Stocks rallied as U.S. and Chinese officials agreed a framework for a trade deal that would pause steeper U.S. tariffs and potential Chinese rare earth export curbs. That development, together with a softer-than-feared U.S. inflation print, pushed U.S. indexes to record closing highs and lifted Asian markets. In the short term markets are pricing greater scope for a Federal Reserve rate cut this week. Over the long term the story centers on whether renewed trade cooperation will sustain global capital flows and corporate investment. The move matters for the U.S., Europe, Japan and emerging markets where export exposure and commodities sensitivity vary. Compared with earlier tariff shocks, today’s progress looks more tangible and has revived risk appetite fast.

Opening backdrop: trade truce, inflation relief and record highs

Timely developments that shifted market sentiment

Global markets opened with renewed momentum after top Chinese and U.S. economic officials sketched a trade deal for leaders to approve later this week. The framework aims to pause plans for steeper U.S. tariffs and to ease Chinese controls on rare earth exports. That reduced a major source of policy uncertainty that has weighed on trade exposed sectors for months.

Meanwhile a softer September U.S. inflation readout lowered near-term rate path fears. Markets interpreted the data as increasing the chance of a Federal Reserve rate cut when policymakers meet this week. Stocks reacted quickly. U.S. indexes posted record closing highs last week and futures pushed higher into the new session. Japan and South Korea also climbed more than 2 percent while Chinese indexes hit their best levels in more than a decade in offshore trading.

Gold fell nearly 2 percent as risk appetite rose and demand for haven assets eased. That decline shows how sentiment swings can amplify moves across asset classes when policy uncertainty recedes.

Tech earnings week: megacaps take center stage

Five major reports to test AI and cloud investment narratives

Investors are watching a heavy slate of corporate results, including five of the so called Megacap leaders. META (NASDAQ:META), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) will report this week. Together these companies account for roughly a quarter of the S&P 500 by market value.

Market participants will focus on AI related capital expenditure and cloud revenue growth as indicators of durable tech demand. In addition, guidance on margin pressure and capital allocation will influence sector leadership. Historically, these megacaps have driven large parts of index performance. If results broadly confirm stronger earnings power from AI and cloud services, the rally could find fresh backing. If results disappoint, volatility may return quickly given their concentrated weight.

In addition to megacap earnings, a wide set of corporate reports across industrials, financials and consumer sectors will provide a broader read on growth and margin trends. The aggregate picture matters for how much the Fed can pivot without derailing markets.

Bonds and liquidity: heavy Treasury supply tests demand

New issuance and yield moves complicate the rally

Bond markets adjusted to higher borrowing supply as Treasuries offer large auctions this week. The Treasury plans to sell $69 billion of two year notes and $70 billion of five year notes today. Earlier commentary noted a $139 billion schedule across two and five year maturities as part of a broader heavy issuance calendar.

Yields nudged higher as equity strength and slightly firmer inflation expectations pushed investors to reassess duration. The move higher on the curve shows how cross asset flows can cut both ways. Demand at auctions will be watched closely for signs of whether dealers and foreign buyers remain comfortable with elevated issuance.

Central bank decisions will also matter. The Bank of Canada is widely expected to cut rates by a quarter point, a dynamic reinforced by new Trump tariffs on Canadian goods. In contrast the European Central Bank and the Bank of Japan are expected to hold policy steady. That divergence should keep currency and rate differentials in focus and may influence regional capital flows in the weeks ahead.

Global cross currents: China, commodities and geopolitics

Local policies and strategic sectors add complexity

China’s market reaction was notable. The offshore yuan jumped to a six week high as the People’s Bank of China set a reference rate at its strongest level since last October. That helped Chinese equity benchmarks rally to multi year highs. The trade framework with the U.S. points to an easing of a key economic risk and could support Chinese domestic demand if it leads to smoother supply lines.

Commodities remain a focal point. Copper has faced pronounced supply disruptions this year, reinforcing concerns about capital spending in mining and smelting. Separately, commentary continues on the effectiveness of Western sanctions on Russian oil given market workarounds. In addition, China’s defense sector unveiled an autonomous combat support vehicle powered by a domestic AI model called DeepSeek, highlighting how technology and national security priorities intersect for policymakers.

Politics matter too. Argentina’s recent legislative win handed the president a mandate for radical economic reform that markets will interpret through the lens of fiscal and currency stability. Taken together, these developments show how trade, technology and geopolitics can move markets in tandem with classic macro indicators.

What to watch through the session

Data, auctions and earnings will set near term tone

Market participants will focus on the Federal Reserve meeting outcome and any signals about the timing and magnitude of rate adjustments. Earnings from the technology leaders will provide a test of growth narratives tied to AI and cloud spending. Auction results for two and five year Treasuries will reveal appetite for new issuance. Finally, currency moves and commodity flows will reflect how markets digest trade progress against broader geopolitical risks.

This session combines policy, corporate fundamentals and supply dynamics. The interaction among these forces will determine whether the recent rally broadens across sectors or becomes concentrated in a few leadership names. For readers in the U.S., Europe, Japan and emerging markets, the immediate implications are clear. Reduced policy uncertainty can lift risk assets. Over the longer term, attention will shift to how trade arrangements and national priorities shape capital allocation and investment trends.