U.S. markets reacted negatively to the non-structural Trump-Xi trade truce, Meta's AI spending concerns, and Fed Chair Powell's pushback on a December rate cut, which lifted the dollar. Futures bounced back on strong Apple and Amazon Q3 results.
Markets slip as Trump–Xi deal falls flat and Fed pushes back on cuts
Key takeaways
- Muted U.S.–China trade deal disappoints markets: The Trump–Xi meeting delivered no major surprises, with the U.S. halving tariffs on Chinese goods and extending the trade truce by a year, while China agreed to resume soybean purchases and delay rare-earth export controls. However, no structural progress was made on trade imbalances or tech access.
- Tech-led pullback weighs on Wall Street sentiment: U.S. equities retreated for a second straight session, led by the Nasdaq 100’s 1.5% drop after Meta’s sharp selloff on rising AI-related capex. Despite the dip, major indices held key support levels, while futures rebounded in after-hours trading on strong Apple and Amazon earnings.
- Powell’s remarks firm up dollar and yields: Fed Chair Powell’s pushback against expectations of another near-term rate cut drove the U.S. dollar to a three-year high and lifted Treasury yields, as traders trimmed the odds of a December cut to 70% from over 90%.
The US stock market responded negatively over the past two sessions after a slew of ex post risk events: Fed Chair Powell’s press conference, mega-cap technology earnings results for Q3 (Microsoft, Meta Platforms, Alphabet), and a highly anticipated in-person trade deal negotiation meeting between Trump and Xi.
The conclusion of the Trump-XI meeting on Thursday, 30 October, has not offered any positive surprises to market participants, as US President Trump mentioned a slew of potential positive deals on Wednesday that materialised as expected.
The US White administration has decided to lower the 20% tariff on Chinese products to 10% in relation to the fentanyl issue and extend the US-China trade truce that is due on 10 November 2025 to another year. Also, the US agreed to suspend a rule on US sanctions that covers subsidiaries of blacklisted Chinese firms.
In return, China is expected to resume soybean purchases from U.S. farmers and postpone the expansion of its rare-earth export controls by one year. However, Beijing fell short of securing access to Nvidia’s high-end Blackwell AI chips, despite President Trump earlier suggesting that such access could be on the table.
Overall, the current deal does not yield the type of structural changes to address the imbalanced US-China trading relationship.
On Thursday, 30 October, all four major US stock indices ended the US session with losses, led by the technology-heavy Nasdaq 100 that dropped by 1.5% weighted down by Meta's plunge of 11.3% due to investors’ concerns about its rapid increase in capital expenditure to support Artificial Intelligence services that have not transformed into higher revenue streams.
Despite the lacklustre performances seen in the US stock indices, the S&P 500, Nasdaq 100, and Dow Jones Industrial Average managed to hold their respective key short-term supports at 6,830, 25,745, and 47,400, respectively.
Interestingly, in today’s Asia session, the S&P 500 and Nasdaq 100 E-min futures have managed to recover by 0.7% and 1.2% respectively, reinforced by the rallies seen in Apple (2.3%) and Amazon (13.2%) in the after-hours session due to their respective Q3 earnings beat and positive guidance.
Mixed performances for Asia Pacific stock markets at the time of writing, Japan’s Nikkei 225 continued to extend its rally for the fourth time this week, up by 1.9% intraday to hit another record high of 52,320.
Hong Kong’s Hang Seng Index and China’s CSI 300 both fell nearly 1%, weighed down by weaker-than-expected manufacturing and services PMI data from China. China’s official NBS Manufacturing PMI fell to 49.0 in October 2025, down from 49.8 in September and below forecasts of 49.6, marking the lowest level since April. Meanwhile, the NBS Non-Manufacturing PMI stood at 50.1 in October 2025, little changed from September’s 10-month low of 50.0.
In the FX market, the US dollar rebounded to a three-month high as Fed Chair Powell defused the Fed's dovish pivot during his press conference on Wednesday, 29 October, as he flagged that the third Fed funds rate cut in the December 2025 FOMC meeting is “far from” certain.
Fed funds futures traders pared back dovish positioning after the Fed Chair’s remarks, with the odds of a December rate cut slipping to 70% from above 90% earlier, signalling a more cautious read on the policy outlook. The shift in expectations pushed Treasury yields higher across the curve and lent renewed support to the U.S. dollar as markets reassessed the near-term easing trajectory.
In the Asian session, the U.S. Dollar Index held steady after two consecutive days of 0.4% gains. The Australian and New Zealand dollars underperformed, slipping 0.3% and 0.2% respectively against the greenback at the time of writing.
Our YouTube video above contains more insights and the latest intraday technical analysis on our Charts of the Day, Japan 225, and Nasdaq 100.
