AI-fuelled rally: Wall Street surges to new highs; Trump's trade sweetener lifts Asia ahead of the FOMC rate decision .Australia markets in focus after data.
Trump’s trade softening boosts equities
Key takeaways
- AI-driven rally pushes Wall Street to record highs: Renewed optimism around artificial intelligence, fuelled by OpenAI’s restructuring deal with Microsoft and Nvidia’s ambitious revenue outlook, propelled all three major U.S. indices to fresh all-time highs, led by the Nasdaq 100.
- Trump’s conciliatory trade tone lifts Asian markets: Hints of tariff reductions and potential U.S. tech access for China ahead of the Trump–Xi summit boosted sentiment across Asia, with Japan’s Nikkei 225 and China’s CSI 300 hitting new highs. Australia’s ASX 200 lagged due to hotter inflation data.
- Markets' position for continued Fed easing cycle: Futures pricing indicates near certainty of a 25-basis-point cut at the upcoming FOMC meeting and another in December, reinforcing expectations of a gradual Fed rate normalisation through 2026 as inflation pressures ease and growth moderates.
The Artificial Intelligence (AI) euphoria has once again lifted Wall Street to new heights on Tuesday, 28 October. Three major US stock indices rallied to another set of fresh all-time closing highs, led by the Nasdaq 100 with a gain of 0.7% followed by the Dow Jones Industrial Average (+0.3%) and the S&P 500 (0.2%).
The current bullish tone in the US stock market has been reinforced by a slew of news flow on AI optimism. Firstly, OpenAI has finalised a restructuring plan with Microsoft Corp, where it will give Microsoft Corp. a 27% ownership stake, removing a major uncertainty for both companies and clearing the path for the ChatGPT maker to become a for-profit business.
Secondly, Nvidia Corp CEO Jensen Huang announced a slew of new partnership deals with Uber Technologies, Palantir Technologies, and CrowdStrike Holdings at a company presentation in Washington. He added that Nvidia’s latest chips, the Blackwell processor and the newer Rubin model, are on track to generate half a trillion dollars in revenue through 2026.
In today’s Asia session, US President Trump threw in a “sweetener” ahead of the high-stakes in-person trade deal meeting with Chinese President Xi on Thursday, 30 October, in South Korea. Trump mentioned that he had considered cutting the 20% tariff to 10% on Chinese goods over China’s assistance in the fentanyl crisis in the US. In addition, Trump suggested he was open to providing China with access to higher-U.S. technology semiconductor products, such as Nvidia’s Blackwell AI processor.
Japan’s Nikkei 225 jumped by 2% to hit a fresh all-time intraday high of 51,332. China’s CSI 300 rallied by 0.9% to a new 52-week high and 4-year high, while the Hong Kong stock market is closed for a public holiday today.
The outlier has been Australia’s ASX 200, which tumbled by 1% due to a hotter-than-expected core CPI print for both Q3 (actual: 3% y/y vs consensus: 2.7% y/y) and the month of September (actual: 3.5% vs consensus: 3.1%), which reduces the odds of an RBA interest rate cut in the November and December meetings.
Ahead of today’s FOMC monetary policy decision meeting, the market participants in the Fed funds futures market have already fully priced in a 25-basis-point (bps) cut on the Fed funds rate to bring it lower to 3.75%-4.00%. Therefore, today’s focus will be on Fed Chair Powell’s press conference that may provide hints on future growth and inflation trends in the US, and the latest monetary policy guidance.
According to the latest data from the CME FedWatch Tool, traders are assigning a 91% probability to another 25-basis-point rate cut at the Federal Reserve’s December meeting, which would bring the policy rate down to a range of 3.50%–3.75%. Markets are also positioning for at least three additional cuts in 2026, implying a gradual normalisation path toward a 2.75%–3.00% range by year-end. The pricing underscores traders’ confidence that disinflationary momentum and a cooling labour market will give the Fed room to ease further without reigniting inflation pressures.
Mixed performances are seen among the major currency pairs against the US dollar at this juncture. The AUD/USD outperformed with an intraday gain of 0.4% due to a hotter CPI print in Australia. At the other end of the spectrum, the GBP/USD underperformed with a loss of 0.2% at the time of writing.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
