Key Points

• U.S.–China Truce: Tariffs and some export curbs were eased, improving near-term supply chains, but both sides kept leverage tools; expect periodic flare-ups rather than a lasting reset.
• Foxconn Beat: Profit rose 17% on strong AI server demand; management sees continued growth as it leans further into data-center hardware partnerships (including Nvidia).
• SoftBank Pivot: Shares fell up to 10% after selling its Nvidia stake to help fund a larger bet on OpenAI; exposure to AI hardware remains via Arm.
• AMD Outlook: CEO Lisa Su guided to ~35% annual sales growth, targeting double-digit AI data-center market share over 3–5 years, with new rack-scale systems and major partnerships.

U.S.–China Trade Truce Eases Tensions, But Strategic Rivalry Endures

Washington and Beijing rolled back parts of last month’s deal, halving some U.S. tariffs tied to fentanyl precursors and easing Chinese curbs on critical minerals; supporting a short-term thaw in supply chains and commodities.

Yet analysts call the détente fragile: Beijing kept its new export-control framework to retain leverage and is weighing a “validated end-user” screen that could restrict rare-earth flows to firms with U.S. defense ties.

With China’s growth slowing (Q3 4.8%) and both sides pursuing self-reliance, the base case is rolling negotiations and periodic flare-ups rather than a grand bargain, positive for sentiment at the margin but not de-risking the rivalry.

Foxconn Profit Beats on AI Server Demand; Outlook Stays Firm

Foxconn (Hon Hai) posted a 17% YoY profit rise to NT$57.67bn (vs. NT$50.41bn est.) on robust AI server shipments, with revenue broadly in line at NT$2.06tn.

Management expects sequential growth to continue into the back half, led by AI and ICT products, as its Cloud & Networking segment accelerates.

The company is deepening ties with Nvidia and expanding partnerships with Stellantis, Uber, and Mitsubishi Electric (energy-efficient AI data centers), underscoring a strategic shift from consumer devices toward higher-growth infrastructure.

SoftBank Drops Nvidia Stake to Fund AI Bet; Shares Slide

SoftBank shares fell as much as 10% after disclosing the October sale of its entire Nvidia position (32.1 million shares for $5.83 billion) to help fund a $22.5 billion investment in OpenAI, alongside a $9.17 billion trim of T-Mobile.

Management framed the move as reallocating capital while preserving balance-sheet strength; analysts said the pivot doubles down on generative AI rather than signaling bearishness on chips, with exposure to Nvidia’s ecosystem maintained via Arm.

Regional tech names softened in sympathy, including Advantest and Tokyo Electron, while TSMC and SK Hynix edged lower.

AMD Targets Faster Growth on Expanding AI Footprint

AMD CEO Lisa Su forecast ~35% annual revenue growth over the next 3–5 years, anchored by “insatiable” demand for data center AI chips and an AI segment she expects to grow ~80% annually to tens of billions in sales by 2027.

Management aims for double-digit share of the AI accelerator market; still dominated by Nvidia, and highlighted partnerships with OpenAI, Oracle and Meta, plus next-gen MI400X rack-scale systems shipping next year.

Shares dipped ~3% after hours even as long-term gross margin guidance (55%-58%) topped expectations; AMD said core businesses beyond AI remain solid, with Epyc CPUs still a key revenue driver.

Conclusion

Risk sentiment improved on signs of policy de-escalation, with the U.S.–China truce easing some supply frictions even as both sides preserve leverage, implying episodic flare-ups rather than a reset.

Inside AI, capital and demand remain robust: Foxconn’s beat underscores durable infrastructure orders, AMD mapped an aggressive growth path and share gains, and SoftBank rotated exposure from Nvidia to OpenAI while retaining hardware links via Arm.

The setup favors selective participation, own cash-generative enablers of AI compute and efficient manufacturers.

Investment Insights

• U.S.–China truce: Treat the thaw as tactical, not permanent, diversify supply chains and assume periodic flare-ups around critical materials.
• Foxconn’s beat: The “picks and shovels” of AI still look resilient; favor manufacturers with strong customer mix and clear order visibility.
• SoftBank shift: Capital is rotating within AI; the ecosystem extends beyond one chip leader, expect higher volatility as big bets move between platforms.
• AMD roadmap: A credible second source in data-center AI is forming; benefit from a multi-vendor setup, but anchor exposure in firms with proven execution and durable margins.

Economic Calendar

Sources: Federal Reserve events calendar; Investing.com CPI schedule; U.S. Census retail sales release schedule; BLS PPI schedule/FRED; Eurostat and UK ONS release calendars.

Key Points

• Asia Rallies on Truce: Japan’s Nikkei hits a record as a Trump–Xi rare-earths truce lifts risk sentiment; Korea gains on Nvidia-led AI investments while China’s PMI at 49 underscores drag.
• Auto Chip Squeeze: Dutch takeover of Nexperia and China export blocks spark a legacy-chip shortage; Honda trims output and OEM “war rooms” race to avoid Q4 line stoppages.
• Rare Earths Pop: U.S.-listed rare-earths miners rise as Beijing delays new export controls for one year after the Trump–Xi meeting, easing near-term supply risk though prior curbs remain.
• China More Investible (Cautiously): Tariff relief and limited tech access temper geopolitical overhangs, but foreign exposure stays low despite strong CSI 300/HSI gains; flows hinge on growth, policy traction, and a softer dollar.

