US futures
Dow futures 0.54%, S&P futures 0.45% & Nasdaq futures 0.52%
In Europe
FTSE 0.45% & DAX -0.36%
- Stocks reach fresh record highs
- Expectations are for a 25nbps rate cut. What about QT?
- Nvidia reaches $5 trillion market cap
- Oil steadies ahead of EIA inventory data
Nvidia reaches $5 trillion market cap
U.S. Stocks rally to record highs as Nvidia reaches $5 trillion in valuation and investors await an expected Federal Reserve rate cut, along with a wave of magnificent seven earnings.
NVIDIA rose above the 5 trillion market cap level, adding to optimism surrounding big tech. Yesterday, Apple briefly topped $4 trillion in market cap; Microsoft trades above that level. The S&P 500 tech index is up 1.4% while the Philadelphia semiconductor index is trading 2.1% higher.
Meta, Microsoft, and Alphabet are due to report earnings after the close.
More broadly, the three major US indices hit a series of record highs in recent sessions, boosted by optimism about AI, strong earnings, and hopes of a rate cut from the Federal Reserve.
The FOMC will announce its rate decision at 18:00 GMT and is expected to cut rates by 25 basis points to 3.75%-4%. The market is also pricing in a 92% probability that the Fed will cut rates by a further 25 basis points in December. Given that the October rate cut is fully priced in the market, the market will be looking to Fed Powell’s presser for clues over what’s next.
Investors are also keeping an eye on the Fed's plans to end quantitative tightening, its long-running effort to shrink its balance sheet. An end to the QT programme would loosen monetary policy further.
Meanwhile, U.S. President Trump is starting the final leg of his Asia trip after reaching a deal with South Korea and saying he is optimistic about an agreement with Chinese President Xi Jinping. The pair will meet for talks tomorrow.
Corporate news
Nvidia became the first company to surpass $5 trillion in valuation, boosted by an impressive rally, which has cemented its place at the centre of the global AI boom. The latest leg higher comes as CEO Jensen Huang announced $500 billion in AI chip orders and plans to build 7 supercomputers for the US government.
Boeing is experiencing volatility after reporting its Q3 results, which saw revenue of $ 23.27 billion, above the $ 21.97 billion forecast; however, it posted a loss per share of $7.47, ahead of the $4.59 per share the market was expecting.
Caterpillar, the construction agricultural equipment manufacturer, is up over 4% on stronger-than-expected results. In Q3, Caterpillar posted EPS of $4.95 on revenue of $17.64 billion. This was ahead of forecasts of EPS of $4.59 on revenue of $16.77 billion.
Nasdaq 100 forecast – technical analysis.
The Nasdaq 100 has broken out above its rising channel, surging to a record high above 26180. The RSI is tipping into RSI, which could be a reason for caution; the price could consolidate or even ease lower. With blue skies above, buyers will look to extend gains towards 26,500 and 27,000 as the next logical target. Support can be seen at 25,200 the October 9 high. It would take a break below 23,950 to create a lower low, altering the chart's structure.
FX markets – USD rises, USD/CAD falls
The U.S. dollar is rising as investors react to optimism from Trump surrounding U.S.-China trade talks and as attention turns to the FOMC rate decision, where the central bank is expected to cut rates.
USD/CAD is falling as the BoC cut rates by 25 bps, in line with expectations, taking the rate to 2.25%. The BoC statements said that the policy rate is “about the right level,” suggesting the central bank is close to the end of its rate-cutting cycle.
The GBP/USD has fallen to 1.32, its Lowest level in three months, on U.S. dollar strength and as the market sees an increasing possibility that the BOE could cut rates again this year, and potentially as early as next week. Goldman Sachs believes the central bank could cut rates in November. News that the budget watchdog is set to cut a key productivity forecast by 3%, which could lead to a £20 billion hit to public finances, is also weighing on sterling.
Oil steadies ahead of EIA inventory data & the Fed rate decision
Oil is holding steady after two days of losses as investors look ahead to a busy few days, including the EIA's weekly inventory data and the Fed's interest rate decision today, as well as the Trump-Xi Jinping meeting tomorrow.
Oil prices had been falling earlier in the week on concerns that OPEC+ would further increase output when it meets on Sunday. Concerns about oversupply pulled oil prices abruptly lower. At the start of the week, however, API reported a larger-than-expected 4 million barrel drop in US crude stocks, which has helped support oil prices.
Traders will closely monitor US-China trade progress ahead of the Fed rate decision, where the central bank is widely expected to deliver a 25-basis-point rate cut. Looser monetary policy, combined with the US-China trade tensions, could lift oil prices.
