US Stocks Monday Morning Briefing | No new strike confirmed on Sunday; Trump shifts to “decision time”; Brent closes at $116.72; Le Pen leads in polls; FOMC decision and Microsoft and Alphabet earnings land on the same day this week
(Cash-market closing prices are for Friday, 23 October, US Eastern time. US stock futures open at 06:00 on Monday, Hong Kong time; as of 07:00 for this edition, opening futures quotes verified by compliant sources were not yet available.)

On Friday, the S&P 500 fell 0.52% to 7623.68 points, the Dow fell 1.23% to 52215.16 points (-652.82 points), the Nasdaq fell 0.21% to 25955.34 points, and the equal-weight S&P ETF (RSP) fell 0.77% to $216.54 (The Wall Street Journal). The 10-year US Treasury yield closed at 4.987%, the 2-year at 4.68% and the 30-year at 5.314% (The Wall Street Journal); the December Brent contract closed at $116.72, up 3.1%, and WTI closed at $103.27, up 3.8% (The Wall Street Journal); spot gold closed near $3997 an ounce, below the $4000 threshold; and the US dollar index closed at 101.81, up about 0.2%. For the week, the Dow rose 0.41%, the S&P 500 fell 0.47% and the Nasdaq fell 0.71%.

Market themes
The biggest news on Sunday was not what happened, but what did not: Trump’s Saturday remark that it could be “maybe tomorrow” did not materialise on Sunday as a confirmed new round of strikes. In a Fox News interview on Sunday, he instead spoke of “decision time”: make a deal or “finish it off.” Those words lengthened the immediate fuse but did not remove the risk premium: on the same day, Iran said it had shot down a US drone over Bandar Abbas near the Strait of Hormuz, providing continued support for Brent at its six-month high of $116.72. Meanwhile, France’s story acquired a different protagonist on Sunday: Le Pen formally launched her presidential campaign, and a poll published Sunday put her in the lead at 32%–33.5%. The focus on France’s bond spread has extended from whether street unrest will spiral out of control to whether markets will begin pricing in next year’s election early. At Monday’s open, watch oil and futures pricing first, then whether Verizon’s premarket earnings can steady telecom stocks—all of this is merely a prelude to Wednesday’s FOMC decision and Microsoft and Alphabet earnings on the same day.

I. Iran: No strike confirmed on Sunday, but drone incident and “decision time” coexist

  • Reuters reported on Sunday that Iran’s military said its air defence system had shot down a US LUCAS drone over the southern port city of Bandar Abbas, citing the semi-official Tasnim news agency (Reuters). Bandar Abbas lies close to the Strait of Hormuz. News of a single drone is not enough by itself to change oil’s direction, but it is enough to make markets reluctant to erase the war premium ahead of Monday’s open.
  • In an interview on Fox News’s Sunday Morning Futures on Sunday, Trump said: “I have to make a decision: Do I finish it off—which is very easy to do—or do I make a deal? That’s it.” Bloomberg also reported that Trump had previously suggested US strikes on Iran could resume after the 3 November midterm elections (Bloomberg). Moving the timetable from “Sunday” to “after the midterm elections” was the weekend’s most important signal of cooling tensions, but “finish it off” remains an option, so cooling does not mean the threat has been removed.
  • The implications for Monday’s trading are straightforward: first watch for fresh news on Iran or Saudi Arabia from tonight through early Monday, then see whether oil heads toward $120 or retreats toward $108. On Sunday there was no confirmed news of de-escalation on the Saudi front. The backdrop remains that Riyadh’s airport was warned on the day it reopened, and the rationale for oil prices remaining high has not changed.

