Stock Market Update

The S&P 500 futures currently trade 25 points above fair value. 

Asian markets finished mixed on Wednesday, with semiconductor shares rebounding sharply in Japan and South Korea while company-specific weakness weighed on China and Hong Kong. Japan's Nikkei 225 gained 0.9%, with Kioxia Holdings (+3%), Advantest (+2%), Taiyo Yuden (+2%), SoftBank Group (+2%), and Lasertec (+2%) advancing as sentiment toward AI spending improved. Japanese exports increased 16.7% yr/yr in September, marking a 13th consecutive increase but falling short of expectations, while the trade deficit narrowed substantially from August. South Korea's KOSPI rallied 3.3%, led by Samsung Electronics (+6%) and SK Hynix (+6%) after stronger results from U.S. AI server maker Super Micro Computer provided fresh evidence of resilient AI-related demand. The rebound also coincided with a 105.4% yr/yr surge in South Korean exports during the first 20 days of October, including a 222.5% jump in semiconductor shipments, while foreign investors returned as net buyers. China's Shanghai Composite fell 0.6%, with CATL (-12%) tumbling after reporting sharply slower third-quarter profit growth, while PetroChina (-2%) and Kweichow Moutai (-2%) also declined. Hong Kong's Hang Seng lost 0.9% and fell to its lowest level since July, with Pop Mart (-6%), Tencent (-4%), and SMIC (-2%) joining weakness in CATL, although Lenovo (+3%) and Z.AI (+2%) bucked the decline. The divergence across the region suggests investors are becoming increasingly selective toward growth and AI-related exposure, rewarding evidence of strong underlying demand while remaining sensitive to slowing earnings growth and questions surrounding returns on heavy investment.

• In economic data:
  • Japan's September trade deficit narrowed to JPY536.6 bln (expected JPY181.0 bln; prior JPY1,111.9 bln), with exports up 16.7% yr/yr (expected 20.1%; prior 19.3%) and imports up 18.9% yr/yr (expected 19.6%; prior 28.0%).
  • South Korean exports surged 105.4% yr/yr during the first 20 days of October, including a 222.5% increase in semiconductor shipments.
  • South Korea's September PPI increased 0.2% m/m (prior 0.1%) and 7.7% yr/yr (prior 7.9%).
  • New Zealand's September credit card spending increased 6.9% yr/yr (prior 3.6%).

European markets trade mostly higher, with upbeat corporate results and renewed strength in technology shares helping offset elevated oil prices and bond yields. Germany's DAX gains 0.7%, led by Adidas (+2%) after the company raised its full-year earnings forecast following record quarterly sales, while Infineon (+2%) and SAP (+1%) participate in the technology rebound. France's CAC 40 rises 0.6%, with EssilorLuxottica (+12%) surging after stronger-than-expected third-quarter revenue and STMicroelectronics (+2%) benefiting from improved technology sentiment, while Michelin (-5%) retreats after reporting lower nine-month sales. London's FTSE 100 underperforms with a 0.1% gain as September CPI accelerated to a hotter-than-expected 3.5% yr/yr and producer-price pressures intensified, strengthening the case for tighter monetary policy. The U.K.'s fiscal picture adds another headwind, with September public-sector borrowing reaching GBP24.50 bln, above expectations and the year-earlier level, while HSBC (-1%), Lloyds (-1%), and Rio Tinto (-3%) trade lower. The STOXX Europe 600 gains 0.5%, while Italy's FTSE MIB rises 0.6% and Spain's IBEX 35 advances 0.7% as corporate earnings help continental markets withstand the renewed inflation and rate concerns weighing more heavily on the U.K.

• In economic data:
  • U.K. September CPI increased 0.4% m/m (expected 0.3%; prior 0.5%) and 3.5% yr/yr (expected 3.4%; prior 3.1%); core CPI rose 0.2% m/m (expected 0.2%; prior 0.3%) and 2.8% yr/yr (expected 2.8%; prior 2.6%).
  • U.K. September PPI Input increased 1.5% m/m (expected 1.3%; prior 0.5%) and 8.3% yr/yr (expected 7.2%; prior 6.7%); PPI Output rose 0.8% m/m (expected 0.7%; prior 0.7%) and 4.6% yr/yr (expected 4.3%; prior 3.8%).
  • U.K. September public sector net borrowing totaled GBP24.50 bln (expected GBP23.80 bln; prior GBP18.30 bln).
  • Switzerland's September M3 money supply totaled CHF1,238.9 bln (prior CHF1,239.5 bln).