United States equity benchmarks rallied to fresh highs on Monday (Tuesday AEDT) after a weekend of diplomacy between Washington and Beijing eased trade tensions and raised hopes that President Donald Trump and China’s President Xi Jinping could finalise a deal this week.
All three major averages closed at record levels, with the Dow Jones Industrial Average adding 337.5 points, or 0.7%, to finish at 47,544.6. The S&P 500 rose 83.5 points, or 1.2%, to 6,875.2, and the Nasdaq Composite gained 432.6 points, or 1.9%, to close at 23,637.5.
The small-cap Russell 2000 also posted a new record close, up 6.96 points, or 0.3%, at 2,520.4.
U.S. President Donald Trump said on Monday that Washington and Beijing were poised to come away with a trade deal ahead of his expected meeting with Chinese leader Xi Jinping.
Speaking aboard Air Force One en route to Japan from Malaysia, Trump added that he could sign a final deal on TikTok as early as Thursday.
“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said.
Market participants were also focused on a cluster of central bank decisions this week in the U.S., Europe and Japan.
ANZ analysts commented in a note to clients: "The FOMC, ECB and BoJ are all scheduled to meet this week. The FOMC is expected to cut 25bp on Wednesday, with the focus on the accompanying statement and Chair Powell’s press conference.
"We expect Powell to signal a cautious, meeting-by-meeting approach to further cuts.
"On Thursday, we expect the ECB to hold rates and for policymakers to signal comfort with current policy settings. While last week’s PMI data were encouraging as regards the growth outlook, we still think the growth climate is fragile and maintain an easing bias.
"With the ECB forecasting inflation to undershoot the 2% target next year, any downside risks to growth may necessitate a policy response.
"The BoJ will meet on Thursday, and we expect it to keep its policy rate unchanged, though at least two Board members are likely to dissent in favour a 25bp hike.
"Heightened uncertainty from trade policy and a significant shift in the political landscape are likely to keep the BoJ cautious, despite elevated inflation. We expect it will hike 25bp in January and April next year."
Technology and chip stocks were among the session’s biggest winners. Qualcomm climbed 11.1% and reached a new all-time high earlier in the day after unveiling new artificial intelligence chips that position the company as a competitor to Nvidia and AMD.
AI chip leader Nvidia also contributed strongly to the rally, rising 2.8% and delivering the largest boost to the S&P 500.
The consumer discretionary sector finished up 1.5%, led by Tesla, which jumped 4.3% amid optimism tied to the U.S.-China negotiations.
Attention now turns to a busy week of corporate results from several of the so-called “Magnificent Seven” technology names; Alphabet, Amazon, Apple, Meta Platforms and Microsoft are all due to report third-quarter results in the coming days.
Investors are likewise pricing in a Federal Reserve rate reduction on Wednesday, a view reinforced after the Bureau of Labor Statistics released slightly cooler-than-expected inflation data last week.
Markets are watching closely for the tone of Fed Chair Jerome Powell’s post-decision remarks and whether policymakers indicate a path for further cuts.
On the bond markets, the 10-year rates were down 0.8% to 4.557%, and 2-year rates were up 0.4% to 3.497%.
