Today’s Outlook:
• US MARKET : Wall Street ended higher on Friday as investors assessed U.S. President Donald Trump’s latest remarks on China, while quarterly results from regional banks eased concerns about credit risks. Trump said his proposed 100% tariff on goods from China would not be sustainable, but blamed Beijing for the latest impasse in trade talks that began with Chinese authorities tightening control over rare earth exports. Trump unveiled the new tariffs a week ago, along with new export controls on “any and all critical software,” to go into effect on November 1. Robust earnings from JPMorgan and other big banks this week helped get the third-quarter earnings season off to an upbeat start.
This Week’s Potential Catalysts: President Donald Trump confirmed on Friday that his planned meeting with Chinese President Xi Jinping will move forward, stating that the two countries are “getting along” as his administration works to stabilize relations with Beijing. The president also indicated that discussions with China would include efforts to end the conflict in Ukraine. Meanwhile, U.S. Treasury Secretary Scott Bessent announced he would speak with his Chinese counterpart later on Friday, highlighting ongoing economic and financial dialogue between the world’s two largest economies. The Federal Reserve is widely expected to cut the U.S. policy rate by a quarter-of-a-percentage point at its next two meetings to support the labor market, despite objections from several policymakers worried that further policy easing could worsen inflation. The Fed’s newest governor, Stephen Miran, is a lone advocate for steeper rate cuts.
Last Week’s Review: (1) International Monetary Fund chief Kristalina Georgieva on Friday said she hoped the U.S. and China could ease trade tensions and avoid a cutoff in the flow of rare earths to the global economy that she said would have a “material impact” on growth. Such a scenario would exacerbate uncertainty and hurt an already weakened global growth picture, Georgieva told reporters after a meeting of the IMF’s steering committee, where member countries voiced concerns about a host of risks facing the global economy. This year’s annual meetings of the IMF and World Bank took place days after a fresh flare-up in a simmering trade war between the world’s two largest economies that dominated discussions among thousands of finance officials and central bankers from around the world. The IMF on Tuesday forecast global real GDP growth at 3.2% for 2025, up from a July forecast of 3.0% and a more severe April forecast of 2.8%, saying tariff shocks and financial conditions had proven more benign than expected. That did not reflect the latest threats raised by the U.S. and China.
(2) The U.S. dollar was headed for a weekly loss against the Swiss franc and yen on Friday, amid concern about trade tensions and unease among some regional American banks. The U.S. federal government shutdown has also choked off the release of key macroeconomic data, leaving investors with less certainty than usual about what is happening in the economy. U.S. President Donald Trump said his proposed 100% tariff on goods from China would not be sustainable, but blamed Beijing for the latest impasse in trade talks that began with Chinese authorities tightening control over rare earth exports. Trump also confirmed he would meet with Chinese President Xi Jinping in two weeks in South Korea in an attempt to ease trade tensions.
(3) Tumbling financial stocks stole the punchbowl from the S&P’s cautious recovery. Zions Bancorp disclosed a $50 million third-quarter loss on souring California loans, which was enough to sap the remaining bullishness from strong earnings reports from six of the nation’s largest banks on Tuesday and Wednesday. The S&P 500 Banks index fell 3.5%, more than reversing a 1.2% gain the previous session. The KBW regional bank index fell 7%. Meanwhile, optimism about artificial intelligence was not sufficient to hold the market together. An early rally by chipmakers buoyed things after Taiwan’s TSMC 2330.TW, the world’s largest maker of advanced semiconductors, raised its fullyear revenue forecast on a bullish outlook for AI spending. The market was fragile given the recent downward spiral in U.S.-China trade relations, even as the big banks provided hopeful signs of economic resilience, at a time when economic data, good or bad, is in short supply due to the ongoing government shutdown.
(4) U.S. Senate Democrats on Thursday blocked a bill that would have funded the Pentagon for a full year, thwarting an effort by Republicans to restart some federal funding as the government shutdown stretched into its 16th day. The tally was 50-44, falling short of the 60 needed to advance the measure in the 100-member Senate. The vote was largely along party lines, with President Donald Trump’s fellow Republicans voting in favor and all but three Democrats objecting. Democrats who voted against advancing the legislation said they did not want to back spending on the military without providing funding for other programs, such as healthcare and housing, that are important to Americans.
