge a "bubble-like period" in valuations, many believe the underlying fundamentals represent a long-term trend. They argue that the current cycle is driven by supply constraints rather than speculative demand, and that the companies involved are massive with strong financial performance, unlike the dot-com bubble of 2000. Bubbles are also seen by some as beneficial for mobilizing capital and talent into emerging sectors.

NVIDIA is at the center of the "AI money machine," described as "selling the shovels in today's AI gold rush." The company invests in firms that then buy its chips, creating a cycle where capital flows into potentially unprofitable companies, cycles back into data centers, and returns to NVIDIA as revenue. This raises questions about the business model's long-term proof.

Key Asian players are heavily exposed to the AI boom:

• SoftBank: Primarily a financier with active investments (e.g., OpenAI) and stakes in chip companies. It recently sold its entire $5.8 billion stake in NVIDIA to fund its founder's AI ambitions, amplifying market anxiety.
• High-Bandwidth Memory (HBM) chipmakers: Companies producing HBM chips, essential for NVIDIA's products, are seeing rising margins, with demand projected to surge by 45% next year.
• TSMC: The primary chipmaker for NVIDIA, AMD, and Qualcomm. Its recent slowest revenue growth in over a year fueled fears that the AI rally might be unhinged from fundamentals.

Despite skepticism, many remain confident in AI's long-term potential, viewing any "bubble" as merely valuations getting ahead of themselves, not a lack of fundamental growth.

Alibaba Smart Glasses

Alibaba has made a rare foray into hardware, releasing smart glasses in China. These glasses feature built-in translucent displays that superimpose contextual information onto the user's view of their surroundings. Equipped with cameras, microphones, and swappable batteries, international versions are promised for next year.

Conclusion

The global landscape is marked by significant market volatility and geopolitical shifts. Technical issues at the CME highlight infrastructure vulnerabilities in financial markets, while the OPEC+ meeting underscores ongoing challenges in oil supply management amidst geopolitical tensions. Federal Reserve policy remains a central driver for global equities, with strong expectations for a December rate cut, prompting strategic portfolio diversification. Politically, Donald Trump's proposed immigration pause and the Hong Kong fire disaster raise critical questions about social policy and safety oversight. Meanwhile, the Ukraine conflict continues with cautious optimism for peace talks, and China's strategic infrastructure investments reshape global trade. Economic concerns persist in India due to trade deficits and U.S. tariffs, and Guinea-Bissau's latest coup reflects deep-seated regional instability. Finally, the AI industry, while booming, faces scrutiny over its sustainability and potential bubble characteristics, with key players like NVIDIA and TSMC at the forefront of this technological revolution.