27/10/2025 Daily Reports
Global equities kicked off the week on a strong note as optimism surrounding a potential U.S.–China trade understanding boosted risk appetite. While no official agreement has been signed yet, reports that negotiators have drafted a framework for Presidents Trump and Xi to review later this week fueled a broad market rally across Asia. Japan’s Nikkei, Taiwan’s TAIEX, and South Korea’s KOSPI each advanced about 2%, while Chinese shares and Nasdaq futures also climbed. The prospect of easing U.S. tariffs and reduced restrictions on China’s rare earth exports lifted sentiment and drove commodities, including copper, higher, even as gold prices slipped amid the shift toward risk assets.
The upbeat tone, however, may prove fragile. Much of the optimism stems from expectations that the deal could extend rather than resolve trade tensions, raising the risk of market disappointment. Still, investors remain focused on an eventful week ahead for global monetary policy, with the Federal Reserve, European Central Bank, Bank of Japan, and Bank of Canada all set to meet. The Fed is widely anticipated to cut rates by 25 basis points, though uncertainty over future moves lingers given limited economic data from the recent U.S. government shutdown. Meanwhile, European investors will also keep an eye on a packed earnings calendar that could shape short-term sentiment across major indices.
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- Global markets are exhibiting a robust “risk-on” trend, fuelled by a surge in Asia and an improvement in sentiment surrounding U.S.-China trade relations. A preliminary framework for trade talks has boosted risk appetite, lifting global futures. The Nikkei index surged past the 50,000 mark today, reaching a new record high amid expectations of significant fiscal stimulus from the newly appointed Prime Minister, Sanae Takaichi. This domestic push, combined with a weaker yen, is providing a direct tailwind for Japanese equities.
- U.S. futures are advancing ahead of a pivotal week of big tech and AI earnings reports, with Amazon, Apple, Meta’s being the key factor likely to influence the Nasdaq. The market’s bullishness is supported by expectations of a Federal Reserve rate cut this week, which favours higher valuations for growth and technology stocks.
In Europe, the DAX is rallying alongside its global counterparts, buoyed by the easing of trade tensions and an IFO Business Climate Index that unexpectedly increased in October, alleviating some immediate fears of a recession. However, the ECB remains in assessment mode, leaving the DAX sensitive to global growth and earnings signals. Overall, easing geopolitical and tariff concerns are fuelling a broad-based rally, with investor focus now squarely on corporate results to validate the high valuations
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- Global investors welcomed a potential breakthrough between Washington and Beijing, as both sides reportedly agreed on a framework for a trade deal, possibly averting a 100% tariff hike on Chinese goods scheduled for November 1.
- US stock futures surged — Dow +0.65%, S&P 500 +0.74%, and Nasdaq +0.92% — after the news broke Sunday evening, reflecting renewed optimism ahead of this week’s Federal Reserve meeting.
- The Dow Jones closed above 47,000 for the first time on Friday, fueled by softer-than-expected CPI data, which strengthened market expectations for another rate cut.
- Asian markets mirrored the upbeat sentiment — Nikkei 225 jumped 1.9%, Kospi rose 2.4%, and Hang Seng gained 1.28% — as traders bet on improved trade relations and economic stability in the region.
- The anticipated Trump–Xi meeting in South Korea later this week could mark a major turning point in the trade war, with reports suggesting concessions on both sides, including a possible deferral of rare-earth export controls by China.
- The trade war has hit US farmers particularly hard — especially soybean producers — but the emerging deal may bring long-awaited relief and boost agricultural exports once again.
What’s Next?:
Markets are clearly pricing in optimism, but sustainability will depend on whether this “framework” turns into a tangible agreement. We’ve seen temporary calm before — what matters now is whether both sides can move from headlines to handshakes.
