Stock Market Update

Equity futures point to a higher open this morning after Friday's action pushed the major averages to fresh record highs. 

The market carries its momentum into a much anticipated week of potential catalysts. 

The FOMC is widely expected to provide another 25-basis-point rate cut on Wednesday, with Friday's softer-than-expected September Consumer Price Index (0.3%; Briefing.com consensus: 0.4%) helping to cement the market's expectations for cuts at the October and December meetings. 

On the trade front, the U.S. and China have reached a framework for a trade deal that will avoid additional 100% tariffs, with President Trump and Chinese President Xi expected to finalize the deal during their meeting this Thursday. 

The market will also receive another heavy batch of earnings reports this week, including those of five "magnificent seven" names. 

In corporate news: 

• Treasury Secretary Scott Bessent, in an interview, says there will be no changes to U.S. export controls on chips, according to CBS News. 
• Keurig Dr. Pepper (KDP 29.60, +2.44, +9.0%) reported EPS in-line, beat revenue expectations, raised its sales growth guidance, and reaffirmed its EPS outlook.
• Microsoft (MSFT 530.12, +6.51, +1.2%) was upgraded to Buy from Neutral at Guggenheim, with a target price of $586.
• Snowflake (SNOW 261.00, +3.06, +1.2%) reaffirmed its Q3 revenue guidance and FY26 revenue guidance

Reviewing overnight developments: 

Equity indices in the Asia-Pacific region began the week on a higher note with Japan's Nikkei (+2.5%) and South Korea's Kospi (+2.6%) hitting fresh records while markets in New Zealand were closed for a holiday. Japan's Nikkei: +2.5%, Hong Kong's Hang Seng: +1.1%, China's Shanghai Composite: +1.2%, India's Sensex: +0.7%, South Korea's Kospi: +2.6%, Australia's ASX All Ordinaries: +0.4%.

In news:

• U.S. Treasury Secretary Bessent and U.S. trade rep Greer announced that a framework for a deal with China has been agreed upon, suggesting that the additional 100% tariff will not be implemented on November 1.
• South Korea's President Lee said that talks with the U.S. regarding South Korea's $350 bln investment are still deadlocked.

In economic data:

• China's September FDI -10.4% YTD (last -12.7%) and September Industrial Profit 3.2% YTD (last 0.9%)
• Hong Kong's September trade deficit HKD50.2 bln (last deficit of HKD25.4 bln). September Imports 13.6% m/m (last 11.5%) and Exports 16.1% m/m (last 14.5%)

Major European indices trade on a somewhat higher note with a sentiment boost after U.S. trade officials said that a framework for a deal with China has been reached, reducing the likelihood of additional tariffs being implemented on November 1. STOXX Europe 600: +0.1%, Germany's DAX: -0.1%, U.K.'s FTSE 100: +0.1%, France's CAC 40: -0.2%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.5%.

In news:

• Moody's affirmed France's Aa3 rating but lowered the outlook to Negative due to risks from political instability related to the ongoing budget battle.
• Bank of France Governor Villeroy de Galhau said that it is necessary to reduce France's deficit to 3% of its budget to stabilize public debt.

In economic data:

• Eurozone's September M3 Money Supply 2.8% yr/yr (expected 2.7%; last 2.9%). September Private Sector Loans 2.6% yr/yr, as expected (last 2.5%) and September loans to nonfinancials 2.9% yr/yr (last 3.0%)
• Germany's October ifo Business Climate Index 88.4 (expected 88.1; last 87.7). October Current Assessment 85.3 (expected 85.5; last 85.7) and Business Expectations 91.6 (last 89.8)