Key takeaway:
Today, the focus is on how inflation data may change expectations for rate hikes, whether energy risks will affect actual supply, and whether AI investment can continue to translate into orders and earnings.
【Today’s Key Themes】
First key theme: U.S. and Chinese inflation data are today's central variables. China’s September CPI and the U.S. September CPI will be released one after the other. Whether price pressures from energy and AI investment can ease will affect interest rate expectations and asset pricing.
Second key theme: Expectations for energy supply and demand are shifting simultaneously. Shipping risks in the Strait of Hormuz, the safety of energy facilities, and a pause in some U.S. production coincide with OPEC lowering its forecast for demand growth in 2026. The IEA report is also in focus.
Third theme: Diverging performance across the AI supply chain. Memory stocks fell overnight, while related stocks rebounded in South Korea in early trading. ASML’s earnings, capacity expansion by equipment companies, and progress on data center power supply are worth watching.
Fourth theme: The dollar’s pullback and pressure on bonds are intersecting. A weaker dollar has prompted a short-term rebound in precious metals, but rate-hike expectations, Treasury financing supply and demand, and falling gold ETF holdings continue to affect market performance.
Fifth theme: Domestic fund flows and industrial price changes are unfolding in parallel. Margin financing balances have declined, polysilicon prices have recovered, coal mines are resuming production, and steel inventories have increased. Watch whether fund flows provide support and whether supply and demand are balanced across industry chains.
【U.S. Equities】
All three major U.S. indexes edged lower on Tuesday. The Dow fell 0.35% to 51,670.70; the S&P 500 fell 0.02% to 7,805.58; and the Nasdaq fell 0.15% to 27,204.38.
Sector and stock performance was mixed. Micron and SK Hynix’s U.S.-listed shares both fell more than 3%, while Citi fell more than 5%. Meta rose more than 2% and Oracle gained 4%. Apple rose 1.4% intraday, hitting a record high. The Philadelphia Semiconductor Index fell more than 3% at one point before narrowing its loss to 0.77%.
Earnings expectations are a key test for a high-valuation market. Data compiled by Bank of America show that third-quarter earnings growth is expected to slow from the previous quarter in 10 of the S&P 500’s 11 sectors. Analysts expect earnings growth among index constituents to fall from 25% in the third quarter of 2026 and 28% in the fourth quarter to 18% in the first half of 2027.
【Macroeconomics】
Federal Reserve officials continue to focus on inflationary pressure from energy and AI investment. Williams said another rate hike this year would be appropriate, but that further hikes may not be needed in 2027 if the economic outlook evolves as expected. He noted that energy costs are feeding through to areas such as transportation and food, while demand for data centers and chips is pushing up the costs of some goods and construction labor.
Collins expects rates may be raised further before year-end, with the timing dependent on the data. She is watching closely to see whether price pressures spread beyond energy and AI infrastructure. Barkin said taking action to address inflation is reasonable.
As of this morning, CME FedWatch showed a 77.3% probability that rates will remain unchanged in October. By December, the probability of a cumulative 25-basis-point rate hike was 68.7%, while the probability of a cumulative 50-basis-point hike was 19.1%.
The U.S. Dollar Index fell 0.4% on Tuesday, closing at 102.180. The dollar traded at 158.30 yen. Pressure on Treasury supply and demand is drawing attention: PIMCO believes U.S. Treasury yields have not yet peaked, while Dalio warned that rising financing needs from governments and AI companies, alongside weaker demand from some traditional buyers, could push yields higher. The auction yields on three- and six-month U.S. Treasury bills rose to 4.085% and 4.2%, respectively.
The IMF forecasts global real GDP growth of 3.1% in 2026 and cited commodity prices and bond markets as prominent risks. Singapore’s third-quarter GDP grew 5.4% year over year, above the 5% forecast, and 1.1% quarter over quarter, below the 1.3% forecast. The Monetary Authority of Singapore left the slope and midpoint of its exchange-rate policy band unchanged.
