Stocks will be looking to round off the month of October in style as risk appetite continues to pick up in the new week. US-China optimism remains the key reason for that, with market players not even flinching about the possibility of Trump tariffs kicking in on 1 November. The expectation now is that the US and China will come to an accord to continue with the trade truce after Trump meets with Xi Jinping later in the week.
S&P 500 futures are now up 0.8% and that carries over from the strong close on Friday to fresh record highs. And that run looks to extend further this week with tech staying rather buoyed. Nasdaq futures are seen up 1.0% currently.
Adding to the positive expectation on US-China talks was the US CPI report last week here. The numbers were softer than estimated though one can argue that the details still makes for a narrow path for the Fed to track for now. The impact of tariffs passthrough continues to be evident but less pronounced in the past months than what many have feared it to be. So, there’s that.
But as we look to the week ahead, it’s all on US-China headlines now. Market players will be hoping for some compromise on the rare earth issue with tariffs to stay as they were before Trump’s latest threats. And perhaps some empty promises on trade such as soybeans purchases, enough to keep Trump and markets happy but in the end all being an illusion once more. A 2019 classic.
