Wall Street Scales Record Highs Ahead of Busy Week

Keep reading to find out more about this and other news. 

US Inflation Rises Less Than Expected 

The rally in equities over the last two sessions was sparked on Friday, after the belated release of the US Consumer Price Index (CPI) for September. 

The report had originally been slated for 15 October, but was delayed due to the US government shutdown, during which the Bureau of Labor Statistics (BLS) ceased all operations. 

However, despite the ongoing shutdown – which, incidentally, is set to enter its fourth week tomorrow - the government decided to make an exception for September’s CPI report, with the BLS publishing the data on Friday. 

Annual inflation in the US rose to 3.0% in September, up from 2.9% in August. However, the increase was less than had been expected, with economists anticipating a reading of 3.1%. 

The markets had already been expecting the Federal Reserve to cut rates at its meeting this week; however, the softer-than-expected inflation data reinforced these expectations and ignited Friday’s stock market rally. 

According to the CME FedWatch tool, markets are currently pricing in a 98% chance that the Fed will announce a 25-basis point reduction in interest rates tomorrow.  

US-China Relations Ease 

The risk-on sentiment carried over into the new week, as global stocks were buoyed on Monday by signs of easing tensions and a potential trade deal between the US and China.  

Besides the record highs recorded on Wall Street, Japan’s Nikkei 225 index surged past 50,000 points for the first time, gaining 2.5% in Monday’s session. South Korea’s Kospi jumped 2.9%, also closing at a record high. 

Monday’s moves came after US and China officials met over the weekend and reached a framework agreement for a potential deal, which will be discussed when their respective leaders meet later this week. 

US Treasury Secretary Scott Bessent told reporters that the agreement would effectively remove the prospect of the 100% tariffs which President Trump had previously threatened. 

Bessent further commented that he expected “some kind of deferral” on Beijing’s proposed rare earth export controls, that China would make “substantial” purchases of US soybeans and that a final deal on TikTok has been reached. 

This week is a big one in terms of announcements. As well as important economic announcements, there are a number of key earnings reports being released, with five of the so-called Magnificent Seven reporting.  

It might also be worth keeping an eye on the previously mentioned meeting between Trump and Xi Jinping, the outcome of which could have an impact on the markets. The two are expected to meet on Thursday on the sidelines of the Asia Pacific Economic Cooperation (Apec) summit. 

Economic Announcements 

Below are some of the important economic announcements to look out for this week.