It's a move forward. President Xi Jinping scored public relations wins in his US visit, securing cooperation pledges on fentanyl, military talks, and easing bilateral tensions. This allows China to refocus on its slowing economy and political intrigues at home with the hope that chip sanctions will be slowly undone. However, sceptics question if China will follow through with trade tensions still tight in certain sectors. Despite differences, Blinken called US-China relations "consequential", stressing managing competition without conflict and finding areas of cooperation.
EQUITY
Wallstreet stayed muted after a strong start to the week. Walmart shares plunged over concerns about consumer weakness, while Cisco and Palo Alto Networks declined on disappointing guidance, though some see long-term tailwinds for Cisco. Additionally, economic data stoked recession fears as a government shutdown was averted and chip export restrictions hampered Alibaba and Chinese tech shares while boosting Intel.
GOLD
Gold continued higher in early Asian trade as bulls set sights on breaching the $2,000 level again, with easing inflation and a slowing U.S. economy bolstering expectations that the Fed's rate hike cycle has ended. U.S. weekly jobless claims, which rose to a three-month high last week, point to a slight cooling in the labour market, adding to data this week showing moderating inflation and dipping retail sales.
OIL
Crude prices plunged to four-month lows this week as swelling inventories and slowing demand stoked worries of a supply glut, though OPEC may extend output cuts to rebalance the market. Despite the recent price rout, Saudi Arabia and Russia could roll over their 2 million barrels per day supply curbs into 2024 to erase the expected surplus, while China's steady imports provide some optimism for resilient demand.
CURRENCY
The greenback meandered after jobless claims rose, stoking rate-cut hopes, though the dollar rebounded as markets questioned rapid pivots. The pound initially rallied on cooling inflation but gave back gains as the economic outlook remained cloudy. The yen strengthened, but an ex-official warned that interventions treat symptoms, not causes of weakness, casting doubt on the clad-iron currency.
