Stocks Erase Gains After Trump-Xi Talks, Yen Falls: Markets Wrap

(Bloomberg) — US equity-index futures erased gains and Asian shares lost momentum after Presidents Donald Trump and Xi Jinping ended their summit that was aimed at easing the trade tensions between the world’s two largest economies.

Contracts for the S&P 500 were flat after the underlying gauge erased gains following Federal Reserve Chair Jerome Powell’s warning that a rate cut in December isn’t a foregone conclusion. Asian shares gave up earlier gains to trade 0.1% lower. Technology sector remained in focus after Samsung Electronics Co.’s earnings beat estimates, and megacap US companies boosted bets on the artificial intelligence theme.

The yen fluctuated against the dollar after the Bank of Japan held its policy rate. Gold was flat after four days of declines, while a gauge of the dollar trimmed gains from the prior session. Treasuries recouped some of their losses with the yield on the 10-year declining one basis point to 4.06%.

Markets are looking past the Fed’s cautious stance on further rate cuts and turning their focus to the ongoing Trump–Xi meeting, which investors hope will ease the world’s largest trade dispute and steady global markets after months of tension. The artificial intelligence theme and spending by megacap companies were also in focus as big technology names started reporting earnings.

Trump earlier said the US and China “could” sign a trade deal Thursday as the two leaders started a high-stakes meeting.

The two leaders were set to finalize a détente at their South Korea meeting to put the world’s biggest trade fight on hold — at least for now.

Earlier, following the Fed’s expected rate cut, Powell’s caution about future moves and his focus on labor market risks led investors to scale back easing bets.

Fed officials delivered their second straight rate reduction Wednesday to support a softening labor market, and said they would stop shrinking the portfolio of assets on Dec. 1. Governor Stephen Miran dissented again in favor of a larger reduction. Kansas City Fed President Jeff Schmid said he preferred not to cut rates at all.

Investors also got a chance to price in tech companies spending on artificial intelligence after earnings from megacaps. Three bellwethers – Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. — together racked up some $78 billion in capital expenditures last quarter. That’s up 89% from a year earlier.

Their earnings were mixed. Meta Platforms shares fell 7.4% in extended trading while Alphabet jumped 6.7%. Microsoft fell almost 4%. Earlier in the US trading day, Nvidia Corp. became the first company to reach $5 trillion in market valuation.

“Even though the Fed communication was more hawkish than the market had expected, the news of Nvidia’s market cap exceeding $5 trillion and Alphabet’s favorable earnings announcement are supporting tech-related stocks in Asia,” said Tomo Kinoshita, global market strategist at Invesco Asset Management.

Corporate News:

Artificial intelligence startup OpenAI is preparing to file for an initial public offering as soon as next year that may give the company a market capitalization of $1 trillion, Reuters reported. Toyota Motor Corp. has no plans to sweeten a deal involving a proposed ¥4.7 trillion ($31 billion) buyout of Toyota Industries Corp., Chief Executive Officer Koji Sato said, rebuffing widespread criticism of a planned privatization bid. California Public Employees’ Retirement System, the largest public pension plan in the US, is planning to vote against Elon Musk’s $1 trillion Tesla Inc. compensation agreement. Bank of America Corp., Citigroup Inc. and Morgan Stanley are among about 20 banks that have joined a $20 billion debt financing backing the buyout of Electronic Arts Inc. AirAsia Aviation Group plans to raise as much as $600 million, replacing a private credit facility with a lower-interest bearing bond. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 1:16 p.m. Tokyo time Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 fell 0.5% Hong Kong’s Hang Seng rose 0.5% The Shanghai Composite was little changed Euro Stoxx 50 futures rose 0.2% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.2% to $1.1625 The Japanese yen was little changed at 152.74 per dollar The offshore yuan was little changed at 7.0957 per dollar Cryptocurrencies

Bitcoin fell 1.4% to $109,904.42 Ether fell 1.8% to $3,881.47 Bonds

The yield on 10-year Treasuries declined two basis points to 4.06% Japan’s 10-year yield was unchanged at 1.655% Australia’s 10-year yield advanced seven basis points to 4.29% Commodities

West Texas Intermediate crude fell 0.4% to $60.22 a barrel Spot gold rose 0.3% to $3,942.76 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi.

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