Global Markets May Rebound Amid Signs of U.S. Economic Resilience

Overview

Australian investors are set for a stronger open following a rebound on Wall Street, where the S&P 500 rose 0.5% after President Donald Trump moderated his stance on China trade policy. Early volatility gave way to a solid recovery as risk sentiment improved. The change in tone reduced concerns about escalating trade tensions, providing a supportive backdrop for the ASX ahead of a busy week for corporate updates and global data releases.

Global Market Drivers

Optimism grew after Trump confirmed that talks with Chinese President Xi Jinping will proceed later this month, easing investor fears of renewed tariff pressures. Gains were broad-based across U.S. indices, with the Nasdaq up 2.1% and the Dow Jones adding 1.6% for the week. Stronger-than-expected results from regional U.S. banks such as Truist Financial, Regions Financial, and Fifth Third Bancorp helped to calm concerns about credit quality and liquidity, lifting the S&P Regional Banks Index by 1.8%.

Positive fund flow data from Bank of America, showing $28.1 billion in equity inflows and a sharp decline in cash holdings, reinforced risk-on sentiment. Analysts at Goldman Sachs maintained a constructive view on U.S. equities, citing improving policy visibility and continued strength in AI-driven capital expenditure through 2026.

Investor Positioning

Flows data from Bank of America reflected renewed confidence in equities, showing $28.1 billion of inflows into stock funds and $24.6 billion of outflows from cash positions for the week ending October 15. This trend supports the view that institutional investors are rotating back into risk assets amid expectations of policy stability heading into 2026.

Meanwhile, Goldman Sachs maintained its constructive outlook on U.S. equities, citing improving CEO confidence and moderating policy uncertainty. The firm expects AI-related capital expenditure growth by major hyperscalers to remain robust into 2026, though potentially at a slower pace than 2025 levels.

Outlook

Next week’s focus will turn to key corporate earnings and macroeconomic events. Major Australian miners — BHP, Fortescue, and Whitehaven — are set to release quarterly results, while Mirvac and Woodside will report mid-week.

On the macro front, China’s Fourth Plenum (Oct 20–23) will attract attention as policymakers discuss the 15th Five-Year Plan (2026–2030), expected to emphasize “High-Level Opening Up” and “New Productive Forces.” In the U.S., Netflix and Tesla earnings will serve as bellwethers for technology and consumer sentiment.

Conclusion

The near-term market tone remains constructively bullish following a rebound in risk sentiment and easing trade concerns. While volatility could persist around key political and economic events, investors are positioning for a moderate continuation of the rally into year-end. Strength in U.S. bank earnings, improved liquidity flows, and a potential easing in geopolitical risk collectively suggest that market momentum is stabilizing after recent turbulence.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Disclosure: The information mentioned above has been sourced from the company reports and a third-party database, i.e., Koyfin. Investors are advised to use strict stop-loss to protect their investments in case of any unfavorable/uncertain market events.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au