(Nov 3): US equity-index futures advanced on Monday, suggesting that the seven-month rally in global stocks may still have room to run as strong tech earnings and easing US-China trade tensions lift sentiment.
Contracts for the S&P 500 and the Nasdaq 100 indices rose 0.4% after gains on the underlying gauges last Friday, with earnings optimism outweighing worries about a rally that’s heavily concentrated on tech giants. Asian shares rose 0.3% as South Korea climbed to a new peak. Indices in China dropped. Markets in Japan and cash trading of Treasuries were closed on Monday due to a holiday.
Commodity markets were in focus, with gold recovering from early declines after China scrapped a long-standing tax incentive. West Texas Intermediate crude oil rose as much as 0.8% after Opec+ decided to pause output increases during the first quarter. Treasury futures inched higher while Australian yields rose ahead of an interest-rate decision by the country’s central bank on Tuesday.
Stocks have rallied to record levels, even after Federal Reserve chair Jerome Powell warned that a December rate cut isn’t a foregone conclusion and megacap tech earnings were mixed. Trade tensions have also eased, with Beijing signalling plans to suspend new export controls on rare earth metals and end investigations into US firms in the semiconductor supply chain.
“Powell’s Federal Open Market Committee press conference last week threw a curveball to the markets, but the broader context of one-year ceasefire in the US-China trade relations and global artificial intelligence (AI) boom should keep investors in a positive mood at the start of November,” said Homin Lee, a senior macro strategist at Lombard Odier Singapore. “The market’s focus will be on private sector data releases in the US as well.”
See also: BofA’s Hartnett sees gold, China stocks as best AI boom hedges
From geopolitics to trade risks, a US shutdown and high valuations, traders had a lot to digest in October. Ultimately what prevailed was confidence in US companies and bets that rate cuts will keep momentum going for profits. The AI theme was also a key theme just as several megacap tech firms reported earnings.
Since its April slump, the S&P 500 has roared back nearly 40%, marking its longest monthly winning streak since 2021. The Nasdaq 100’s performance has been even more striking: a seven-month rally, its best run in eight years, powered by tech’s strong balance sheets and unrelenting AI optimism.
Attention was also on the commodities market as China announced the scrapping of a long-standing gold tax incentive in a potential setback for consumers in one of the world’s top bullion markets. The precious metal surged to a record high in early October, aided by a buying frenzy among retail investors, before dropping sharply in the final two weeks of the month.
See also: Asian equities, US futures rally as tech results lift sentiment
Bullion fell as much as 1% earlier, as the plan could hurt demand in one of the largest precious-metals markets.
“The tax changes in gold’s heaviest consumer nation will dent global sentiment,” said Adrian Ash, a director of research at BullionVault. “This news could prove very welcome to traders and investors hoping for a deeper correction after last month’s spike.”
Meanwhile, oil rose. Opec+ said it will pause output increases after making another modest hike next month.
The move came as the market faces the prospect of a ballooning oversupply that has seen Brent lose 10% over the past three months. Prices have pulled back from a five-month low after increased US sanctions on Russia created question marks about the supply prospects from the major exporter.
Traders will also be watching a packed week for global central banks. Policymakers from Australia to Sweden and Brazil are expected to keep rates steady, while their counterparts in Mexico may deliver a cut. The Bank of England is expected to skip an interest-rate cut on Thursday.
In the US, the ongoing federal shutdown continued to cloud the outlook by disrupting key economic data releases.
Corporate news:
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- Berkshire Hathaway Inc’s cash pile soared to US$381.7 billion in the third quarter, a fresh record, and operating earnings surged 34% at chief executive officer Warren Buffett’s conglomerate.
- Westpac Banking Corp’s profit came in line with estimates as growth in mortgages and loans to businesses buoyed the Australian lender.
- Distressed Hong Kong builder New World Development Co has launched an exchange offer for its outstanding perpetual notes, issuing up to US$1.9 billion worth of new securities, according to an exchange filing.
Some of the main moves in markets:
Stocks
- S&P 500 futures had risen 0.3% as of 10.43am Tokyo time on Monday
- Australia’s S&P/ASX 200 fell 0.3%
- Hong Kong’s Hang Seng rose 0.3%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1527
- The Japanese yen was little changed at 154.12 per dollar
- The offshore yuan was little changed at 7.1224 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to US$109,573.15
- Ether fell 0.5% to US$3,840.42
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.08%
- Japan’s 10-year yield advanced one basis point to 1.655%
- Australia’s 10-year yield advanced three basis points to 4.33%
Commodities
- West Texas Intermediate crude rose 0.3% to US$61.18 a barrel
- Spot gold fell 0.3% to US$3,991.80 an ounce
Uploaded by Tham Yek Lee
