Stocks Get AI Boost Before Earnings, Fed Decision: Markets Wrap
(Bloomberg) — Asian indexes advanced on optimism that artificial intelligence will continue to drive profits at megacap technology companies reporting earnings this week, amid growing bets on a Federal Reserve interest-rate cut.
MSCI’s regional stock index rose 0.5%, with the tech sector outperforming and chip-related stocks such as SK Hynix Inc. and Advantest Corp. jumping after strong earnings. Japan and South Korea climbed to records — yet in both the Nikkei 225 and the Kospi, losers outnumbered winners. Similarly, almost 400 components declined in the S&P 500 index, even as the gauge closed at an all-time high.
Nvidia Corp.’s shares extended gains to 8.5% in Asian trading on the alternative platform Blue Ocean, signaling further gains when trading starts in New York. That came after President Donald Trump said he plans to speak with Chinese leader Xi Jinping about the company’s Blackwell chip. Futures for the S&P 500 index rose 0.2% while Nasdaq 100 futures rose 0.4%. Contracts indicated a slightly weaker start for European shares.
With five big tech companies — representing roughly a quarter of the US equity benchmark — set to report earnings between Wednesday and Thursday, investors will soon gauge whether the billions poured into computing infrastructure will keep flowing and ultimately deliver returns. Adding to the week’s momentum, Fed officials are poised to announce their rate decision on Wednesday, with Wall Street largely betting on a quarter-point cut.
“There is positive news everywhere,” said Vey-Sern Ling, a managing director at Union Bancaire Privee.
The technology sector remains the key focus of market participants. Over Wednesday and Thursday, Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com Inc. and Apple Inc. will all report results. The so-called ‘Magnificent Seven’ group is projected to deliver profit growth of 14% in the third quarter, according to data compiled by Bloomberg Intelligence.
That’s nearly twice the 8% expected profit growth for the broader S&P 500, but it also would be the slowest pace since the first quarter of 2023.
“We expect another strong round of megacap tech earnings reports, given the relentless demand for AI technology and infrastructure,” said Clark Bellin at Bellwether Wealth. “While profitability in AI remains an unknown, investors for now are willing to overlook this as the AI arms race heats up.”
What Bloomberg strategists say…
This year’s equities rallies are haunted by concerns the AI boom is carrying so much of the weight in driving the surge. Such a view was reinforced with Tuesday’s narrowest gain since at least 1993 for the S&P 500, and Japanese equities on Wednesday are also displaying a lack of breadth as they surge.
— Garfield Reynolds, MLIV Team Leader. Click here for full analysis.
In other corners of the market, a gauge of the dollar edged higher after two days of declines. Oil held a three-day drop amid mounting signs of oversupply, while gold inched up after three days of losses. Copper hit a record on the London Metal Exchange.
In European news, UBS Group AG’s profit beat expectations in the third quarter as investment banking revenue and lower-than-forecast legal costs boosted performance.
Deutsche Bank AG exceeded analyst estimates for fixed-income trading, giving tailwind to Chief Executive Officer Christian Sewing just a couple of weeks before he presents a new strategy.
Meanwhile, Trump said he expects to lower tariffs the US imposed on Chinese goods over the fentanyl crisis and speak with Xi about Nvidia, as leaders of the world’s biggest economies seek to ease tensions in a meeting on Thursday.
The Wall Street Journal reported Tuesday Trump was considering cutting the 20% tariff to 10% on Chinese goods over fentanyl.
In another sign of easing tensions, China bought at least two cargoes of US soybeans, its first known purchase this season. Shares in mainland China rose almost 1%.
Also buoying sentiment were bets the Fed will cut rates Wednesday, with traders hoping for clarity as to when officials will stop shrinking the central bank’s portfolio of securities. Bets have grown they may end quantitative tightening as soon as this month.
Expectations are set for two things from this week’s Fed meeting — officials will lower rates by a quarter percentage point and Chair Jerome Powell will offer little guidance as a growing divide among policymakers blurs the path ahead.
“The markets have a massive wall of event risk to scale this week,” wrote Kyle Rodda, a senior analyst at Capital.com in Melbourne.
Corporate News:
OpenAI is giving its long-time backer Microsoft Corp. a 27% ownership stake as part of a restructuring plan that took nearly a year to negotiate. Private equity firm Boyu Capital has emerged as the frontrunner in Starbucks Corp.’s search for a partner in its China business. Apple Inc. is preparing major changes to its MacBook Air, iPad mini and iPad Air lines, with a plan to give the popular devices higher-end displays. Visa Inc. reported fiscal fourth-quarter earnings that topped estimates as consumers continued to swipe, tap and insert their credit cards to transact globally. Mercedes-Benz Group AG confirmed its annual outlook and said it will proceed with a €2 billion ($2.3 billion) share buyback after the luxury-car maker defended its profitability in the third quarter. Banco Santander SA posted third-quarter results that beat analysts’ estimates as profit jumped in the US and provisions for souring loans remained contained. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 6:50 a.m. London time Nasdaq 100 futures rose 0.4% The MSCI Asia Pacific Index rose 0.5% The Shanghai Composite rose 0.6% Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1628 The Japanese yen was little changed at 152.22 per dollar The offshore yuan was little changed at 7.0994 per dollar The British pound fell 0.3% to $1.3232 Cryptocurrencies
Bitcoin rose 0.3% to $113,162.94 Ether rose 1.1% to $4,024.14 Bonds
The yield on 10-year Treasuries was little changed at 3.98% Japan’s 10-year yield advanced one basis point to 1.650% Australia’s 10-year yield advanced five basis points to 4.22% Commodities
Spot gold rose 0.7% to $3,980.41 an ounce West Texas Intermediate crude rose 0.3% to $60.34 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi and Garfield Reynolds.
©2025 Bloomberg L.P.