【AI Memory Chain】
Memory stocks diverged across markets: Micron and SK Hynix’s U.S.-listed shares fell more than 3% overnight, while Samsung Electronics rose 3.6% and SK Hynix gained nearly 3% in early trading in South Korea. Share price volatility across the memory chain, and whether AI investment demand continues to translate into realized results, are key points to watch today.
Applied Materials expects revenue from its services business to grow by more than 20% in 2026 and exceed $12 billion by 2030. It plans to more than double its R&D labs and manufacturing capacity by 2030 and aims to increase its share of the wafer fabrication equipment market by more than 2 percentage points between 2025 and 2030.
AI infrastructure investment also faces power supply and construction constraints. Oracle has urged regulators to speed up approval of a natural gas pipeline serving a data center. The project is designed to deliver about 400 million cubic feet of gas per day to power fuel cells, but the pipeline’s start date has been pushed back to February 2027. ASML’s third-quarter results, due at 13:00 today, are a key event for the semiconductor industry chain.
【Technology】
Google launched Gemini 4 Argon across channels including the Gemini app, developer APIs, and AI Mode in Search, targeting use cases such as software engineering and cybersecurity. The launch price is $2 per million input tokens and $10 per million output tokens.
Nvidia plans to invest an additional $2 billion in Europe, following $8 billion invested over the previous year. It is also providing a new round of funding to Doctolib, Genesis AI, Pigment, and Entalpic, covering health technology, robotics, business software, and materials research.
Meta launched the “Your Algorithm” feature, allowing users to adjust their feeds and the ranking of Reels content in real time based on their interests and feedback. Apple introduced a range of home accessories, including smart cameras, thermostats, and door locks, designed in collaboration with LG Electronics and Schneider Electric.
AI safety and commercial adoption are both drawing attention. U.S. and European banking regulators are stepping up scrutiny of risks from autonomous agents and cyberattacks. The Information reported that OpenAI is in preliminary talks to acquire cybersecurity startup Trail of Bits. In a Deloitte survey, 52% of CFOs said they expect many large U.K. companies to use AI to replace workers over the next year, but only about one-third believe AI will improve profit margins over the same period.
【Crude Oil】
International oil prices were mixed on Tuesday. WTI crude futures rose 0.43% to $94.14/barrel, while Brent crude futures fell 0.9% to $105.69/barrel. The most-active domestic SC crude futures contract was little changed in overnight trading at 753 yuan/barrel.
Risks to energy facilities and shipping remain a key focus on the supply side. A Saudi Energy Ministry official said that a Saudi Aramco administrative building in Dhahran was attacked, causing a small fire. Ship safety incidents occurred in and around the Strait of Hormuz. More than a dozen very large crude carriers and several Suezmax tankers turned back or changed course as they approached Fujairah port, with waiting times for some transfers extended. Whether loading activity at major oil producers has been affected remains to be seen.
Demand expectations have also been revised: OPEC lowered its forecast for global oil demand growth in 2026 from 380,000 barrels per day to 180,000 barrels per day, while raising its 2027 growth forecast from 2.36 million barrels per day to 2.55 million barrels per day. Today’s IEA monthly Oil Market Report will offer another assessment of supply and demand.
【Precious Metals】
Gold and silver came under pressure overnight before staging a short-term rebound. Spot gold briefly fell below $4,150/oz. After remarks from Fed official Williams, gold rebounded briefly to around $4,158/oz and silver to around $59.26/oz, though both were still down on the day at the time. At 07:19 today, spot silver fell back below $59/oz.
Domestic night trading also weakened: the most-active Shanghai gold futures contract fell 0.33% to 900 yuan/gram, while the most-active Shanghai silver futures contract fell 1.51% to 14,466 yuan/kg. Gold T+D and silver T+D on the Shanghai Gold Exchange fell 0.28% and 1.48%, respectively, in the evening session.
