Optimism, however, is fragile after Trump said trade talks with Canada were terminated due to an ad opposing US tariffs that targeted Republican-held districts and used Ronald Reagan’s words. There’s no guarantee the US-China meeting will happen or lead to a durable truce — I’m extremely skeptical — but it would mark the first face-to-face encounter since Trump returned to the White House and follow a wild ride of tariff and chip wars that have only intensified since January.

Make no mistake: Xi knows that America won’t be an ideal partner for China, with or without Trump in the White House. Relations may have been less chaotic before, but the first chip export restrictions actually came during the Biden administration — and China remains determined to gain tech independence from the West. And it’s doing well. The country now has its own tech giants, social media platforms, communication systems, EVs, smartphones, robots and chips.

Beijing wants those tech leaders to use homegrown components to keep production in-house. Many domestic chipmakers are thriving. SMIC shares, for instance, have soared nearly 500% since last September Alibaba has climbed up to 140% since DeepSeek’s chatbot launch early this, and the Hang Seng Index has recovered roughly two-thirds of its post-2018 selloff. With limited foreign investor exposure and Beijing’s clear push to make the sector shine, Chinese tech could still have room to run.

Returning to the trade story — the Trump-Xi meeting next Thursday could keep hope, and the bears, at bay for now.

Meanwhile, the prospect of robust tech earnings and lower Fed rates continues to sweeten investor sentiment. Earnings from Netflix, Tesla, IBM, Super Micro Computer and SAP came in mixed, but markets are now in wait-and-see mode ahead of next week, when the AI heavyweights are expected to deliver standout results and the Federal Reserve (Fed) a 25bp cut.

Finally some data! Economic data remains scarce due to the ongoing US government shutdown, but the Bureau of Labor Statistics decided to publish September CPI figures today to give policymakers and investors some direction ahead of next week’s decision. Both headline and core inflation are expected to land around 3.1% YoY for September, and some analysts warn CPI could rise toward 3.5% in the coming months amid tariff-driven pressures. That’s well above the Fed’s 2% target, but markets broadly believe the central bank will tolerate higher inflation to avoid an economic meltdown.

Even so, inflation remains an issue. Today’s numbers are unlikely to be a game-changer if they align with the 3% expectation. A softer print could fuel speculation of a third rate cut in December, boosting risk appetite while dragging US yields and the dollar lower. Conversely, a stronger CPI could trigger a reassessment of dovish expectations and raise questions about whether major indices deserve to keep pushing into uncharted highs.

Despite risks, global equities continue to rally. The S&P 500 and Nasdaq keep hitting records — largely on AI enthusiasm — while the Dow Jones, Stoxx 600, and even the FTSE 100 are near all-time highs. Indices, of course, don’t always reflect underlying fundamentals, but in a high-inflation environment, equities remain one of the few ways to keep pace with price pressures.

For now, despite bubbling bubble concerns, consensus still points to an extension of the global rally — unless US inflation data challenge that view before the weekly close. In the absence of a big deviation, focus will remain squarely on the Fed and earnings.

In FX, the US dollar held firm this week — stronger than expected given the extended government shutdown — as political headlines elsewhere offset dollar weakness. French political turmoil kept the euro under pressure, while Takaichi’s appointment as Japan’s new prime minister push the USDJPY higher on expectations of a softer Bank of Japan (BoJ) stance.

In metals and energy, gold is consolidating just above $4,100 per ounce, suggesting the early-week selling pressure has eased alongside volatility. US crude tested but failed to sustain gains above its 50-day moving average near $62.50/bbl after new sanctions targeting two Russian oil giants triggered conflicting reports on whether India might halt Russian oil imports to avoid secondary sanctions. From a technical standpoint, recent headlines have likely exhausted their upside potential, leaving room for a minor correction into the weekly closing bell.