US stock markets hit fresh record highs on US-China trade optimism - Newsquawk Asia-Pac Market Open

• US stocks were firmer and buoyed by the risk-on sentiment to start the week amid reports that the US and China agreed on a framework for a trade deal ahead of the Trump/Xi meeting later this week. Sectors were predominantly green with Communications leading the gains, followed by Tech and Discretionary, while Consumer Staples and Materials were the only sectors in the red. The stock-specific highlight was arguably Qualcomm (QCOM), which surged after announcing the launch of Qualcomm AI200 and AI250 chip-based accelerator cards and racks for data centres. As a result of the heightened risk appetite, spot gold was pressured and fell beneath USD 4k/oz, while the crude complex was initially bid, but later sold off to settle in the red.
• USD was rangebound with slight weakness to start the week as modest upticks in GBP and EUR were offset by downticks in havens, as trade-related updates from over the weekend sparked a risk-on tone across markets. Nonetheless, the dollar didn't get much traction ahead of the central bank rate decisions later in the week including from the FOMC on Wednesday.
• Looking ahead, highlights include South Korean GDP, UK BRC Shop Price Index, Supply from Australia.

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LOOKING AHEAD

• Highlights include South Korean GDP, UK BRC Shop Price Index, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were firmer and buoyed by the risk-on sentiment to start the week amid reports that the US and China agreed on a framework for a trade deal ahead of the Trump/Xi meeting later this week. Sectors were predominantly green with Communications leading the gains, followed by Tech and Discretionary, while Consumer Staples and Materials were the only sectors in the red. The stock-specific highlight was arguably Qualcomm (QCOM), which surged after announcing the launch of Qualcomm AI200 and AI250 chip-based accelerator cards and racks for data centres. As a result of the heightened risk appetite, spot gold was pressured and fell beneath USD 4k/oz, while the crude complex was initially bid, but later sold off to settle in the red.
• SPX +1.23% at 6,875, NDX +1.83% at 25,822, DJI +0.71% at 47,545, RUT +0.28% at 2,520.
• Click here for a detailed summary.

TARIFFS/TRADE

• China’s Foreign Minister Wang said he had a phone call with US Secretary of State Rubio, while he hopes China and the US are to make preparations for their leaders' interaction. Furthermore, he said President Xi and Trump respect each other, as well as noted that China and the US should “meet each other halfway” to solve disputes via dialogue instead of exerting pressure, according to SCMP.
• US Commerce Secretary Lutnick said Japan's USD 550bln investment would focus on "power, pipelines...things that are fundamental to national security and have virtually no risk", according to a Nikkei interview. Furthermore, he said Japanese companies would provide gas turbines, transformers, and cooling systems to help expand US generation capacity and noted that levies on Japanese-made semiconductors and pharma will remain at 15%.
• Japan is “very close” to opening its market to Brazilian beef, according to Brazil’s agriculture minister, in a move that would be a further blow to US exports, according to Bloomberg.
• UK Chancellor Reeves said the UK had really good meetings around a UK-GCC trade deal while in Riyadh, and she is confident that she can get the deal over the line.
• UK is seeking a ‘steel club’ with the US and the EU to tackle Chinese oversupply, according to FT, while Britain’s trade minister said an alliance is a natural response to the global glut of metal, although talks had not yet reached a stage of a written proposal.
• Mexican President Sheinbaum said she spoke with US President Trump over the weekend and that the US is extending the trade deadline for several weeks, while she added that they "will give it a few more weeks" to close the issues of 54 pending trade barriers.
• Canadian PM Carney said Canada is ready to sit down with the US, and he hasn't had contact with US President Trump since Thursday, while he added that there is a strong trading relationship with the US, and contingency plans are prepared if Trump doesn't want to negotiate.
• Ontario Premier Ford declined to apologise for sponsoring an anti-tariff television commercial that US President Trump used as a reason to terminate high-stakes trade talks with Canada, according to Bloomberg.

NOTABLE HEADLINES

• US House Speaker Johnson said he backs Trump admin plans not to tap emergency funds for SNAP food aid, according to Politico.

