US equity futures are higher led by small caps, with sentiment TACOed for a second consecutive weekend thanks to Trump’s comments that the US will “be fine” with China ahead of trade talks between the two sides. It’s going to be a busy week for earnings, with Tesla, Netflix and General Motors among companies reporting. As of 8:00am, S&P futures are up 0.3%, with Nasdaq futures up 0.4%. Pre-mkt, Mag7 names are all higher; Tesla climbed in pre-market trading ahead of its report Wednesday, the first from the Magnificent Seven cohort of big-tech companies. There are also notable moves higher in Fins as credit concerns subside. Treasuries, which rallied last week amid trade-war and credit quality jitters, are steady today around 4.00% on the 10Y. The yield curve is flatter with 2Y and 5Y yield higher, while 10Y yields are mostly unchanged at 4.00%. Ahead of a resumption in US/China talks this week in Malaysia, Trump said rare earths, fentanyl and soybeans are the US’s top issues with China, and told Fox News that his threatened 100% tariff on Chinese goods was “not sustainable,” though “it could stand.” Concerns about more “cockroaches” in credit markets also ease ahead of many small regional banks reporting this week. The USD is higher. Commodities are also higher across all 3 complexes, yet crude is weaker. Almost 20% of SPX reports this week. The US economic calendar is empty today. September’s delayed CPI print will be released Friday. Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision began Saturday
In premarket trading, Magnificent Seven stocks are all higher (Amazon +0.1%, Tesla +1%, Apple +1.4%, Meta +0.4%, Nvidia +0.2%, Microsoft flat, Alphabet +0.2%).
In corporate news, Amazon Web Services suffered a widespread disruption, affecting services for companies including Perplexity, Coinbase and Robinhood. Sales of Apple’s latest generation of iPhones are off to a faster start than usual, with its most basic model surging in popularity. Kering agreed to sell its beauty division to L’Oreal in a €4 billion deal.
Amid fears about more “cockroaches” in credit markets, Bloomberg Economics Chief US Economist Anna Wong said that “the problem isn’t yet flashing red.” But nerves remain. Deutsche Bank strategists noted that overall equity positioning tumbled last week in the biggest weekly cut since the April selloff, and sentiment fell to net bearish for the first time in four weeks, which is odd because Goldman saw the reverse: the first positive sentiment print since February.
Meanwhile, Morgan Stanley’s Michael Wilson said that there needs to be follow through on a US-China deal and stability in EPS revisions to clear the risk of a further correction in stocks.
“The market trend is rather positive with this new lull on the trade war front,” said Andrea Tueni, head of sales trading at Saxo Banque France. “The earnings so far have been rather good and the AI frenzy has helped a comeback from the tech sector.”
The latest bout of volatility has spared a sector rotation in the US and Europe, with investors taking profit in crowded sector while defensive plays are back in favor. The Relative Rotation function on the terminal shows momentum has faded for tech in the US, while optimism has returned to health care.
Elsewhere, China’s economy grew at the weakest pace in a year in the third quarter as a boost from booming exports was undermined by weak spending and investment. The 4.8% expansion was still a touch better than economists expected. The data came just ahead of a four-day meeting of China’s political leaders, with markets watching for fresh measures to extend the country’s strongest equity rally in eight years and shore up the yuan.
The new tariff threats “were ultimately a case of ‘the boy who cried wolf,’ and the more it occurs, the less people take it seriously,” said Michael Field, an analyst at Morningstar Investment Service. “Investors took a little bit off the table and now maybe they’re getting a bit more optimistic as we head into earning season.”
Back home, as the government shutdown entered its 20th day, a keenly-awaited CPI reading will finally be released on Friday. Bloomberg Economics expects core consumer price inflation, which strips out volatile food and energy prices, to slow to 0.23% in September from 0.35% the prior month, taking the annual measure down to 3.0% from 3.1%. That should give the Fed a green light to cut rates next week.
European stocks reboudned, with the Stoxx 600 rising 0.6%, paring Friday’s decline as signs of easing global trade frictions helped boost broader risk sentiment. Industrial,bank and energy stocks are leading gains while autos provide a drag. The CAC 40 underperforms as a sharp drop in BNP Paribas shares weighs on the index. Here are the biggest movers Monday
Earlier in the session, Asian stocks advanced across the board, lifted by hopes for policy support from a key political meeting this week in China and easing trade tensions. The MSCI Asia Pacific Index rose 1.9% to close at a record, propelled by shares of TSMC and Tencent. Japan’s benchmarks were among the region’s best performers on expectations that stimulus advocate Sanae Takaichi will become the country’s first female prime minister. Stocks in Hong Kong and China also rallied as the so-called Fourth Plenum, a four-day gathering that helps shape China’s long-term policy, kicked off in Beijing. The Hang Seng China Enterprises Index rose 2.5%, the most since August, after officials affirmed the economy is on track to reach this year’s expansion target. The CSI 300 Index added 0.5%, even as data showed the weakest growth pace in a year. There’s “optimism building around possible new measures to support domestic consumption and stabilize the property sector,” Billy Leung, an investment strategist at Global X Management, said, referring to the plenum. Singapore and Malaysia markets were closed for a holiday. Vietnamese stocks plunged by the most in six months amid concerns over corporate bond issuance violations.
