- The risk sentiment improved after President Trump and Xi reached a conciliatory ground, followed by tariff reduction and trade controls.
- Tech giants such as Nvidia, Alphabet, and Samsung remained key drivers behind optimistic sentiment as AI investments skyrocketed across US equities.
- Traders look forward to Apple and Amazon’s upcoming earnings reports and the Fed’s policy decision.
The US equities remained steady on Wednesday, after President Donald Trump and Xi Jinping’s meeting ended conciliatory, reducing tariffs from 57% to 47%. Meanwhile, Beijing agreed to suspend rare earth export controls for one year, easing the trade tensions between the two countries. These developments have pushed the markets towards record highs.
The S&P 500 futures witnessed minimal movement, while the Dow Jones Industrial Average edged lower after Friday’s upside momentum. Asian equities displayed a mixed forecast.
Japan’s Topix increased 0.7% after the Bank of Japan kept rates unchanged. Meanwhile, Chinese shares dropped 0.7%. The European stocks indicated a softer tone, as markets maintained caution. Anna Wu, a cross-asset strategist at Van Eck Associates Corp, opined that the medium-term outlook will likely remain volatile.
The Fed’s decision to cut 25 bps yesterday supports investor sentiment. However, Fed’s Chair Powell remarked on uncertainty about the December cut, halting hopes for further easing. The 10-Year treasury yield mildly rose above 4%, weighing on rate-sensitive stocks such as Visa and McDonald’s. Meanwhile, the megacap technology shares shaped market resilience.
Nvidia continued advancing, 3.1% this time, reaching a $5 trillion market cap, being the first US company to hit this milestone. The robust results by Alphabet and Samsung Electronics acted as a catalyst for the broader tech rally.
However, Meta Platforms dropped 7% in premarket trading. Additionally, the US technology firms invested nearly $78 billion into AI-related infrastructure this year, reflecting AI’s market dominance.
Last week, Dow remained volatile but maintained a supportive outlook this week. According to Michael Rosen, CIO at Angeles Investments, Chair Powell senses the policy divisions between those favoring aggressive easing and those against sticky inflation. Rosen remarked against aggressive future easing himself.
Investors anticipate Apple and Amazon’s upcoming earnings and the Fed’s policy decision. The US equities hold near record territory with slight corrections, supported by improving US-China breakthroughs and AI-driven optimism.