Global markets rallied on Tuesday as easing geopolitical tensions and growing expectations of a US rate cut buoyed sentiment. Wall Street gained on AI optimism, led by Alphabet at Nvidia’s expense; Europe advanced on a defence rebound; while Asia climbed after President Trump’s outreach to China and Japan calmed trade and Taiwan concerns.
US stocks rose on Tuesday as investors weighed the future of the AI boom and growing expectations of a rate cut next month. The S&P 500 gained +0.7%, the DOW rose +1.2%, and the NASDAQ added +0.4%, recovering from earlier losses. Alphabet climbed +1.3% to yet another record high after reports that Meta may spend billions on Google’s AI chips, fuelling optimism about the company’s growing role in the AI race. Nvidia tumbled -3.7% as investors worried the report signalled increased competition. On the data front, shutdown-delayed reports painted a mixed picture of the economy: retail sales rose +0.2% in September, below forecasts, while producer prices increased +0.3% on the month, and consumer confidence tumbled to 88.7—its second-lowest reading since April. ADP also noted further softening in the labour market, with private employers cutting an average of -13,500 jobs per week over the past month. The weaker data bolstered expectations that the Fed could deliver a quarter-point rate cut in December, pushing the US two-year yield down -3bp to 3.461% and the 10-year yield -4bp to 3.994%.
European equities closed higher on Tuesday, as investors awaited key US economic data for direction. The STOXX 600 rose +0.9%, with Germany’s DAX gaining +1.0%, France’s CAC 40 shifting +0.8% higher and the UK’s FTSE 100 rising +0.8%. Defence stocks rebounded after two sessions of heavy losses, with Renk up +4.6% and Rheinmetall rising +1.7%, as reports suggested Ukraine had agreed to the framework of a potential peace deal with Russia. Novo Nordisk gained +4.5% after promising trial results for its new obesity drug Amycretin, while UK retailer Kingfisher jumped +6.0% after raising its full-year profit outlook.
Asian equities rose broadly on Tuesday, with Chinese and Hong Kong markets leading gains after US President Donald Trump held calls with the leaders of China and Japan in an effort to defuse escalating tensions over Taiwan that threaten to derail his recent trade truce with Beijing. China’s Shanghai Composite jumped +0.9% after Trump described relations with Xi Jinping as ‘extremely strong’, while Hong Kong’s Hang Seng climbed +0.7%. Japan’s Nikkei 225 finished flat as markets reopened after a holiday, while South Korea’s Kospi rose +0.3%, amid revived Fed rate-cut hopes. SoftBank extended its decline, tumbling -10.0% on concerns that Google’s Gemini model could challenge OpenAI, one of its key AI investments. Australia’s ASX 200 added +0.1% as gains in miners, including Newmont (+4.9%) and Evolution Mining (+3.5%), offset weakness in financials. In New Zealand, the NZX 50 eased -0.1% ahead of the Reserve Bank’s interest rate decision.
The WTI crude fell -1.8% to US$57.80/bbl, gold rose +0.1% to US$4,145.04/oz, and iron ore gained +0.2% to US$104.42/MT.