Stock Market Update

The S&P 500 futures currently trade six points below fair value.

Asian markets finished mostly lower on Tuesday, with concerns surrounding AI valuations, rising borrowing costs, and heavy capital spending driving a sharp selloff across the region's major technology markets. Japan's Nikkei 225 tumbled 1.8% for a fourth consecutive decline, with Kioxia Holdings (-13%), SoftBank Group (-9%), Tokyo Electron (-7%), Taiyo Yuden (-5%), and Advantest (-3%) leading the retreat, while September producer prices rose a weaker-than-expected 6.8% yr/yr. South Korea's KOSPI plunged 5.5%, with Samsung Electronics and SK Hynix under pressure after China's CXMT reported progress on a new memory-cell design, adding another competitive concern for the semiconductor industry. China's Shanghai Composite bucked the broader weakness with a 0.1% gain, while the Shenzhen Component slipped 0.3% to a more than one-year low as semiconductor shares traded mixed. Hong Kong's Hang Seng Index recovered from an early selloff to gain 0.3%, with Geely (+3%), Xiaomi (+2%), AIA (+2%), and Meituan (+1%) advancing. In Australia, business confidence deteriorated further in September, while investors also digested the minutes from the Reserve Bank of Australia's latest policy meeting.

• In economic data:
  • Japan's September PPI fell 0.3% m/m (expected 0.5%; prior -0.3%) and rose 6.8% yr/yr (expected 7.6%; prior 7.6%).
  • Japan's bank lending increased 5.3% yr/yr (expected 5.5%; prior 5.3%).
  • Australia's September NAB Business Confidence fell to -13 from -9.
  • Australia's September NAB Business Survey was unchanged at -1.
  • Minutes from the RBA's September meeting showed the Board unanimously raised the cash rate by 25 bps to 4.60%, citing mounting upside risks to inflation and indicating further tightening could be required.

European markets trade mostly higher on Tuesday, with lower oil prices and bond yields supporting sentiment while renewed concerns about AI valuations weigh on technology shares. Germany's DAX rises 0.3% for a third consecutive advance, with Zalando (+7%), Fresenius, Siemens Healthineers, Fresenius Medical Care, and Bayer (all +4% or more) among the leaders, while Infineon (-7%) tumbles amid concerns surrounding AI investment returns and increased competition from China's CXMT. Germany's annual inflation rate was confirmed at 3.3% in September, up from 2.9% in August and marking its highest level since December 2023. France's CAC 40 edges up 0.1%, with Société Générale (+2%), L'Oréal (+1%), and Danone (+1%) advancing, while STMicroelectronics (-5%) follows the broader semiconductor selloff and LVMH (-1%) retreats following weaker-than-expected third-quarter organic sales. London's FTSE 100 gains 0.6%, supported by HSBC (+1%), Lloyds Banking Group (+2%), Barclays (+2%), AstraZeneca (+2%), and GSK (+2%), while Whitbread (+2%) advances after reporting better-than-expected first-half profits. The broader STOXX Europe 600 rises 0.4%, while Italy's FTSE MIB gains 0.3% and Spain's IBEX 35 trades little changed.

• In economic data:
  • Germany's September CPI rose 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%).
  • Germany's September HICP rose 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%).
  • The U.K.'s September BRC Retail Sales Monitor increased 1.0% yr/yr (expected 0.8%; prior 0.5%).