II. France: Le Pen launches campaign on Sunday and leads in polls; the next protest is already scheduled

  • Reuters reported on Sunday that far-right leader Le Pen formally launched her presidential campaign in Orléans, promising to restore order and national confidence. Her platform centres on “zero tolerance” policing, restoring border controls and automatically deporting foreign criminals. A poll published Sunday put her support at 32%–33.5%, well above far-left leader Mélenchon’s 17%, and showed her winning a hypothetical second-round contest comfortably (Reuters). Street protests have given Le Pen a tailwind, while her polling lead in turn has prompted markets to extend their pricing of French risk from “a week of unrest” to next year’s election.
  • The protest figures were also revised on Sunday: France’s interior ministry said 1314 people were arrested on Saturday, about half the previous week’s figure, and approximately 50 police officers were injured, compared with more than 1000 the previous week. Police unions warned on Sunday that such intensive deployments could not be sustained indefinitely (Reuters). Unions and the Yellow Vests have scheduled the next protest for Saturday, 31 October, and a strike for 5 November. Talks between the government and union and student representatives have begun, but protest leaders say they have received “no response” so far (Reuters).
  • The transmission path to US stocks remains unchanged: on Monday, watch whether France’s 10-year yield and the French-German spread retreat from above 5% and around 175 basis points, respectively. A retreat would give the European sovereign-debt storm a temporary respite; a widening spread would leave in place the trigger behind last Thursday’s surge in US Treasury yields. Moody’s has kept France’s Aa3 rating and negative outlook unchanged, conditional on passage of the 2027 deficit-reduction budget.

III. Bonds, the dollar and commodities: 10-year yield stuck just below 5%; oil remains high and gold loses $4000

  • Friday’s closing mix was contradictory: oil surged, yet the 10-year yield closed at only 4.987%, up about 4 basis points from Thursday’s haven-driven session but down about 9 basis points from the previous Friday over the week. The Wall Street Journal noted that investors continued to shift toward less volatile stocks; consumer staples had risen 9.6% this month and were on track for their best month in 26 years (The Wall Street Journal). Oil rose, but Treasury yields did not follow, suggesting the market has not fully priced the energy shock as making a rebound in inflation inevitable.
  • Sunday added another chapter to the oil story: Brent rose about 6% and WTI about 2% over the week, their third consecutive weekly gains. Houthi attacks on Saudi energy targets and Sunday’s interception reports together heightened supply concerns. Ole Hansen, head of commodity strategy at Saxo Bank, previously said the global oil market remained fragile and higher energy prices were squeezing both stocks and bonds because “another inflation shock could limit central banks’ room to ease” (Barron's).
  • Gasoline prices have reached voters: the US national average on Friday was $4.29 a gallon, about 40% higher than a year earlier, and the US midterm elections are on 3 November (The Wall Street Journal). This is the most difficult backdrop for this week’s FOMC meeting: if oil does not fall, inflation expectations will be hard to bring down; if those expectations do not fall, futures pricing of a near-80% chance of a December rate hike will be hard to dislodge.

IV. Individual stocks and sectors, including earnings: Energy stands alone; telecoms remain Friday’s sore spot

  • Energy led gains on Friday and hit a record high, with Chevron up 2.9% and ConocoPhillips up 3.6%. By contrast, consumer staples fell 1.92%, communication services 1.78%, consumer discretionary 1.66% and financials 1.32%. American Express fell 3.7% to $313.22: its Q3 earnings beat expectations and it raised its full-year guidance, but it announced job cuts of about 5%, and the stock fell rather than rose. The Dow is price-weighted, so a steep decline in a high-priced stock directly amplified the index’s loss.
  • Telecom stocks illustrated this week’s structural shift: after news that SpaceX was seeking access to about 80 thousand base stations and could become the fourth nationwide US wireless carrier, AT&T and T-Mobile each fell nearly 8% on Friday and Verizon fell 1.2%, while tower operators Crown Castle rose 9% and American Tower rose 4%. Verizon reports first, before Monday’s open; whether telecom shares can steady before the results is the first question for the opening session.
  • Technology stocks stabilised somewhat on Friday: the Nasdaq outperformed the broader market, chip stocks stopped falling and rebounded, Micron rose 2.5%, AMD rose 1.7% and Microsoft rose 0.7%. Barron's characterised Friday in its weekly review as “the AI selloff cooled, but the rest of the market paid the price”: the Dow fell 653 points, the S&P fell 0.5% and the Nasdaq fell only 0.2%, reversing Thursday’s rotation, while high oil prices “didn’t help” (Barron's). The Russell 2000 fell 0.29% to 2775.90 points on Friday, with small caps also unable to escape the decline.

