US Market Wrap: Indices gain as Tech outperforms on AI-recovery

SNAPSHOT: Equities up, Treasuries down, Crude mixed, Dollar up, Gold down REAR VIEW: Houthis claim six attacks on Saudi Arabia in 48 hours, strikes include the Yanbu Aramco facility and the Shaybah oilfield; Putin has reportedly proposed a meeting with Trump and Xi next month to discuss ending the Ukraine war; Iranian Navy said the US military attacked the Konarak naval base with "two light projectiles" early this morning, which US officials later deny; Trump signs an executive order waiving Graham Act sanctions and tariffs on Russian energy; China Q3 GDP Y/Y sees slight beat; Softer-than-expected Canadian inflation; DeepSeek is reportedly working closely with Huawei to shape the design of future AI chips; Nscale reportedly in talks with Anthropic for a USD 45bln cloud computing deal. COMING UP: Data: Chinese LPR (Oct), German PPI (Sep), UK Unemployment Rate (Aug), EU/German ZEW Survey (Oct), US ADP Weekly Employment Change, Building Permits (Sep), Atlanta Fed GDPNow (Q3). Events: NBH Policy Announcement (Oct). Speakers: BoE's Greene; RBA's Hauser. Supply: Japan, UK, Germany, US Treasury Buyback Announcement. Earnings: GE Aerospace, General Motors, RTX, Northrop Grumman, Hasbro, Netflix, Chubb, United Airlines, EssilorLuxottica, ABB. WEEK IN FOCUS: Highlights include UK, Japan and Canada inflation, Chinese Activity Data and Global Flash PMIs. Click here for the full report. WEEKLY US EARNINGS ESTIMATES: Earnings pick up with META, TSLA, SPCX, LRCX and NFLX the highlights. Click here for the full report. MARKET WRAP Equity indices rebounded to start the week as AI concerns eased over the weekend, although breadth was poor outside of AI names. As such, hyperscaler and mega-cap names drove gains within Tech and Consumer Discretionary (AMZN +5%, named a top pick at MS), while Utilities, Real Estate and Financials saw losses (RSP -0.2% vs. SPX +0.6%). In the final hour, Bloomberg reported that Nscale is in talks with Anthropic for a USD 45bln cloud computing deal, an update that lifted neocloud names, although CoreWeave finished 0.4% lower despite positive sell-side commentary. US yields rose on the gradual recovery of AI growth optimism, further boosted by gains in prompt WTI futures as unconfirmed reports circulated of more Houthi strikes on Saudi Arabia's oil infrastructure. Short-lived oil downside was seen in response to a WSJ report that Russian President Putin has proposed a meeting with US President Trump and Chinese President Xi next month to discuss ending the Ukraine war. French yields traded notably higher, posting one of the the largest one-day rises since March 2025, as anti-government civil unrest added to fiscal uncertainty, a drag on both the EUR and bond demand. In FX, USD performance was mixed as higher US yields saw haven alternatives pressured (CHF, JPY, gold). AUD outperformed on Chinese data overnight (GDP & retail sales beat); CAD was firmer despite a slightly softer-than-expected inflation report, as money markets still favour a BoC rate hike next week. FIXED INCOME T-NOTE FUTURES (Z6) SETTLED 6+ TICKS LOWER AT 105-08 AI equity rebound gives space for US yields to rise. At settlement, 2-year +4.8bps at 4.763%, 3-year +4.8bps at 4.855%, 5-year +5.6bps at 4.933%, 7-year +6.0bps at 5.034%, 10-year +5.9bps at 5.140%, 20-year +5.4bps at 5.528%, 30-year +5.4bps at 5.480%. THE DAY: Yields rose as the easing of AI concerns over the weekend prompted a return of the Treasury sell-off, alongside upside in equities. A lack of further negative AI news meant the weekend acted as a clearing event, although continued positive sell-side commentary on CoreWeave after its sharp sell-off last week was not enough to prevent shares trading lower once again. Other upside factors included the rise in prompt crude futures following unconfirmed Houthi attacks on Saudi Arabia's oil facilities. Across the Atlantic, turmoil in France continued, with weekend protests turning into riots and no clear immediate solution, leaving growing uncertainty over how long the standoff between the government and protesters will last. Concern also grew over the impact on growth and business/consumer confidence. ZN Z6 hit lows of 105-04 before bouncing to 105-08 as oil prices retreated into settlement. US data saw the NAHB Housing Market Index fall to 29 from 32, the lowest reading since June 2012, weighed on by declines in current sales conditions, sales expectations and prospective buyer traffic. Supply Bills US sold 3-month bills at a high rate of 