This week, the global equity markets were influenced by major Central Bank policy decisions, corporate earnings and the U.S-China trade deal. President Trump and President Xi Jinping’s meeting in South Korea eased trade tensions between the countries. The U.S. Federal Reserve (Fed.) and Bank of Canada (BoC) cut their policy rates by 25 bps. Five of the ‘Magnificent 7’ companies reported higher than expected earnings in the previous quarter. However, the elevated capital expenditure (capex) projections dampened investors’ optimism. 

In global geopolitics, Argentina’s President Javier Milei’s Freedom Advances party, which is also backed by President Trump, doubled its congressional representation in the latest election. President Trump and Prime Minister Sanae Takaichi signed a critical minerals and rare earths agreement, to reduce the dependence on China. President Trump also announced that the U.S. would resume testing of nuclear weapons. President Trump’s meeting with Prime Minister Carney was cancelled and an additional 10% tariff was imposed on Canadian imports. The Gaza ceasefire agreement is in jeopardy due to the renewed conflict in Gaza.

Global Updates
  • The MSCI All Country World Index rose over the week as investors digested corporate earnings reports, central bank actions and improving trade relations. 
  • Eurozone economic growth of 0.2% in the third quarter beat estimates. The European HCOB PMI reading of 50 in October indicated an expansion in European economic activity, which however contracted in France. Employment, however, declined sharply during the month. 
  • Among the major central bank decisions, the BoC implemented a 25 bps rate cut in its policy rate. On the other hand, the Bank of Japan and the European Central Bank chose to hold rates steady, prioritizing controlling inflation management. 
  • S. and China have reached a preliminary consensus on key issues in their trade talks. The U.S. agreed to lower tariffs on China in leu of rare earth concessions and controlling the drug trade emanating from China. China also resumed its purchases of Soybean cargos from the U.S.
  • President Trump agreed to lower tariffs for Malaysia, Cambodia, Thailand and Vietnam in lieu of narrowing their trade imbalances and supply of critical minerals. 
  • Samsung has announced a collaboration with Nvidia to deploy 50,000 Nvidia GPUs to automate and optimize its facilities manufacturing chips for mobile and robots.
  • In China, the official NBS Manufacturing PMI reading of 49.0 for October, marked the 7th consecutive month of contraction. The decline in new orders and foreign sales accelerated despite the competition among distributors, weighing down prices. 
  • Gold prices briefly fell below the $4,000 per ounce benchmark due to the decline in safe haven demand, following the Fed’s rate cut. Gold prices declined over the week, however ending the week higher than the $4,000 benchmark.
  • Oil futures ended the week lower, due to the projected over supply in the market from the OPEC+ countries, planning to raise production by 137,000 barrels per day from December. 
U.S. Equity
  • The S&P 500, Dow Jones, and Nasdaq indices dipped slightly at the end of the week, after reaching record highs. Investors were enthused by President Trumps lowering of tariffs on China and robust third quarter corporate earnings reports. The spending projections of Meta and Microsoft, however, raised investor concerns. The Fed’s rate cut also had a positive impact on the markets. The markets also displayed a partial market rotation out of big tech. 
  • The U.S. Core CPI inflation was lower than expected, at 0.3% month-over-month and 3% year-over-year for September. The ADP National Employment Report also estimated that 14,250 jobs were added in the U.S. economy over the four-week period ending October 11th.
  • The U.S. Manufacturing PMI and Services PMI for October came in higher than expected at 52.2 and 55.2 respectively, indicating accelerated economic growth.
  • Markets were optimistic regarding the resolution of the Sino-U.S. tariffs at the Trump-Xi meeting in South Korea. President Trump eased tariffs to 47%, in exchange of a crackdown on the fentanyl trade and a stay on the export controls on rare earth by China. The disinvestment in TikTok and export of Nvidia chips remained unresolved. 
  • The Fed eased its policy rate by 25 bps to the 3.75%–4.00% range, to minimize the downside risk in the labor market. Fed Chair Jerome Powell clarified that a future rate cut in the Fed’s December meeting was not a “foregone conclusion” due to the differing opinions among policymakers. 
  • Treasury Secretary Scott Bessent announced the list of final candidates for Federal Reserve Chair which included Christopher Waller, Michelle Bowman Kevin Warsh, Kevin Hassett, and Rick Rieder. President Trump has said that the nomination will be finalized by the year end.
  • Nvidia became the first company to cross the $5 trillion capitalization benchmark. Nvidia’s stock rallied after CEO Jensen Huang announced an agreement with the U.S. Department of Energy to build seven supercomputers for them. He also mentioned that the company has bookings worth $500 billion for the Blackwell and Rubin AI chips, through 2026.
  • A 20.2% jump in Amazon’s cloud revenue to $33 billion pushed third quarter earnings to $1.95 on revenue of $180.17 billion. Amazon has revised its estimated full year capex to rise to $125 billion in 2025.
  • Eli Lilly shares rallied after the company raised its full-year revenue outlook guidance to the $63 billion to $63.5 billion range, driven by strong demand for its drugs Zepbound and Mounjaro. In the third quarter, the company reported adjusted earnings per share of $7.02 on revenue of $17.6 billion, a 54% year-on-year increase. In the quarter the sales of Mounjaro and Zepbound grew to $6.5 billion and $3.59 billion respectively.  
  • UnitedHealth Group reported a higher-than-expected adjusted EPS of $2.92 in the third quarter. The company’s revenue grew 12% year-on-year to $113.16 billion, in line with expectations. 
  • eBay Inc reported a 14% higher adjusted EPS of $1.36 and a 8% growth in its merchandise volumes to $20.1 billion, generating an 8% higher revenue of $2.82 billion in the third quarter. However, the company’s stock lagged due to a lower-than-expected earnings outlook of $1.31 to $1.36 EPS in the fourth quarter due to the removal of the de minimis exemption.
  • Apple reported a higher-than-expected EPS of $1.85 on an 8% higher revenue of $102.47 billion for the fiscal fourth quarter. The sales of iPhones drove up the earnings and revenues. 
  • NVIDIA has announced a $1 billion investment in the AI startup Poolside.
  • Meta reported a 26% growth in its revenue to $51.24 billion and a higher-than-expected adjusted EPS of $7.25. Meta also reported a $15.93 billion tax charge from President Trump’s ‘One Big Beautiful Bill Act’. However, Meta’s stock lagged due to the aggressive capex plans in the $70 billion and $72 billion range in AI.
  • Microsoft reported a $3.1 billion drop in its fiscal first quarter earnings due to its $13 billion investment in OpenAI. Microsoft reported an EPS of $3.72 during the quarter on a revenue of $77.6 billion. The company’s revenue grew by 18%, driven by a 40% growth in cloud business from Azure.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index declined over the week.
  • The U.S. 10-year Treasury yield rose sharply to 4.101% and the yield on the 2-year note jumped to 3.609% over the week.
  • The U.S. Dollar Index surged up to 99.49 this week owing to the 25 bps rate cut by the Fed.

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