FX

• USD was rangebound with slight weakness to start the week as modest upticks in GBP and EUR were offset by downticks in havens, as trade-related updates from over the weekend sparked a risk-on tone across markets. Nonetheless, the dollar didn't get much traction ahead of the central bank rate decisions later in the week including from the FOMC on Wednesday.
• EUR marginally strengthened, albeit with price action kept within relatively tight parameters at the 1.16 handle amid light newsflow and mostly better-than-expected German IFO data.
• GBP edged mild gains against the dollar but with upside capped around the 1.3350 level, while it was reported that the UK OBR is expected to cut its trend productivity growth forecast by about 0.3% which is said to threaten a GBP 20bln hit to UK public finances.
• JPY was ultimately flat on the day with price action USD/JPY indecisive after oscillating on both sides of the 153.00 level, while attention turns to US President Trump's meeting with Japanese PM Takaichi on Tuesday.

FIXED INCOME

• T-notes settled marginally lower and the curve flattened amid risk-on trade and front-loaded supply.

COMMODITIES

• Oil prices were mildly lower after failing to sustain early gains on what was a choppy session, while reports noted that OPEC+ is leaning towards another modest production increase at its meeting later this week.
• OPEC+ is leaning towards another modest oil output increase at the meeting on Sunday, according to Reuters citing sources.
• OPEC+ base case scenario is a small hike for now, according to Bloomberg citing delegates, while the group is so far expected to focus on a third monthly increase of 137k BPD.

GEOPOLITICAL

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Ukraine is to expand strikes against Russian refineries.
• US reportedly floated a six-month deadline for Berlin to sort out the ownership limbo affecting the German assets of Russian oil major Rosneft PJSC, allowing them to be temporarily exempted from US sanctions, according to Bloomberg sources.

OTHER

• Venezuelan Oil Ministry is to ask the Presidency to suspend agreements with Trinidad and Tobago, including gas projects.
• Chinese Commerce Ministry said they firmly oppose UK measures on 11 Chinese firms and urged the UK to correct wrong practices, while it added that China will resolutely defend rights and interests.

ASIA-PAC

NOTABLE HEADLINES

• PBoC Governor Pan said they will resume government bond purchases and sales in the open market, while they will continue to maintain a supportive monetary policy stance and will implement a properly loose monetary policy. Furthermore, they are to explore mechanisms to provide liquidity to non-bank institutions under specific scenarios, while the PBoC Governor also said the Bank is to crack down on domestic cryptocurrency operations and speculations.
• China's forex regulator head announces plans to roll out policies to facilitate trade in the near future, via state media
• China's securities regulator head said it will launch a deepening reform in the ChiNext board, according to Xinhua.
• Japanese Finance Minister Katayama said they explained to US Treasury Secretary Bessent the new Japanese PM Takaichi admin's responsible and proactive fiscal policy, while Bessent said Takaichi's policy has sent a positive signal to markets.
• RBA Governor Bullock said reducing inflation while maintaining employment levels is very satisfying, and the unemployment rate could come down once again in the next month, while she added the Board is cautious about policy, with rates still a bit restrictive. Furthermore, she said US tariffs could potentially be deflationary for Australia and labour supply growth is not as fast as it was, but will not fall off a cliff, while they are prepared to adjust policy if proven wrong on the labour market.
• Fitch affirmed Australia at 'AAA'; Outlook Stable, while it stated that Australia is relatively insulated from US tariff risks.
• Moody's affirmed Japan's sovereign rating at A1; Outlook Stable.

EU/UK

NOTABLE HEADLINES

• UK OBR is expected to cut its trend productivity growth forecast by about 0.3%, according to FT citing sources, increasing the prospect of big tax rises, including income tax. Furthermore, it was noted that Chancellor Reeves faces a GBP 20bln hit to UK public finances from a productivity growth downgrade.

DATA RECAP

• German Ifo Expectations New (Oct) 91.6 vs. Exp. 89.9 (Prev. 89.7, Revised 89.8)
• German Ifo Current Conditions New (Oct) 85.3 vs. Exp. 85.5 (Prev. 85.7)
• German Ifo Business Climate New (Oct) 88.4 vs. Exp. 87.9 (Prev. 87.7)