• EUROPEAN MARKET: European stocks fell sharply Friday, tracking overnight losses on Wall Street following concerns over the health of U.S. regional banks, ahead of the release of key inflation data. The DAX index in Germany dropped 1.8%, the CAC 40 in France slipped 0.2% and the FTSE 100 in the U.K. fell 0.9%.
Consumer price inflation rose 2.2% in the eurozone on an annual basis in September, data confirmed earlier Friday, offering the European Central Bank few reasons to further ease monetary policy. The eurozone’s consumer price index (CPI) rose by 2.2% annually last month, up from 2.0% in September, confirming the flash release seen earlier this month. Month-on-month, the reading gained 0.1% last month after posting a similar gain of 0.1% in August. Stripping out more volatile items like food and fuel, the “core” number rose to 2.4% in the twelve months to September, increasing from 2.3% in the prior month.
The ECB has cut interest rates by two percentage points in the year to June but has been on hold ever since, arguing that inflation was now roughly at target and there was no urgency in adjusting rates further. It is widely expected to keep rates unchanged at its next meeting at the end of this month.
•ASIAN MARKET: Most Asian stock markets fell sharply on Friday tracking overnight losses on Wall Street, where renewed fears over U.S. regional banks rattled investor confidence, while Chinese shares led regional declines amid escalating trade tensions with Washington.
Japan’s Nikkei 225 dropped 1.3% on Friday after sharp gains in the last two sessions, set for a 1% weekly loss
Chinese shares fell the most in the region, as trade tensions between Beijing and Washington remained heightened. Last week, Trump threatened to impose additional 100% tariffs on Chinese imports starting Nov. 1, in response to Beijing’s expanded curbs on rare earths exports. The renewed friction has reignited fears of another trade war between the world’s two largest economies, after they averted higher tariffs earlier this year by cutting deals.
China’s blue-chip Shanghai Shenzhen CSI 300 dropped 1.3% on Friday, while the Shanghai Composite index fell 1%. Hong Kong’s Hang Seng index slumped 1.8%, poised to lose nearly 3% this week.
• COMMODITIES : Oil prices managed small gains on Friday but were headed for a weekly loss of nearly 3% after the IEA forecast a growing glut and U.S. President Donald Trump and Russian President Vladimir Putin agreed to meet again to discuss Ukraine. Brent crude futures settled at USD 61.29 a barrel, up 23 cents, or 0.38%. U.S. West Texas Intermediate futures finished at USD 57.54 a barrel, up 8 cents, or 0.14%. Trump and Putin agreed on Thursday to another summit on the war in Ukraine, to be held in the next two weeks in Hungary.
• INDONESIA: Indonesia on Friday launched a new economic stimulus package that includes cash handouts totalling 30 trillion rupiah ($1.81 billion) for 35 million households and expanded a planned paid internship scheme, its chief economic minister said. The cash handouts will be distributed as early as next week and will last until the end of the year, Airlangga Hartarto told a press conference. The new package comes on top of a nearly $1 billion stimulus announced in September, which consisted of food assistance, temporary jobs in construction and also launched the internship programme. This will now be extended to a total of 100,000 university graduates, up from 20,000 under the previous plan, Airlangga said. The budget for the additional 80,000 interns was allocated at around 1.4 trillion rupiah, state secretariat minister Prasetyo Hadi said. Separately, the Finance Ministry published a regulation stating that the government will cover 6% out of the 11% value-added tax on economy-class domestic air fares for the travel period of December 22 to January 10.
The JCI closed sharply lower, down -2.56% to 7,915.66, breaking below the key 8,000 support level. Most conglomerate stocks have already broken below their 20-day moving average (MA20), suggesting investors should consider reducing position weights.If a rebound opportunity arises, there may be one short-term upside move ahead of the MSCI indexing catalyst, although the risk level remains elevated under current conditions.
A tactical play is recommended — such as monitoring sector rotation into fundamentally strong, classic stocks like banks, given that banking dividend yields currently exceed bond yields (Bank Div Yield > Bond Yield). However, the banking sector still faces performance challenges (concerns over loan disbursement and asset quality). Consumerbased stocks may also serve as a defensive hedge in this environment.
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