Key Takeaways
- US President Trump and Chinese President Xi Jinping held a phone call, discussing stable bilateral ties, the Ukraine crisis, and Taiwan, with Xi emphasizing Taiwan's return as an important part of the post-war international order.
- US stock markets extended gains, with the S&P 500 (^GSPC) rising 1.00%, the Nasdaq (^IXIC) up 0.95%, and the Dow Jones (^DJI) increasing 0.14% after market open.
- The Bank of England sold £750 million in gilts during its Asset Purchase Facility (APF) sale, achieving a cover-ratio of 2.75.
- Goldman Sachs economists anticipate downside risks for the economy next year, projecting Federal Reserve rate cuts in December and further cuts in 2025, bringing rates just above 3%.
- The Netherlands' RDW regulator denied commitment to approve Tesla's (TSLA) Full Self-Driving (FSD), contrary to previous reports.
Geopolitical Dialogue and Global Stability
US President Trump and Chinese President Xi Jinping engaged in a phone call on Monday, marking a significant diplomatic exchange. Xi Jinping noted that China-US ties have remained stable since their meeting in Busan and stressed the importance of jointly safeguarding the victorious outcomes of World War II. The leaders also discussed the Ukraine crisis, with Xi urging all parties to reduce differences and expand cooperation, while clarifying China's position on the Taiwan issue. Xi reiterated that the return of Taiwan to China is an important part of the post-war international order. A White House official confirmed the call, indicating discussions on expanding cooperation and striving for more progress in bilateral ties.
Meanwhile, discussions continue regarding a US-drafted Ukraine peace plan, which now comprises 19 points but is not yet finalized after Geneva talks. A Kremlin aide, Ushakov, stated that some provisions of the US plan seem acceptable, though European counter-proposals are viewed as "completely unconstructive" and not working for Russia. The Kremlin has not scheduled any Russia-US talks to specifically discuss the plan.
Economic Policy, Outlook, and Trade Relations
The Bank of England (BoE) conducted an Asset Purchase Facility (APF) gilt sale, offloading £750 million with a cover-ratio of 2.75. In Europe, ECB President Christine Lagarde emphasized that embracing AI can still give Europe an edge, despite the continent lagging behind the US and China in AI investment. Lagarde warned that Europe risks jeopardizing its future if it fails to quickly remove obstacles to AI diffusion.
Goldman Sachs economists foresee downside risks for the economy next year. They anticipate the Federal Reserve to cut rates in December, followed by additional cuts in 2025, bringing rates just above 3%. Chief economist Jan Hatzius cautioned that the economy could slow more than expected.
In trade relations, US officials Lutnick and Greer met with EU counterparts to discuss various issues, including steel and aluminum tariffs. Lutnick suggested the EU establish a balanced digital framework to facilitate resolving outstanding trade cases. EU's Sefcovic stated that conditions are in place to launch negotiations on US steel tariffs, emphasizing the EU's priority on steel and tackling overcapacity. Lutnick also indicated that Trump is weighing advanced Nvidia (NVDA) chip sales to China. Critical minerals and rare earths were identified as topics easy to work on due to broad agreement.
Market Performance and Corporate Developments
US stock markets showed positive momentum, with the S&P 500 (^GSPC) advancing 1.00%, the Nasdaq (^IXIC) gaining 0.95%, and the Dow Jones (^DJI) up 0.14% after market open. This extends earlier gains, with the S&P 500 up 37.06 points to 6,640.05 and the Nasdaq up 210.57 points to 22,483.66.
In corporate news, Tesla's (TSLA) regulator RDW in the Netherlands denied it is committed to approving Full Self-Driving (FSD), contradicting earlier reports. This comes as Tesla aims for FSD approval in Europe.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.