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US stocks rebounded following Trump's softer rhetoric on China - Newsquawk Asia-Pac Market Open

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Monday, Oct 13, 2025 - 09:40 PM
  • US stocks rallied to recoup some of the downside seen on Friday that had been triggered by US President Trump's tariff offensive against China, with the rebound spurred by the softer rhetoric over the weekend by Trump who said everything will be "fine" with China, while Treasury Secretary Bessent also stated that 100% tariffs do not have to happen and that things are still in place for a Trump meeting with Chinese President Xi. The toning down of aggression on China trade from Trump had boosted sentiment and largely reversed a lot of the price action seen on Friday, while outperformance was seen in the Nasdaq and Russell, with tech gains buoying the former following a slew of deals, namely the OpenAI and Broadcom (AVGO) strategic partnership.
  • USD clawed back some of the notable losses seen on Friday, with the greenback helped after US President Trump softened his rhetoric on China, while Treasury Secretary Bessent followed on from this and said 100% tariffs do not have to happen and that Trump is on track to meet with Chinese President Xi in Korea. There were also comments from Fed’s Paulson (2026 voter) who spoke for the first time since becoming President of the Philly Fed, in which she ultimately took a dovish/neutral tone and stated that she is aligned with the median dot plot for the rate view by year-end but noted that policy should be focused on balancing risks to maximum employment and price stability. Furthermore, she called for gradual rate cuts over this year and into next, and noted that gradual cuts should keep the jobs market close to full employment.
  • Looking ahead, highlights include Japanese Money Supply, Singapore GDP, Australian NAB Business Confidence, MAS Policy Decision, RBA Minutes, Supply from Australia.

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LOOKING AHEAD

  • Highlights include Japanese Money Supply, Singapore GDP, Australian NAB Business Confidence, MAS Policy Decision, RBA Minutes, Supply from Australia.
  • Click for the Newsquawk Week Ahead.

US TRADE

  • US stocks rallied to recoup some of the downside seen on Friday that had been triggered by US President Trump's tariff offensive against China, with the rebound spurred by the softer rhetoric over the weekend by Trump who said everything will be "fine" with China, while Treasury Secretary Bessent also stated that 100% tariffs do not have to happen and that things are still in place for a Trump meeting with Chinese President Xi. The toning down of aggression on China trade from Trump had boosted sentiment and largely reversed a lot of the price action seen on Friday, while outperformance was seen in the Nasdaq and Russell, with tech gains buoying the former following a slew of deals, namely the OpenAI and Broadcom (AVGO) strategic partnership.
  • SPX +1.55% at 6,654, NDX +2.18% at 24,750, DJI +1.30% at 46,073, RUT +2.62% at 2,457.
  • Click here for a detailed summary.

TARIFFS/TRADE

  • US Treasury Secretary Bessent said they have aggressively pushed back against China's export controls, which was a provocative move, while substantial communication was had over the weekend and there will be lots of staff-level meetings. Bessent said they are neither going to command nor control us, and he believes China is open to discussion on this. If not, the US has substantial levers it can pull and could move more aggressively than China has, but stated that everything is on the table and he is confident that this can be de-escalated. Bessent also commented that President Trump is on track to meet with Chinese President Xi in Korea and lines of communication have been opened, while he hopes to meet with his Chinese counterpart in Asia before the Trump-Xi meeting. Furthermore, he said that they want to derisk and don't want to decouple, but China is sending a decoupling message.
  • US Treasury Secretary Bessent said US President Trump's post on Friday turned the tables and noted China made a miscalculation, but stated that 100% tariffs do not have to happen and the US-China relationship is good. Bessent added that the US is going to reject licensing requirements and they are taking sound measures to right this problem, while he added that the US has more cards.
  • China issued implementation rules on port fees on US ships and exempted China-made ships owned by US companies from port fees, while it is to adjust special port fees on US ships as needed, according to Bloomberg.

NOTABLE HEADLINES

  • Fed's Paulson (2026 voter) said she favours a gradual path of rate cuts over this year and into next, as well as noted that monetary policy should be focused on balancing risks to maximum employment and price stability. Paulson said gradual rate cuts should keep the job market close to full employment, and it is unclear what the neutral rate is, while she argued for caution in the rate cut pace and said the September Fed rate cut size made sense. Paulson said she sees policy as modestly restrictive and views easing along the lines of the median Summary of Economic Projections policy path as appropriate. Furthermore, she favours a gradual path of rate cuts over this year and into next and noted that monetary policy should be focused on balancing risks to maximum employment and price stability.
  • US Treasury Secretary Bessent said regarding the government shutdown, that this is getting serious and starting to affect the economy, while he added that official treasury data will come out when the government reopens.
  • US House Republicans are holding a conference call on Tuesday at 11:30EDT/16:30BST, according to Punchbowl's Weiss citing sources.