Holdings in SPDR Gold Trust, the world’s largest gold ETF, fell by 1.215 tonnes from the previous day to 1,054.196 tonnes. Precious metals traders will be watching U.S. CPI, the dollar, and changes in interest-rate expectations.
【Domestic Market Signals】
A-shares diverged on Tuesday: the Shanghai Composite Index rose 0.10% to 3,800.86; the Shenzhen Component Index fell 0.25%, the CSI 300 fell 0.29%, and the ChiNext Index fell 0.18%, while the STAR 50 rose 0.03%. Hong Kong’s Hang Seng Index rose 0.30%, while the Hang Seng TECH Index fell 0.79%. Hang Seng Index futures fell 0.07% in overnight trading to 24,340.
Leveraged funds edged lower. As of October 13, the combined margin financing balance on the Shanghai and Shenzhen exchanges stood at 2,508.123 billion yuan, down 9.066 billion yuan from the previous trading day. The Shanghai market fell by 3.102 billion yuan and the Shenzhen market by 5.964 billion yuan.
On policy and financing, China put forward four proposals to promote mining cooperation with Africa; the Ministry of Commerce solicited public comments on measures governing export permits for dual-use items in the civil aviation sector; and the central bank approved Visa’s preparations to establish a bank card clearing institution. Tencent announced pricing for $1.8 billion and 26 billion yuan in notes. The National Energy Administration called for early planning for energy supply during the winter peak season and stronger supply-demand monitoring and early warnings.
In solar and materials, polysilicon prices have rebounded by more than 30% cumulatively, with leading companies discussing a price threshold of 43,000 yuan per tonne. Yunnan Germanium said demand for indium phosphide wafers was strong and its order book was full, with orders spanning wafer sizes of 2–6 inches.
In commodities, coking coal mines in Shanxi are resuming production at a faster pace. In early October, social inventories of five major steel products across 21 cities totaled 9.39 million tonnes, up 2.7% from the previous period. Wage mediation talks at Chile’s Escondida copper mine entered their final day, with a strike risk remaining. Rio Tinto produced 205,000 tonnes of copper in the third quarter, unchanged, while iron ore shipments rose 3% year over year.
The U.S. soybean harvest is 46% complete, ahead of the expected 44%; the corn harvest is 33% complete, below the expected 38%. Weather changes, harvest progress, and energy costs are factors to watch for oils, oilseeds, and agricultural products.
Areas to watch in A-shares include semiconductor equipment and memory-related suppliers, data center power and cooling, indium phosphide materials, gold, energy supply security, solar-grade polysilicon, and the copper industry chain. These themes should be assessed against changes in orders, prices, supply, and demand.
【Key Events】
09:30 China September CPI year over year.
10:10 European Central Bank President Lagarde attends an event.
13:00 ASML reports third-quarter results.
14:05 Bank of Canada Governor Macklem takes part in a discussion.
16:00 IEA releases its monthly Oil Market Report.
16:30 European Central Bank President Lagarde delivers a speech.
17:40 Federal Reserve Governor Bowman delivers a speech.
20:30 U.S. September CPI: unadjusted CPI year over year, seasonally adjusted CPI month over month, seasonally adjusted core CPI month over month, and unadjusted core CPI year over year.
【Risk Disclosures】
Risks to energy facilities and shipping in the Middle East could disrupt oil prices, transportation costs, and market risk appetite. If CPI deviates from expectations, the dollar, bonds, and precious metals could see significant volatility. The bar for U.S. corporate earnings expectations is high, while AI projects still face constraints related to financing, power supply, and construction. A recovery in domestic industrial prices should also be assessed alongside demand, inventories, and order fulfillment. The industry themes noted above are for monitoring purposes only and do not constitute investment advice.
For research and educational purposes only; this does not constitute investment advice.