Stock Market Update

Equity futures point to a lower open this morning after yesterday's tech-driven rally saw the major averages recover roughly half of Friday's losses. 

Mega-cap tech and semiconductor names that outperformed yesterday are down in the pre-market as trade concerns with China linger. Reuters reports that China has sanctioned five U.S.-linked subsidiaries of the South Korean shipbuilding company, Hanwha Ocean.

The Wall Street Journal reports that both the U.S. and China are publicly trying to de-escalate trade tensions, though the Trump administration is privately pressuring China and considering a range of retaliatory options. 

Treasury Secretary Scott Bessent said President Trump is still on track to meet with Chinese President Xi in late October, according to Reuters. 

Earnings reports have ramped up this morning with the release of several large banking names, and while most have delivered EPS and revenue beats, there are a handful that trade lower in the pre-market after experiencing a nice run leading up to their earnings release. 

The NFIB Small Business Optimism Index contracted to 98.8 in September from a prior level of 100.8, the market's only economic data release today. 

In corporate news: 

• Disney (DIS 109.79, -0.48, -0.4%) plans to announce a new CEO in 2026, according to CNBC. 
• Goldman Sachs (GS 775.39, -11.39, -1.5%) beat EPS expectations by $1.22 and beat revenue expectations.
• Johnson & Johnson (JNJ 189.70, -1.20, -0.6%) beat EPS expectations by $0.04, reported revenues in-line, reaffirmed FY25 EPS guidance, and guided FY25 revenues above consensus.
• JPMorgan Chase (JPM 306.14, -1.83, -0.6%) beat EPS expectations by $0.22 and beat revenue expectations. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region finished mostly lower on Tuesday, with outsized losses registered by Japan's Nikkei (-2.7%) and Hong Kong's Hang Seng (-1.7%). Japan's Nikkei: -2.7%, Hong Kong's Hang Seng: -1.7%, China's Shanghai Composite: -0.6%, India's Sensex: -0.4%, South Korea's Kospi: -0.6%, Australia's All Ordinaries: +0.3%. 

In news:

• Markets were trending lower in spite of Wall Street's big gains on Monday, but then selling interest accelerated after China announced new sanctions on five U.S. subsidiaries of South Korean shipping company Hanwha Ocean, breathing new life into the U.S-China trade tension.
• Additionally, China has started collecting additional port fees for U.S. cargo ships and said it will be investigating the impact of the U.S. probe into China's shipping and shipbuilding industries, according to CNBC.
• Samsung reported preliminary Q3 profits that were better than expected, yet that wasn't enough to keep the Kospi (-0.6%) in positive territory, as regional markets reacted to the U.S.-China standoff.

In economic data:

• Japan's M2 Money Stock 1.6% yr/yr (prior 1.3%)
• Australia's September NAB Business Confidence 7 (prior 4)
• India's September WPI Inflation 0.13% yr/yr (expected 0.5%; prior 0.52%)
• Singapore's Q3 GDP 1.3% qtr/qtr (expected 0.3%; prior 1.5%) and 2.9% yr/yr (expected 2.0%; prior 4.5%)

Major European indices are on the defensive in Tuesday's trade, following course with indices in the Asia-Pacific region and the U.S. equity futures market. STOXX Europe 600: -0.9%, Germany's DAX: -1.3%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -1.1%, Italy's FTSE MIB: -1.2%, Spain's IBEX 35: -0.4%.

In news:

• The weakness stems from an increase in U.S.-China trade tension, which has been stoked by China's move to impose sanctions on five U.S. subsidiaries of South Korean shipping company Hanwha Ocean after President Trump threatened to impose an additional tariff of 100% on imports from China if it does not relax its export controls for rare earth minerals.
• Separately, France's President Macron said he is not resigning, and the latest employment data out of the U.K., which featured an increase in the September claimant count and a bump in the unemployment rate, is stirring talk of a possible BOE rate cut in December.
• The British pound has weakened against the dollar in response.

In economic data:

• Eurozone's October ZEW Economic Sentiment 22.7 (prior 30.2; prior 26.1)
• Germany's September CPI 0.2% m/m (expected 0.2%; prior 0.1%) and 2.4% yr/yr (expected 2.4%; prior 2.2%); October ZEW Economic Sentiment 39.3 (expected 41.2; prior 37.3)
• U.K.'s September Claimant Count Change 25.8K (expected 10.3K; prior -2.0K); unemployment rate 4.8% (expected 4.7%; prior 4.7%); and August average earnings index + bonus 5.0% (expected 4.7%; prior 4.8%)