FX

  • USD clawed back some of the notable losses seen on Friday, with the greenback helped after US President Trump softened his rhetoric on China, while Treasury Secretary Bessent followed on from this and said 100% tariffs do not have to happen and that Trump is on track to meet with Chinese President Xi in Korea. There were also comments from Fed’s Paulson (2026 voter) who spoke for the first time since becoming President of the Philly Fed, in which she ultimately took a dovish/neutral tone and stated that she is aligned with the median dot plot for the rate view by year-end but noted that policy should be focused on balancing risks to maximum employment and price stability. Furthermore, she called for gradual rate cuts over this year and into next, and noted that gradual cuts should keep the jobs market close to full employment.
  • EUR weakened against the firmer buck and with attention also on French politics as the government is reportedly to present a budget aiming to cut costs by EUR 31bln, which would cut EUR 17bln in spending and aims to reduce the deficit to 4.7% by end-2026.
  • GBP was softer albeit with the downside stemmed, while there were comments from BoE's Greene who said activity is stronger than thought a year ago and that inflation and wage growth are also stronger. Greene also stated that rates are probably still on a downward path, but policy is less restrictive and stated there is a case for higher for longer rates, skipping cuts.
  • JPY lagged as the improved global risk sentiment spurred an unwinding of last Friday's haven currency flows.

FIXED INCOME

  • T-note futures meandered with cash trade closed for Columbus Day.

COMMODITIES

  • Oil prices were firmer to start the week and buoyed by risk-on sentiment as Trump seemingly cooled his stance towards China on Sunday.
  • OPEC MOMR showed 2025 and 2026 global oil demand growth forecasts were unchanged from last month’s assessment of 1.3mln BPD and 1.4mln BPD, respectively.
  • Saudi Aramco CEO said oil demand is resilient and there is large growth potential, while he stated the maximum sustained production capacity is 12mln BPD, which can be done at no additional cost for one year and sees oil demand growing by 1.1-1.3mln BPD in 2025, and then 1.2-1.4mln BPD in 2026.

GEOPOLITICAL

MIDDLE EAST

  • Israeli Defence Minister Katz condemned the Hamas announcement about handing over four hostages' bodies as a "failure to meet commitments", while he said any intentional delay or omission will be deemed a blatant breach of the agreement and will be responded to accordingly.
  • US President Trump, speaking to the Knesset, said the hand of cooperation and friendship is always open to Iran. Trump later commented that Iran needs help and they will come along, while he reiterated that Iran wants to make a deal.

RUSSIA-UKRAINE

  • Ukrainian President Zelensky plans to meet with US President Trump on Friday and has already shared with Trump a vision of how many Tomahawk missiles Ukraine needs, while they will discuss this on Friday. Zelensky also plans to meet with US energy and arms companies during the visit to Washington, while he urges allies to move faster on using Russian frozen assets for Ukraine.
  • EU's Kallas said the EU is now providing funding for a special tribunal to prosecute Russia for aggression against Ukraine, and called on other member states, countries and participants to fund it so work can really start at full scale.

ASIA-PAC

NOTABLE HEADLINES

  • China's Vice Premier said they need to do everything possible to ensure a timely harvest and procurement of autumn grain, and all tasks related to autumn and winter planting.
  • China's People's Daily wrote that China needs to avoid becoming a "technological subordinate to other nations", according to SCMP.
  • India and Canada have come to a consensus on a roadmap for bilateral relations.

DATA RECAP

  • Indian CPI Inflation YY (Sep) 1.54% vs. Exp. 1.7% (Prev. 2.07%)

EU/UK

NOTABLE HEADLINES

  • BoE's Greene said activity is stronger than thought a year ago, as well as noted that inflation and wage growth are also stronger, while she has concerns that the disinflationary process might be slowing and thinks there is a concern, particularly in the UK about inflation expectations. Furthermore, she said rates are probably still on a downward path, but policy is less restrictive and stated there is a case for higher for longer rates, skipping cuts.
  • French PM Lecornu's government will present the draft state and social security budgets to the Ministerial Council on Tuesday, according to BFMTV. It was later reported that French PM Lecornu's government is to present a budget aiming to cut costs by EUR 31bln, while it would cut EUR 17bln in spending, and aims to reduce the deficit to 4.7% by end-2026, according to La Tribune.

DATA RECAP

  • German Wholesale Price Index MM (Sep) 0.2% (Prev. -0.6%)
  • German Wholesale Price Index YY (Sep) 1.2% (Prev. 0.7%)
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