V. AI news: Hyperscalers are on the hot seat this week; the key is whether cloud revenue can cover the bill

  • Reuters titled its week-ahead preview “Hyperscalers on the hot seat”: about one-third of S&P 500 companies report this week, including Alphabet and Microsoft on Wednesday and Amazon on Thursday. The market is watching capital expenditure guidance and returns on AI investment rather than revenue growth alone (Reuters). Hyperscalers’ capital spending this year is expected to total about $800 billion, boosting profits across the AI buildout chain, but rising financing costs have raised market doubts about the sustainability of that spending (Reuters).
  • Nick Giorgi, chief equity strategist at Alpine Macro, says the market “no longer gives companies spending heavily the benefit of the doubt”; that is healthy in itself, but still implies short-term pain (Reuters). King Lip, chief strategist at BakerAvenue, says earnings will determine whether the technology pullback is a buying opportunity or the start of a deeper correction: “All we need is another round of really strong earnings” (Reuters).
  • The fundamental base is not weak: among the more than 100 companies that have reported, S&P 500 third-quarter earnings growth exceeds 32% year on year, according to LSEG IBES data cited by Reuters. Citi’s Scott Chronert wrote in Barron's weekly review that sentiment could stabilise if cloud revenue growth builds further on strong second-quarter figures; he maintained his year-end S&P 500 target of 8100 points (Barron's). There were no major new AI company announcements over the weekend, and no fresh AI financing or order news was available for this edition.

VI. Upcoming calendar (Hong Kong time)

  • 26 October (Monday): 06:00 US stock futures open (Sunday 18:00 US Eastern time); Verizon before the open; Cadence after the close; Chicago Fed National Activity Index and Dallas Fed manufacturing survey in the evening. Europe has ended daylight saving time, so European markets open 1 hour later than before in Hong Kong time.
  • 27 October (Tuesday): Israeli election; 22:00 Conference Board October consumer confidence; Coca-Cola, Boeing and UPS before the open; Visa and Robinhood after the close.
  • 29 October (Thursday), 02:00: FOMC decision (markets expect the rate to remain at 3.75–4.00%; no dot plot at this meeting; futures price a less than 10% probability of a hike this week and about 80% for a December hike (Reuters)); 02:30 Federal Reserve chair’s press conference; Microsoft and Alphabet report after the close early the same morning (after Wednesday’s US Eastern close). Barron's week-ahead preview also notes that this is the busiest week of third-quarter earnings, with about one-third of S&P 500 companies reporting. The FOMC meets Tuesday through Wednesday, and markets expect rates to remain unchanged (Barron's).
  • 29 October (Thursday): 20:30 preliminary Q3 GDP (market expects annualised growth of 3.2%, above the previous 2.2%) and September PCE (headline expected up 0.5% month on month and 3.7% year on year, above the previous 3.4%; core expected up 0.3% month on month); 21:15 European Central Bank rate decision; Eli Lilly and Mastercard before the open; Amazon and Intel after the close.
  • 30 October (Friday): Bank of Japan decision; 20:30 Employment Cost Index (market expects 0.8%, below the previous 0.9%); Exxon Mobil and Chevron before the open.
  • 31 October (Saturday): Further protests in France (called by unions and the Yellow Vests; the CGT will decide this week whether to join); 3 November (Tuesday): US midterm elections; 5 November (Thursday): Major French union strike.

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