Stock Market Update

The S&P 500 futures currently trade 24 points above fair value.

Asian markets finished mixed on Friday, with easing oil prices and bond yields helping equities recover from early weakness while investors continued to scrutinize valuations across the AI trade. Japan's Nikkei 225 finished virtually flat after clawing back most of its losses following reports that OpenAI expects annualized revenue to reach at least $70 bln by year-end, although SoftBank Group (-4%), Murata Manufacturing (-4%), and Kioxia Holdings (-2%) remained under pressure. China's Shanghai Composite was little changed, while the Shenzhen Component gained 0.2% as attention shifted toward China-EU trade discussions and lingering tensions surrounding rare earths and critical minerals. Chinese technology shares were mixed, with SMIC (+1%) and Cambricon Technologies (+1%) advancing while Eoptolink Technology (-2%), NAURA Technology (-1%), and Zhongji Innolight (-1%) declined. Hong Kong's Hang Seng Index rallied 1.8%, snapping a two-session losing streak, with Xiaomi (+10%) surging after strong vehicle pre-orders while Kuaishou (+6%), Tencent (+3%), AIA (+3%), and SMIC (+2%) also gained. South Korean markets were closed for Hangul Day, while investors now look toward China's September inflation and trade data following the Golden Week holiday.

• In economic data:
  • Japan's August Household Spending fell 3.1% yr/yr (expected -3.5%; prior -3.6%) and rose 0.1% m/m (expected 0.5%; prior 0.5%).
  • Japan's September Machine Tool Orders increased 60.4% yr/yr (prior 64.7%).

European markets are rebounding this morning, with easing geopolitical concerns pulling oil prices and bond yields lower after President Trump ruled out a U.S. attack on Iran before the November midterm elections and pointed to progress in talks with Tehran. Germany's DAX rises 1.0% after touching a two-month low a day earlier, with Zalando (+3%), SAP (+3%), and Heidelberg Materials (+3%) among the gainers, while Deutsche Telekom (-6%) tumbles on concerns about increased competition for T-Mobile US following SpaceX's spectrum acquisition. France's CAC 40 gains 0.7%, snapping back from two sessions of losses as easing pressure on yields also prompts markets to pare expectations for ECB rate hikes, although concerns surrounding France's fiscal and political outlook remain in focus. London's FTSE 100 advances 0.9%, led by Sage Group (+4%), RELX (+3%), and miners Antofagasta (+3%) and Fresnillo (+3%), while Tesco (+3%) extends its post-earnings advance following positive analyst reactions to its improved outlook. The broader improvement in risk sentiment lifts the STOXX Europe 600 by 0.8%, while Italy's FTSE MIB (+0.8%) and Spain's IBEX 35 (+0.8%) also advance. Italian industrial production fell a weaker-than-expected 1.3% m/m in August, reversing the prior month's increase.

• In economic data:
  • Italy's August Industrial Production fell 1.3% m/m (expected 0.0%; prior 0.6%) and was unchanged yr/yr (prior -0.1%).
  • Switzerland's September SECO Consumer Climate fell to -36 (expected -32; prior -33).