4.095%, B/C 2.77x; sold 6-month bills at a high rate of 4.220%, B/C 2.84x STIRS / OPERATIONS Fed Hike Pricing via CME FedWatch: Oct 4.3bps (prev. 4.3bps), Dec 25.8bps (prev. 26.0bps) EFFR at 3.88% (prev. 3.88%), volumes at USD 115bln (prev. USD 118bln) on October 16th SOFR at 3.89% (prev. 3.89%), volumes at USD 2.925tln (prev. USD 3.025tln) on October 16th NY Fed RRP op demand at USD 0.330bln (prev. USD 0.100bln) across 7 counterparties (prev. 1) on October 19th CRUDE WTI (Z6) SETTLED USD 0.48 HIGHER AT USD 98.54/BBL; BRENT (Z6) SETTLED USD 0.31 LOWER AT USD 109.55/BBL The crude complex was mixed, with WTI seeing gains while Brent traded lower. Benchmarks were initially pressured, hitting troughs, as US President Trump eased Russian sanctions, with Russia set to supply over 300k tonnes of diesel in the first instance. Brief downside was seen in response to a WSJ report that Russian President Putin has proposed a meeting with US President Trump and Chinese President Xi next month to discuss ending the Ukraine war. Modest pressure was also seen amid reports that a breakthrough is expected to be announced this week to halt the escalation between Washington and Tehran, though this was swiftly pared as markets digested the line that the two sides are being urged to "make concessions" to prevent a new war. In terms of geopolitical headlines, the Houthis claimed six attacks on Saudi Arabia in 48 hours, with targets including the Yanbu Aramco facility and the Shaybah oilfield. Looking ahead, Pakistani Army Chief Asim Munir arrives in Tehran tomorrow to meet with Iranian officials. On the supply front, Iraqi oil exports have averaged more than 3.4mln BPD in October to date (vs. 3mln BPD in Sep). For the record, WTI traded between USD 96.72-99.71/bbl and Brent between USD 106.82-110.70/bbl. EQUITIES CLOSES: SPX +0.63% at 7,708, NDX +1.17% at 29,529, DJI +0.07% at 52,041, RUT +0.37% at 2,731 SECTORS: Utilities -1.98%, Real estate -1.18%, Financials -0.79%, Industrials -0.65%, Energy -0.63%, Health -0.61%, Consumer staples -0.42%, Materials flat, Communication services +0.28%, Technology +1.19%, Consumer discretionary +2.73%. EUROPEAN CLOSES: Euro Stoxx 50 -0.92% at 6,147, DAX 40 -1.24% at 25,304, FTSE 100 -1.08% at 10,765, CAC 40 -1.11% at 7,868, FTSE MIB -1.55% at 49,086, IBEX 35 -1.49% at 19,039, PSI -0.78% at 9,394, SMI -0.21% at 14,361, AEX -0.13% at 1,141 STOCK SPECIFICS: Skyworks Solutions (SWKS): Positively mentioned by Starboard, which said it remains undervalued following its acquisition of Qorvo. CoreWeave (CRWV): Upgraded at GS. Blue Owl Capital (OWL): Investment bankers have approached the company's founders about a potential full or partial sale. Cleveland-Cliffs (CLF): Profit beat, with a strong next-quarter EBITDA outlook. Intel (INTC): Upgraded at JPM. Netflix (NFLX): Film chief Dan Lin was reportedly fired over the weekend, according to Puck. Cognizant (CTSH), Google (GOOGL): Cognizant and Google Cloud expanded their AI partnership. DXC (DXC): Insurance software unit sale could fetch around USD 2.4bln, according to reports. DeepSeek: Working closely with Huawei to shape the design of future AI chips, according to The Information, citing sources. Nscale: In talks with Anthropic for a USD 45bln cloud computing deal, according to Bloomberg. FX DXY was slightly firmer on Monday and saw mixed performance vs. G10 FX peers. There was no tier-1 US data, nor is any due this week, and no Fed speak given the blackout period ahead of next week's confab. In what was a day of light newsflow, geopolitical headlines were the focus, as US President Trump eased Russian sanctions, while Al Araby Al Jadeed reported that a breakthrough is expected to be announced this week to halt the escalation between Washington and Tehran, although it added that the two sides are being urged to "make concessions" to prevent a new war. High-beta FX outperformed, with the Antipodeans and the Loonie gaining vs. the Dollar, buoyed by risk-on sentiment given the rebound in AI-related names on Monday, as well as by region-specific factors. For the Aussie, strong Chinese data overnight offered support. Out of Canada, inflation was cooler than expected and tempered odds of a rate hike next week, with money markets now assigning a 68% chance of a hike (prev. 74% pre-release). Some mild pressure was seen in the Loonie post-release. GBP, EUR, CHF and JPY all saw losses to varying degrees against the Buck, albeit with little currency-specific newsflow. In Europe, sentiment was hit by the French civil unrest and elevated Dutch TTF prices.