The Golden Road Ahead
Chart of the Week:
Falling Rates and Ongoing Market Buying Support Gold’s Upside
U.S. inflation remains stable—neither accelerating nor slowing meaningfully. In September, the Fed cut rates by 25 bps as cooling labor data prompted policy easing, while the dot plot indicated room for two more cuts this year. This has driven real rates lower, reducing gold’s opportunity cost and boosting investor demand.
Market Recap 1:
AI Tailwinds and Rate-Cut Bets Lift Global Equities on Renewed Risk Appetite
Positive AI momentum continues as OpenAI signs a record chip supply deal with AMD, while Nvidia CEO Jensen Huang highlighted surging AI computing demand and plans to invest in Musk’s xAI. Tech stocks rallied, and infrastructure spending in AI-related utilities added further strength. All four major U.S. indices closed higher, with the Philadelphia Semiconductor Index up 5.5%.
Market Recap 2:
Strong Risk Appetite Weighs on Bonds; U.S. Shutdown Uncertainty Drives Safe-Haven Flows into Gold
Fed minutes showed most officials expect to maintain an accommodative stance this year, with an October rate cut nearly certain. However, the government shutdown has halted key data releases from the Labor and Commerce Departments, adding policy uncertainty as the Fed may have to decide without updated economic inputs. Meanwhile, buoyant global risk sentiment and strong U.S. equities have pressured bonds, while the strength of Asian equities has weighed on Asian investment-grade debt amid risk-on flows.
What’s Trending:
U.S. 3Q Outlook Turns Positive; Earnings Upgrades Led by Communication Services, Tech, and Financials
Of the 112 S&P 500 companies issuing guidance for 3Q, 56 provided positive guidance – a 50% ratio, above the 5-year average of 43% and the 10-year average of 39%. The number of positive outlooks was also the highest since 3Q21. According to FactSet, optimism is largely driven by the tech sector’s confidence in AI’s long-term potential, with 36 tech firms giving positive guidance – exceeding all other sectors combined.
In Focus 1:
“15th Five-Year Plan” to Emphasize Tech Self-Reliance; Policy Support to Favor Technology Stocks
The CCP Politburo held a meeting in late September and announced that the Fourth Plenary Session will convene from October 20–23 to review recommendations for the “15th Five-Year Plan.” The meeting reaffirmed two key priorities—advancing green, low-carbon transformation and strengthening technological self-reliance—while emphasizing the continued development of “new quality productive forces.”
In Focus 2:
China Tech Giants Outperform Sharply, Yet Global Investors Remain Underexposed
Earnings forecasts show that China’s eight major tech giants (note 1)—all listed in Hong Kong and accounting for over 40% of MSCI China’s weight—are benefiting from AI development and DeepSeek-related applications, driving double-digit revenue growth above 12%. This far outpaces the overall China market’s 8% and just 7% (ex-top 8), underscoring the sector’s strong relative performance. The trend suggests a trajectory similar to the U.S. in the AI era, and with Beijing’s continued push for tech self-reliance, Hong Kong-listed tech names stand to gain further.
