Share prices in Japan and South Korea retreated from Monday’s record highs, while shares in Australia also fell at the open. US indices closed at record highs as Chinese and US trade negotiators lined up a series of diplomatic victories that Donald Trump and Xi Jinping were set to unveil at a summit this week. An index of US-listed Chinese stocks rose 1.6%.
Gold held steady after falling more than 3% to trade below $4,000 an ounce, while the dollar gauge fell for a second day. Technology stocks will be in focus after Amazon.com Inc. planned to cut as many as 30,000 jobs, Reuters reported. Treasury bonds rose early Tuesday.
Easing trade tensions had increased appetite for risk, while US companies appeared to have been relatively unscathed by tariffs, with companies protecting their margins through price increases and cost cuts. That optimism faces a reality check this week as investors look to the Federal Reserve meeting for clues about the path of rate cuts, while major tech companies including Amazon.com and Microsoft Corp. reveal whether earnings momentum can be sustained.
“With the Fed on track to cut rates, it appears that extending rates will hinge on this week’s string of high-profile earnings releases,” said Chris Larkin of Morgan Stanley’s E*Trade. “And that could happen, barring any surprises in the US-China trade negotiations.”
The S&P 500 topped 6,875, posting its best three-day rally since May. The shares of Qualcomm Inc. rose to their highest price in 15 months after unveiling chips and computers for the lucrative AI data center market, targeting Nvidia Corp. challenge in the fastest growing part of the sector. On Wednesday and Thursday, five companies that account for about a quarter of the U.S. benchmark — Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com and Apple Inc. – report results. A gauge for the ‘Magnificent Seven’ megacaps rose 2.6%. On trade, Trump told reporters on Monday that “I feel really good” about a deal with China, after officials unveiled a raft of agreements aimed at easing tensions.
While markets cheered the latest developments, some analysts warned that the deal now promised to Trump and Xi leaves South Korea ignoring thorny issues.
Fundamental fights over national security seemed untouched, they said, along with Trump’s stated core mission of rebalancing trade. What makes that even more difficult is that Chinese investment in America is still severely limited.
“While these developments have improved market sentiment, analysts remain skeptical that the underlying issues – such as national security and technological competition – will be fully resolved,” said Fawad Razaqzada of City Index and Forex.com. “Nevertheless, traders have embraced the risky mood.”
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