Global Economic Snapshot

• Germany: October Ifo Business Climate index rose slightly to 88.4 (vs 88.0 expected), while unemployment declined by 1k (expected +8k). CPI came in at +2.3% y/y (vs +2.2% expected).
• Eurozone: Q3 GDP grew +0.2% q/q (vs +0.1% expected).
• US: October consumer confidence at 94.6 (vs 93.2 expected) suggested optimism despite lingering inflation concerns.
• Australia: Q3 Core inflation (trimmed mean) rose 1.0% q/q, above the RBA forecast of 0.6%, signaling sticky domestic price pressures.
• Japan: Tokyo CPI at 2.8% y/y (vs 2.4% expected).
• China: Manufacturing PMI slipped to 49.0 (vs 49.6 expected), indicating ongoing contraction in the sector.

Market Drivers & Key Developments

• US–China Relations: Nomura described a “tension–escalation–truce” cycle as the new normal. While recent trade talks eased friction with tariff truces and soybean purchases, strategic rivalry remains entrenched, and long-term uncertainties persist.
• US Dollar Rebound: Morgan Stanley noted a shift in investor sentiment toward the greenback, citing growing confidence in the US economy and declining demand for downside protection against a weaker dollar. Political uncertainty in Japan and France contributed to the relative strength of the dollar.
• Japan–US Investment Drive: Major Japanese firms (SoftBank, Hitachi, Mitsubishi) to participate in a $550B investment package covering energy, AI, and critical minerals.
• Nvidia: First company to surpass $5 trillion market value; announced $1B equity investment in Nokia to integrate AI into telecom infrastructure.

Policy & Central Banks

• US Fed: Cut rates by 25 bps as expected. Chair emphasized a softening labor market, still-elevated inflation, and differing views on future rate moves. A further cut in December is not guaranteed.
• Bank of Canada: Reduced rates by 25 bps, citing economic weakness and inflation near target, while highlighting soft labor market conditions.
• Bank of Japan: Held rates at 0.5%, signaling patience amid modest growth, steady inflation forecasts, and global uncertainty. Two members dissented in favor of a hike.
• ECB: Refinance rate unchanged at 2.15%; Lagarde highlighted strong digital services growth, moderating labor costs, and global headwinds.

US–China Trade Update

• President Trump and President Xi reached a one-year agreement, set to be renewed after that period.
• US tariffs on Chinese goods were reduced by 10% (from 57% to 47%).
• China agreed to continue rare earth exports without roadblocks and to start immediate purchases of US soybeans.
• Fentanyl-related tariffs were reduced, and Trump’s 1 November tariff threat was scrapped.
• Discussions included semiconductors (no firm agreements), with sensitive issues like Taiwan not raised.
• Future diplomatic engagement planned: Trump to visit China in April next year, followed by Xi’s visit to the US.

Big Tech Earnings Recap

• Alphabet: EPS $2.87, Revenue $102.3B beat expectations; shares +7% on strong ad and cloud growth and confident guidance.
• Meta: Revenue up 26% to $51.2B, EPS $1.05 — missed on profit due to a large one-off tax charge and rising expenses. Shares fell 10% amid AI investment concerns.
• Microsoft: Beat on EPS and revenue, but shares dipped slightly as investors weighed higher AI infrastructure spending and margin pressures.
• Apple: EPS $1.85, revenue $102.5B beat estimates. Positive guidance for the holiday quarter lifted shares 4%, highlighting expected double-digit revenue growth and a rebound in device sales.
• Amazon: EPS $1.95, Revenue $180.2B beat expectations; shares +10% on strong AWS growth, retail margin improvement, and forward guidance.

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