Record Stock Rally Pauses in Asia, Yen Strengthens: Markets Wrap
(Bloomberg) — Global equities paused their record-breaking rally as investors braced for a flurry of earnings from megacap technology companies and policy announcements from major central banks this week.
Asian shares fell 0.5% and futures pointed to a weaker open for Europe. Japanese shares retreated from a record as the yen gained against the dollar, snapping a seven-session slide. Contracts for the S&P 500 were flat after the gauge closed at a record as Chinese and US trade negotiators lined up an array of diplomatic wins for Donald Trump and Xi Jinping to unveil at a summit this week.
“What we’re hoping is for some agreement with hard numbers,” Lorraine Tan, director of equity research for Asia at Morningstar, said in a Bloomberg TV interview. “We’re still going to be skeptical in effect that we do expect heightened risks from tariffs and geopolitics — there is no escape from that.”
Easing trade tensions have helped fuel a stock rally, while US companies have so far emerged largely unscathed by tariffs, protecting margins through price increases and cost cuts. That optimism faces a reality check this week as investors look to the Federal Reserve meeting for clues on the path of rate cuts, while major technology firms including Amazon.com Inc. and Microsoft Corp. reveal whether the earnings momentum can be sustained.
Meanwhile, the yen gained against the dollar after US Treasury Secretary Scott Bessent and newly appointed Japanese Finance Minister Satsuki Katayama discussed exchange rate volatility.
The yen outperformed its Group-of-10 peers, as markets welcomed supportive remarks from Japanese officials and cheered the outcome of a high-profile meeting between US and Japanese leaders in Tokyo. The currency gained also as Japan’s minister for growth strategy Minoru Kiuchi said authorities will keep monitoring the impact of yen weakness on the economy.
What Bloomberg strategists say…
FX traders are reading it to be a reminder that the US administration would prefer a softer dollar. However, the Bank of Japan still needs to do their part this week and set up a rate hike for December. Otherwise USD/JPY could flip back to the 153 area, or higher.
— Mark Cranfield, Markets Live strategist. Click here for the full analysis.
In other corners of the market, the yuan climbed to its strongest level in nearly a year, amid optimism over a potential China-US trade deal. A gauge of the dollar edged lower for a second day. Gold held below $4,000 an ounce as progress in trade talks sapped demand for haven assets.
On Wednesday and Thursday, five firms that account for about a quarter of the US benchmark — Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com and Apple Inc. — will report results. A gauge of the “Magnificent Seven” megacaps jumped 2.6% on Monday.
“With the Fed on track to cut rates, extending the run would appear to hinge on this week’s lineup of high-profile earnings releases,” said Chris Larkin at E*Trade from Morgan Stanley.
Copper — a bellwether for global growth — advanced and traded roughly $60 shy of a record set last year as investors assessed the cooling of trade tensions between the US and China.
On trade, Trump told reporters on Monday that “I really feel good” about a deal with China, after officials unveiled a slew of agreements to ease tensions.
While markets cheered the latest developments, some analysts cautioned the deal now teed up for Trump and Xi to sign in South Korea ignored thorny issues.
Fundamental fights over national security appeared untouched, they said, along with Trump’s stated core mission of rebalancing trade. Making that harder, Chinese investment into America remains heavily restricted.
“While these developments have lifted market spirits, analysts remain skeptical that the underlying issues — such as national security and tech competition — will be fully resolved,” said Fawad Razaqzada at City Index and Forex.com. “Nevertheless, traders have embraced the risk-on mood.”
Meanwhile, Trump hailed the US’s alliance with Japan, reaffirming ties with a longstanding partner and praising new Prime Minister Sanae Takaichi on her plans to ratchet up defense spending as the pair met in Tokyo. Trump and Takaichi signed a framework on critical minerals.
Corporate News:
Amazon.com Inc. to cut corporate jobs in several key departments, including logistics, payments, video games and the cloud-computing unit, according to people familiar with the matter. The terminations, expected as soon as Tuesday, could affect as many as 30,000 jobs, Reuters reported on Monday, citing sources. HSBC Holdings Ltd. reported third-quarter revenue that beat estimates, driven by its key wealth businesses, even as a $1.1 billion provision tied to the Bernard Madoff fraud cases weighed on earnings. BNP Paribas SA’s trading unit suffered a hit from souring debt in the third quarter, adding to challenges for Chief Executive Officer Jean-Laurent Bonnafe after a string of recent setbacks. Novartis AG’s profit rose last quarter, buoyed by a suite of new cancer medicines. Amundi SA reported adjusted pretax income for the third quarter that beat analysts’ estimates as the French asset manager prepares to unveil its new three-year strategic plan next month. Nvidia Corp. and Deutsche Telekom AG are preparing to announce plans for a €1 billion data center in Germany. BlackLine Inc. has attracted takeover interest from suitors including SAP SE, according to people with knowledge of the matter. Nomura Holdings Inc.’s profit beat analysts’ expectations last quarter, buoyed by equity trading and advising on mergers. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:50 a.m. London time Nasdaq 100 futures were little changed The MSCI Asia Pacific Index fell 0.5% Hong Kong’s Hang Seng fell 0.5% The Shanghai Composite fell 0.3% Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1660 The Japanese yen rose 0.6% to 151.95 per dollar The offshore yuan rose 0.2% to 7.0976 per dollar The British pound rose 0.2% to $1.3358 Cryptocurrencies
Bitcoin fell 0.4% to $114,056.62 Ether fell 0.6% to $4,104.43 Bonds
The yield on 10-year Treasuries declined one basis point to 3.97% Japan’s 10-year yield declined 2.5 basis points to 1.640% Australia’s 10-year yield declined one basis point to 4.17% Commodities
Spot gold fell 1% to $3,943.59 an ounce West Texas Intermediate crude fell 0.2% to $61.18 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Alex Gabriel Simon.
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