Traders are anticipating the ECB’s decision on interest rates amid economic growth
Global stock markets started the week on an optimistic note, led by Asian stocks surging to record highs amid growing optimism over a potential U.S.-China trade deal. The surge was fueled by encouraging trade negotiation progress ahead of the upcoming summit between President Donald Trump and President Xi Jinping.
Asian stocks soared to record highs on Monday, fueled by optimism over a potential U.S.-China trade deal, while U.S. and European markets showed mixed performances amid expectations of Federal Reserve rate cuts and ongoing economic data releases.
Asian markets surge on trade deal optimism
Asian stock markets opened the week with strong gains, propelled by positive signals in trade negotiations between the United States and China. The Nikkei 225 in Japan surged to above the 50,000 mark for the first time, closing at 50,535.29 points, a jump of 2.5 percent on the day and marking a 26.6 percent gain year-to-date. South Korea’s and Taiwan’s stock indexes also rose about 2.5 percent, hitting new historic highs. Meanwhile, Thailand’s stocks climbed 2.4 percent to their highest levels in nearly nine months.
The upside momentum was largely driven by reports that U.S. and Chinese negotiators had made significant progress on contentious trade issues ahead of the highly anticipated meeting scheduled between President Donald Trump and President Xi Jinping on October 30 in South Korea. A trade deal is expected to halt further tariff increases and relax controls on Chinese rare earth exports, which together had rattled global markets earlier this year.
Asian currencies mostly strengthened in response, with the South Korean won rising 0.4 percent and the Taiwan dollar up 0.3 percent. The Singapore dollar and Philippine peso remained stable, while the Indonesian rupiah lost 0.2 percent amid a sharp selloff in Indonesia’s stock market, which saw a decline of 3.8 percent, its worst performance in seven months. This drop was attributed to lower foreign investor appeal following Bank Indonesia’s rate cuts and a narrowing yield premium compared to U.S. Treasuries.
U.S. markets show resilience amid rate cut expectations
In the United States, key indices closed last Friday near record highs following an inflation report that undershot market expectations, reinforcing anticipation of a Federal Reserve interest rate cut this week. The S&P 500 ended slightly below the important psychological level of 6,800, up 0.79 percent, while the Dow Jones Industrial Average climbed 1.01 percent and the Nasdaq Composite gained 1.15 percent.
Despite the gains, trading volumes were somewhat subdued, suggesting investors remain cautiously optimistic. Positive economic data supported the market, including an increase in industrial profits by 21.6 percent year-over-year in September and manufacturing and services PMIs indicating ongoing expansion. New home sales also surged, likely benefiting from an easing in borrowing costs, although consumer sentiment dipped slightly to 53.6 amid geopolitical concerns.
Several blue-chip companies reported solid earnings, contributing to market strength. However, attention remains on the Federal Reserve’s upcoming policy meeting, where a 0.25 percent rate cut is widely expected, with the possibility of further easing later this year.
European markets experience mixed movement
European stock markets showed mixed results on Monday. The Euro Stoxx 50 index edged up by 0.28 percent to 5,690 points, continuing the European market’s recent modest gains. Over the past week, the Euro Stoxx 50 advanced about 1.2 percent, while the broader Euro Stoxx 600 gained 1.6 percent. The markets were bolstered by better-than-expected economic indicators, including a stronger-than-predicted Purchasing Managers’ Index (PMI) for the Eurozone, signaling some economic traction.
Among notable movers, companies such as NatWest jumped 5 percent on higher third-quarter profits and an improved performance outlook. Sanofi rose 2.7 percent after beating quarterly profit expectations, and ENI gained nearly 2 percent. In contrast, Safran slipped 1.4 percent despite outperforming earnings forecasts, while Vinci fell 2.9 percent due to sluggish momentum in its airport and motorway operations.
The softer U.S. inflation data also impacted European bond yields, which declined, further supporting equity markets. Traders are pricing in the likelihood that the European Central Bank will maintain interest rates for now, balancing steady economic growth with inflation concerns.
