S&P 500 futures rose 0.27% this morning, premarket, and indexes in Asia and Europe largely rose as well as traders savoured strong economic growth in China, a new “pro-stimulus” government in Japan, and the prospect that President Trump probably isn’t in a position to impose 100% tariffs on China starting November 1.
Investors are also increasingly convinced that the Fed’s rate cuts are now locked in. And the notion that the U.S. Supreme Court may yet rule that Trump’s tariffs are illegal would be the icing on the equity cake, according to a note from JPMorgan over the weekend. “The impact on equity markets could be material as the tariff equity factor [which has weighed on some stocks] could see a sharp reversal,” if the tariffs are struck down, wrote Dubravko Lakos-Bujas and his team
The Nikkei 225 was up 3.37% this morning after the Liberal Democratic Party and the Japan Innovation Party formed a coalition, allowing Sanae Takaichi to become the country’s first female prime minister.
China reported GDP growth of 4.8% in Q3, above analysts’ estimates. The CSI 300 rose 0.53%. The fact that the Chinese economy doesn’t seem to be wounded by Trump’s tariff threats—and the fact that the U.S remains dependent on China’s rare earth minerals—seems to have convinced investors that tariffs on China just aren’t going to happen.
“If we look at Polymarket, it’s currently pointing to just a 7% chance they come into effect by November 1,” Jim Reid team at Deutsche Bank said this morning.
In Europe, the Stoxx 600 was up 0.63% midmorning and the U.K.’s FTSE 100 was up 0.36%.
In the U.S., investors are becoming more convinced that the U.S. Federal Reserve will not put its interest rate-cutting program on hold.
“On Friday, the BLS will publish the delayed CPI numbers for September. We are aligned with consensus in expecting a 0.3% MoM core read – which should further endorse a 25bp cut by the Fed next week,” ING’s Francesco Pesole told clients this morning.
Pantheon Macroeconomics’ Samuel Tombs and Oliver Allen suggested that some investors thing the Fed might cut by 50 bps in December—although that seems unlikely.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
- S&P 500 futures were up 0.34% this morning. The index closed up 0.53% in its last session.
- STOXX Europe 600 was up 0.54% in early trading.
- The U.K.’s FTSE 100 was up 0.36% in early trading.
- Japan’s Nikkei 225 was up 3.37%.
- China’s CSI 300 was up 0.53%.
- The South Korea KOSPI was up 1.76%.
- India’s Nifty 50 was up 0.47% before the end of the session.
- Bitcoin was up to $111.1K.
