Asian stocks rose on Monday, supported by renewed optimism over the U.S.–China trade truce and growing investor enthusiasm for artificial intelligence (AI). Meanwhile, the U.S. dollar strengthened to a three-month high as hawkish comments from policymakers reduced expectations for near-term Federal Reserve rate cuts.
Investors continued to digest developments from last week, including central bank meetings and the year-long trade truce between Washington and Beijing, which broadly met market expectations. However, doubts remain over whether the truce will hold for its full duration.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.63% to 729.82, hovering near the four-and-a-half-year high reached last week. The index is now up more than 27% in 2025, on track for its best annual performance since 2017.
Nasdaq futures climbed 0.25%, and European futures also pointed to a higher open ahead of manufacturing data releases from the region.
In Asia, fresh data revealed that major manufacturing hubs continued to struggle in October as U.S. demand weakened and tariffs under President Donald Trump weighed on export orders. Japan’s markets were closed on Monday for a holiday.
South Korea’s Kospi surged more than 2% to another record high, China’s blue-chip index edged up 0.1%, and Hong Kong’s Hang Seng Index gained 1%.
Bank of America strategists advised investors to “lock in some gains” from recent rallies and rotate into defensive positions toward year-end, noting that much of the optimism over the trade truce is already priced in.
Hawkish Fed Comments Keep Dollar Firm
Several Federal Reserve officials expressed concern on Friday about the recent rate cut decision, while Fed Governor Christopher Waller argued for further policy easing to support a weakening labor market.
After last week’s Fed meeting, Chair Jerome Powell emphasized that another interest rate cut in December was “not a foregone conclusion,” surprising traders who had almost fully priced in another move.
“Rate cuts are consistent with our view of a weaker dollar over time, as the U.S. economy won’t outperform like before,” said Goldman Sachs strategists in a note.
Markets now see about a 68% chance of a December rate cut — down from near certainty before the meeting — leaving the dollar stronger. The euro fell to a three-month low at $1.1524, sterling slipped 0.2% to $1.3142, and the yen traded at 154.05 per dollar, near its weakest level since February.
With the U.S. government shutdown extending into another week, there will be no job openings or nonfarm payrolls data, shifting attention to private employment figures from ADP later in the week. The current shutdown, which began on October 1, is now the second-longest in U.S. history, behind the 35-day 2018–2019 episode.
AI Earnings and Commodities in Focus
Following a mixed set of results from megacap tech companies, attention now turns to upcoming AI-linked earnings. While enthusiasm around artificial intelligence continues to fuel global markets, investors are looking for evidence that massive AI infrastructure spending is delivering real profits.
This week’s key reports include Advanced Micro Devices (AMD), Qualcomm, and Palantir Technologies, alongside results from McDonald’s and Uber.
In commodities, gold climbed back above $4,000, while Brent crude rose 0.32% to $64.98 a barrel. U.S. West Texas Intermediate (WTI) gained 0.28% to $61.16, supported by OPEC+’s decision to delay any production increases until the first quarter of next year.