In Fx, the Bloomberg Dollar Spot Index was flat, pausing after its slide to its lowest in nearly two weeks late last week
USD/JPY slipped 0.1% to the day’s low of 150.27, before reversing; the yen clawed back initial losses as an agreement between the LDP and the Japan Innovation Party quells some political uncertainty. The yen was also bolstered by hawkish comments from a BOJ policymaker. “The key focus is whether they maintain a consistently hawkish stance,” and whether they’ll signal a strong intention to hike again in December, said Marito Ueda, general manager of market research department at SBI Liquidity Market, referring to the BOJ. The kiwi and Swedish krona outperform slightly among the G-10 currencies.
In rates, treasuries are little changed on the day, with yields across the curve within a basis point of Friday’s closing levels. US 10-year is near 4.01%; UK counterpart outperforms and Germany’s lags, each by around 1bp; French 10-year is about 2bp cheaper on the day. In Europe, French bonds underperformed after S&P Global Ratings downgraded the nation’s sovereign credit score in an unscheduled move late Friday, widening the 10-year yield spread with Germany to around 79 basis points after S&P downgraded France. Monday session has no major scheduled events. Treasury auctions later this week include 20-year bond reopening Wednesday and 5-year TIPS new issue Thursday.
In commodities, spot gold is little changed. WTI crude futures fall 0.3%. Bitcoin rises 1.8%.
US economic calendar calendar empty for the session. September’s CPI print, delayed from last week by US government shutdown that began Oct. 1, is expected to be released Friday. Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision began Saturday
A more detailed look at global markets courtesy of Newsquawk
APAC stocks were higher amid tailwinds from recent trade-related rhetoric including US President Trump’s comments on Friday that 100% tariffs are not sustainable and that he will be meeting with Chinese President Xi, while it was also reported that US Treasury Secretary Bessent and Chinese Vice Premier He engaged in candid, in-depth and constructive discussions regarding trade and will meet in person in the week ahead to continue their discussions. ASX 200 marginally gained amid strength in tech and industrials, although the index notably lagged behind regional peers amid weakness in the commodity-related sectors. Nikkei 225 surged to a fresh all-time high above the 49,000 level amid a reignition of the Takaichi trade with the LDP leader on track to become Japan’s first female PM following an agreement to form a coalition with Japan’s Innovation Party. Hang Seng and Shanghai Comp joined in on the positive mood with the Hong Kong benchmark led higher by strength in tech, and as participants digested the latest Chinese data releases, including GDP, Industrial Production and Retail Sales which either matched or topped forecasts, while the CPC Central Committee is also holding a four-day closed-door meeting through to Thursday to discuss the five-year development plan.
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European bourses (+0.6%) opened firmer across the board, but have sauntered off best levels as markets digest the ongoing AWS outages. European sectors hold a positive bias. Defence names lead the pile, driven by the heightened geopolitical tensions between both Israel/Hamas and Russia/Ukraine. As for stock specifics, BNP Paribas (-9%) moves lower as traders digest a recent Sudan-ruling and potential implications, alongside S&P’s unscheduled downgrade on France. Elsewhere, Kering (+3.8%) benefits after agreeing to sell its beauty division to L’Oreal (+0.5%).
The mood music on tariffs has sounded much more positive in recent days. As it stands, President Trump has threatened additional 100% tariffs on China from November 1, but Treasury Secretary Bessent said that he’d be meeting with China’s Vice Premier He Lifeng in person this week. And on Friday, President Trump said he thought that a meeting with Chinese President Xi in South Korea would still go ahead, and said “I think we’re getting along with China”. So that’s added to investor expectations that those 100% tariffs won’t come into force, and if we look at Polymarket, it’s currently pointing to just a 7% chance they come into effect by November 1.
As all that’s happening, we still have the ongoing government shutdown in the US, which is now on day 20. Bear in mind that only two shutdowns have been longer than this one, which were the 35-day shutdown in 2018-19, and the 21-day shutdown in 1995-96. And as it stands, there’s still no sign of a compromise between Republicans and Democrats that would see the government re-open. In terms of the market implications, this is still affecting the flow of economic data, so we’re not getting regular releases like the weekly initial jobless claims, and we don’t have the payrolls number for September either. However, this week we will get the postponed CPI release for September, which is coming out on Friday, just in time for the FOMC meeting the week after.
