Hopes for US-China Deal Fuel Rally

The anticipation surrounding a potential U.S.-China trade agreement is proving to be a potent market catalyst.

On Monday, U.S. equity markets responded emphatically to positive signals. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed at record highs, with the S&P 500 surpassing the significant 6,800 level for the first time. This rally occurred even before the formalization of a trade accord.

“Many technology forecasts have, until now, excluded the potential benefits of renewed access to the Chinese market. Reintegrating China into the equation could inject considerable optimism into the markets,” notes Sam Stovall, chief investment strategist at CFRA Research.

Nvidia‘s recent guidance, which notably excluded H20 shipments to China, underscores the restrictive impact of trade tensions on the outlook for American technology giants. This highlights how geopolitical factors significantly hinder growth projections.

A ratified U.S.-China trade agreement, by clarifying and potentially relaxing existing trade parameters, could lead major tech firms to upwardly revise their earnings guidance. Such revisions may set off another wave of investment in a market segment robustly influenced by tech titans. This dynamic underpins the sector’s ongoing role in global financial health.

Beyond the tech sector, agricultural products are also poised to benefit. Reports suggest that China may be preparing to ease its unofficial boycott of U.S. soybeans as part of the broader agreement. This is particularly significant in light of Treasury Secretary Scott Bessent’s identity as a soybean farmer, a point he emphasized in recent televised remarks. This creates a complex intersection of policy, personal interest, and global economics.

While Bessent’s comments allude to his personal stake, the broader implications of the U.S.-China trade tensions have impacted individuals and businesses alike. A potential truce could provide much-needed respite, offering benefits across diverse sectors and contributing to a more stable global market environment.

Trump indicates trade deal with China is near. President Trump, speaking aboard Air Force One, stated that he and President Xi are close to “come away with” a trade deal. He also suggested that a resolution regarding TikTok could be reached soon.

Amazon poised for major layoffs. The company plans to implement significant job cuts impacting “almost every division,” potentially affecting up to 30,000 employees. Sources indicate the layoffs will begin imminently. This reorganization reflects a broader trend within the tech industry of streamlining operations in the face of economic uncertainty.

HSBC exceeds earnings expectations. The bank reported third-quarter “profit before tax came in at $7.3 billion,” surpassing analysts’ estimates. However, the figure represents a year-over-year decrease due to increased operating expenses. This highlights the trade-offs involved in managing costs versus growth imperatives in a global financial institution.

U.S. stock indexes reach record levels. All three major U.S. indexes and the Russell 2000 achieved “close at all-time highs” on Monday. However, “Asia-Pacific markets slipped“on Tuesday. The Kospi in South Korea experienced a decline despite stronger-than-expected economic growth in the country, indicating a disconnect between macroeconomic data and investor sentiment in some regions.

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How Saudi Arabia is diversifying away from oil — and betting big on AI

According to Saudi Arabia’s Minister for Investment Khalid Al Falih, 50.6% of the Saudi economy is now “completely decoupled” from oil, marking a significant shift in the country’s economic priorities.

The nation is substantially increasing its investment in fast-growth sectors, particularly artificial intelligence. Al Falih has stated that Saudi Arabia intends to be a “key investor” in the development of AI applications and large-language models. Furthermore, the nation plans to construct data centers “at a scale and at a competitive cost not achieved anywhere else,” suggesting a long-term commitment to AI infrastructure and technological advancement.

— Lim Hui Jie