Key Points

• World Bank upgrades China’s 2025 growth forecast to 4.8%: Citing stronger exports and government support despite ongoing U.S. trade tensions and sluggish domestic demand.
• AMD surges 23.7% after OpenAI partnership: Marks one of the largest GPU supply deals in AI history and potentially grants OpenAI up to a 10% stake in the chipmaker.
• S&P 500 and Nasdaq close at record highs: Fueled by AI-driven optimism and rate cut expectations, as investors shrug off the sixth day of the U.S. government shutdown.
• Japan’s Nikkei 225 hits a second consecutive record: Lifted by global tech momentum and yen weakness, even as bond yields reach multi-decade highs.

World Bank Lifts China’s 2025 Growth Outlook to 4.8% Amid Tariff Truce

The World Bank raised its 2025 growth forecast for China to 4.8%, up from 4% projected in April, citing resilient exports and ongoing government support despite persistent trade tensions with the U.S.

The bank’s revision aligns closely with Beijing’s 5% GDP target and comes as China’s shipments to Southeast Asia and Europe offset declines to the U.S.

Still, policymakers expect momentum to ease in 2026, projecting 4.2% growth as exports cool and stimulus fades. The report underscores structural challenges — from weak consumption to high youth unemployment — that continue to weigh on the recovery.

AMD Soars 24% as OpenAI Secures Landmark AI Chip Partnership

AMD shares surged 23.7% after OpenAI agreed to deploy up to 6 gigawatts of AMD’s Instinct GPUs and potentially acquire a 10% stake in the chipmaker through a performance-based warrant. The multi-year deal — one of the largest GPU supply agreements in AI history — positions AMD as a strategic partner in OpenAI’s $1 trillion global compute buildout.

The agreement marks a pivotal shift in the AI hardware race, reducing OpenAI’s reliance on Nvidia and validating AMD’s next-generation chip roadmap. Nvidia fell 1% on the news, reflecting investors’ recalibration of AI infrastructure alliances.

S&P 500 and Nasdaq Close at Record Highs as AI Deals Drive Momentum

The S&P 500 and Nasdaq Composite ended at all-time highs Monday, lifted by AI-related dealmaking that outweighed concerns over the ongoing U.S. government shutdown. AMD’s 23.7% surge following its multi-year chip deal with OpenAI fueled a 2.9% gain in the Philadelphia Semiconductor Index, extending the broader rally in technology stocks.

Investors continued to price in a 94.6% chance of a Fed rate cut at the October meeting, despite the lack of official data amid the shutdown. Meanwhile, the Dow slipped 0.14%, and analysts anticipate 8.8% Q3 earnings growth for the S&P 500 as reporting season approaches.

Nikkei 225 Hits New Record as Tech Momentum Lifts Japan Markets

Japan’s Nikkei 225 briefly surged to another record high Tuesday, closing nearly flat at 47,950.88 as tech stocks mirrored Wall Street’s AI-driven rally led by AMD’s 24% surge on its OpenAI partnership. Gains in Renesas and Fujikura offset losses in Tokyo Electron and Lasertec, while government bond yields reached multi-decade highs — with the 10-year JGB hitting 1.694%, its highest since 2008.

The yen weakened further to 150.49 per dollar, extending a four-session slide. Meanwhile, Australia’s ASX 200 slipped 0.27%, and regional markets in China, Hong Kong, and South Korea remained closed for holidays.

Conclusion

The World Bank’s upgrade of China’s growth outlook to 4.8% boosted sentiment across Asia, while AMD’s landmark deal with OpenAI reignited enthusiasm for semiconductor and AI-linked equities.

U.S. indices reached fresh records despite the prolonged government shutdown, underscoring investor confidence in near-term rate cuts.

In Japan, the Nikkei 225’s record highs reflected the spillover of global tech momentum and a weaker yen.

Global markets extended their rally as AI-led optimism and resilient economic signals overshadowed ongoing policy uncertainties. Overall, markets appear positioned for continued strength, though valuations and policy divergence remain key factors to monitor.

Investment Insights

• AI remains a core market driver: Strategic partnerships like OpenAI–AMD signal continued capital rotation into AI infrastructure, supporting semiconductor and cloud ecosystem valuations.
• China’s growth upgrade offers selective upside: While trade tensions persist, the World Bank’s 4.8% forecast reinforces long-term opportunities in Asian equities tied to exports and industrial recovery.
• Rate cuts priced in, but caution warranted: Record U.S. equity highs reflect optimism, yet stretched valuations and limited economic data amid the government shutdown could heighten short-term volatility.
• Japan’s momentum signals renewed investor confidence: A weaker yen and policy continuity favor exporters, but rising bond yields warrant close monitoring for equity risk shifts.

Economic Calendar