In terms of what to expect, our US economists are looking for headline CPI to come in at a monthly +0.42% pace, which would push up the year-on-year rate to +3.1%, and be the strongest monthly print since January. Meanwhile for core CPI, they expect that to come in at +0.32%, with the year-on-year print remaining at +3.1%. Within the data, they’re still looking for signs of tariff impacts in core goods, with a focus on categories like apparel and new vehicles that haven’t yet seen a meaningful tariff pass-through. For more information, see their full preview here.
Otherwise this week, another key data highlight will be the October flash PMIs on Friday, which will give us an initial indication as to how the global economy has fared at the start of Q4. We also have a few CPI prints elsewhere, including from Japan, the UK and Canada. Then on the earnings side, we’ve got more than 80 companies in the S&P 500 reporting this week, including Tesla and Netflix, along with more than 80 from the STOXX 600, including Barclays, NatWest and SAP.
Overnight in Asia, markets have got the week off to a strong start this morning, as easing trade tensions has lifted equities across the region. Japan’s Nikkei (+2.94%) has been the biggest outperformer, which has got a further boost after the Liberal Democratic Party agreed a coalition deal with the Japan Innovation Party, setting up Sanae Takaichi to become the country’s next Prime Minister. She’s been pro-stimulus, similar to her predecessor Shinzo Abe, and their 5yr bond yield (+4.8bps) is up to a post-2008 high of 1.23% overnight.
Meanwhile in China, the Q3 GDP figures overnight have shown growth decelerating to +4.8% year-on-year, the slowest in a year. However, that’s marginally better than the +4.7% reading expected by the consensus, so we haven’t seen much of a direct market reaction, and indices including the CSI 300 (+0.80%) and the Shanghai Comp (+0.69%) have both risen this morning. That’s been echoed elsewhere in Asia, with South Korea’s KOSPI up +1.02%. And US and European equity futures have similarly moved higher, with those on the S&P 500 (+0.33%) and the DAX (+0.67%) pointing to solid gains. The main point of weakness is among French bond futures, which have underperformed their German counterparts this morning after S&P’s move on Friday to lower France’s credit rating from AA- to A+.
Recapping last week now, it was a topsy-turvy one for markets, with several different themes to digest. Initially, risk assets bounced back strongly from the US-China sell-off on the previous Friday, but there was then a big slump thanks to those fresh concerns about regional banks, before more positive trade headlines and earnings results led to a fresh recovery. So at the height of those fears, the VIX index hit an intraday peak of 28.99pts, something we hadn’t seen since April just after the Liberation Day turmoil. But that volatility ultimately subsided, with the VIX ending the week down slightly at 20.78pts, whilst the S&P 500 also ended the week up +1.70%. Those gains were even stronger for the NASDAQ (+2.14%), with a boost from OpenAI’s deal with Broadcom (+7.61% last week) to purchase 10 gigawatts of computer chips. However, regional banks still struggled given the broader concerns around credit quality, and the KBW regional bank index fell -1.72% in its 4th consecutive weekly decline.
Meanwhile for US Treasuries, there was a rally across the curve, particularly at the front-end as investors dialled up their expectations for Fed rate cuts. That was partly driven by the general risk-off tone amidst the regional bank issues, but lower oil prices also helped to lower inflation expectations. So the 1yr US inflation swap fell -4.7bps last week to a 3-month low of 3.10%. And in turn, the amount of cuts priced in by the June 2026 meeting was up +6.3bps on the week to 101bps. So the 2yr yield ended the week -4.4bps lower at 3.46%, whilst the 10yr yield fell -2.3bps to 4.01%.
Over in Europe, there was a very divergent performance. For instance, France’s CAC 40 moved up +3.24% after French PM Lecornu survived no-confidence votes in the National Assembly, whilst the index was also supported by strong earnings from LVMH (+10.93%). However, the STOXX 600 was up by a smaller +0.37%, and the German DAX actually fell -1.69% last week alongside declines for Italy’s FTSE MIB (-0.69%) and the UK’s FTSE 100 (-0.77%). For bonds, however, there was a more consistent rally, with yields on 10yr bunds (-6.4bps), OATs (-11.8bps), and BTPs (-8.8bps) all moving lower. And over in the UK, 10yr gilts (-14.4bps) outperformed as weaker-than-expected data saw investors dial up their expectations for Bank of England rate cuts.
Lastly, precious metals continued to perform very strongly, with both gold and silver prices posting a 9th consecutive weekly gain for the first time since 2020. For gold, that meant prices rose +5.82% last week to $4,252/oz, and they even hit an intraday record of $4,380/oz at one point. Meanwhile silver was up +3.53% to $51.92/oz. Otherwise, Brent crude oil prices fell -2.30% last week to $61.29/bbl, which came as a backdrop of rising OPEC+ supply and lingering trade uncertainty was boosted by easing fears of restrictions on Russian oil. That followed a call between President Trump and President Putin, who agreed to a meeting in Budapest
