Stock Market Update

The S&P 500 futures currently trade 35 points below fair value. 

Equity indices in the Asia-Pacific markets finished mostly lower on Thursday, following course with the U.S. market, which was upset by a spike in Treasury yields. Japan was the notable exception. The Nikkei jumped 0.9%. Japanese technology shares rallied after an extended holiday while Chinese equities came under pressure amid uncertainty surrounding US-China trade talks. Treasury Secretary Bessent said an agreement was made to extend the trade truce for two more months until January 10. Japan's Nikkei 225 gained 0.9%, led by AI and semiconductor names including Ibiden (+14.6%), Advantest (+3.2%), Lasertec (+1.8%), Tokyo Electron (+1.5%), and Murata Manufacturing (+0.8%) following recent strength in global technology shares. China's Shanghai Composite fell 1.2%, while the Shenzhen Component dropped 2.3%, with investors cautious about the duration of the US-China trade truce; Foxconn Industrial Internet (-3.1%), China Life Insurance (-3.0%), and Kweichow Moutai (-1.1%) were among the notable decliners. Hong Kong's Hang Seng Index slipped 0.3% for a second consecutive decline, pressured by rising global bond yields, a stronger dollar, and rebounding oil prices. Tencent (-0.6%), Lenovo (-2.4%), Z.AI (-1.8%), and Genscript Biotech (-4.8%) declined, with technology and growth shares facing renewed pressure from higher borrowing costs. Investors across the region continue to monitor US-China negotiations, along with the inflation implications of higher oil prices and rising bond yields.

• In economic data:
  • Japan's September S&P Global Manufacturing PMI fell to 54.1 from 54.9, below the 55.0 consensus.
  • Japan's September S&P Global Services PMI fell to 51.6 from 52.5.
  • Australia's August unemployment rate increased to 4.6% from 4.5%, above the 4.5% consensus.
  • Australia's employment increased by 39,500 in August, above the 21,500 consensus and following a 15,900 decline in July.
  • Hong Kong's August imports increased 60.0% month-over-month following a 41.0% increase.
  • Hong Kong's August exports increased 53.0% month-over-month following a 50.7% increase.

European markets trade mixed, with elevated oil prices, high bond yields, and uncertainty surrounding US-Iran diplomacy weighing on sentiment. The Swiss National Bank left its key policy rate unchanged at 0.00%, as expected. Germany's DAX 40 is down 0.3%, with BMW (-2.5%), Rheinmetall (-2.5%), Volkswagen (-2.1%), SAP (-1.6%), and Mercedes-Benz (-1.6%) leading losses, while Siemens, Henkel, MTU Aero Engines, and Deutsche Telekom gain more than 1.0%. France's CAC 40 was down as much as 0.8% before rebounding, with BNP Paribas (-3.6%), Stellantis (-1.5%), and STMicroelectronics (-1.3%) under pressure. France's September consumer confidence held at 86, and the manufacturing business climate indicator remained at 101. London's FTSE 100 trades slightly higher, outperforming its continental peers, supported by BP (+1.2%), Shell (+0.8%), Unilever (+0.8%), and British American Tobacco (+1.9%). Halma (+0.2%) edges higher after raising its margin guidance, while Rolls-Royce (-1.0%) and BAE Systems (-0.6%) retreat.

• In economic data:
  • Germany's September Ifo Business Climate Index rose to 89.9 from 88.8, above the 89.1 consensus.
  • France's September consumer confidence held at 86, above the 85 consensus.
  • France's September Business Survey held at 101, below the 102 consensus.
  • Spain's August PPI increased 13.2% year-over-year following a 9.2% increase.