Asia Rallies on Trump–Xi Truce; Japan Sets Records, Korea Lifted by Nvidia

Japan led regional gains after Washington and Beijing agreed a rare-earths truce, with the Nikkei 225 jumping over 2% to a record 52,411.34 and the Topix up 0.94% to 3,331.83.

South Korea outperformed as Nvidia deepened partnerships, fueling AI build-out: the Kospi rose 0.5% to a fresh high of 4,107.5 and the Kosdaq gained 1.07% to 900.42; Hyundai climbed 9.6% on plans to deploy 50,000 Blackwell GPUs and invest about $3 billion in local AI infrastructure, while Naver added ~5% as it expands capacity with more than 60,000 Nvidia GPUs.

Australia’s ASX 200 finished flat at 8,881.9. China lagged, with the Hang Seng down 1.43% to 25,906.65 and the CSI 300 off 1.47% to 4,640.67 after the October manufacturing PMI fell to 49.0, missing expectations and reinforcing a months-long contraction.

Panasonic slid over 8% after cutting its profit outlook on weaker energy-unit earnings. U.S. markets closed lower overnight as Big Tech earnings weighed: S&P 500 −0.99% to 6,822.34, Nasdaq −1.57% to 23,581.14, Dow −0.23% to 47,522.12.

Auto Makers Brace for Nexperia Chip Crunch as Geopolitics Bite; “War Rooms” Activate

Global carmakers are scrambling to manage a fresh semiconductor squeeze after the Dutch government took control of Nexperia and China blocked exports, choking supplies of legacy chips used in basic vehicle functions.

Honda became the first to trim output, affecting major North American plants, while Volkswagen said it has at least a week of buffer and Stellantis, Mercedes-Benz and others have activated cross-functional “war rooms” to secure parts on the open market and via alternative suppliers.

Europe’s ACEA warned assembly-line stoppages could be “days away” without a diplomatic fix.

Executives from Ford and GM framed the disruption as a political issue centered on U.S.–China tensions, with Europe caught in the middle—raising the risk of broader fourth-quarter production losses if relief doesn’t materialize.

Rare Earths Miners Rally as Beijing Pauses New Export Curbs After Trump–Xi Meeting

U.S.-listed rare earths names advanced after China agreed to delay additional export controls for one year, easing near-term supply risk following talks between President Trump and President Xi.

Critical Metals gained nearly 7% premarket, USA Rare Earth rose about 6%, and Energy Fuels added ~3%, with MP Materials and NioCorp up around 3%.

While existing restrictions from April remain, the pause—paired with Washington’s move to cut fentanyl-linked tariffs—tempers immediate pressure on downstream sectors from autos to defense.

The relief comes against a structurally tight backdrop: China still produces roughly 70% of global rare earths and processes nearly 90%, underscoring persistent strategic dependence even as markets price a tactical de-escalation.

Trade Truce Nudges China Back Onto Investors’ Radar, But Caution Lingers

A year-long U.S.–China trade truce has eased one key overhang—lower tariffs, partial relief on rare-earths controls and limited tech access—making China marginally more investible after a strong year for onshore and Hong Kong equities.

Yet foreign participation remains restrained: offshore China-focused funds have seen $3.9B in outflows year-to-date and large global funds hold just 1.43% exposure on average, even as the CSI 300 is up ~20% and the Hang Seng has climbed 31%, outpacing the Nasdaq’s 23%.

Managers are concentrating on AI and self-sufficiency themes while awaiting clearer growth and policy traction; strategists see scope for upside if easing Fed policy and a softer dollar revive flows, with some houses projecting roughly 30% gains in mainland and Hong Kong indexes by end-2027—tempered by skepticism over how long the current détente will last.

Conclusion

Markets closed the week with a tentative risk-on tone as a Trump–Xi truce eased rare-earths tensions, propelling Japanese equities to records and lifting U.S.-listed critical-minerals names.

Yet fragility persists: China’s manufacturing PMI remains in contraction, and Europe’s autos face a geopolitically induced legacy-chip squeeze, with “war rooms” activated to protect Q4 output. Investor positioning toward China is still cautious despite strong onshore and Hong Kong gains, leaving room for incremental re-risking if policy support and a softer dollar materialize.

Near term, AI infrastructure build-outs and supply-chain recalibration dominate flows, but headline risk and execution timelines argue for disciplined selectivity.

Investment Insights

• Asia tech tailwinds: Favor Japan and Korea beneficiaries of AI capex (semis, factory automation, robotics). Use dips from U.S. tech volatility to add quality cyclicals with earnings visibility.
• Autos—supply risk management: Trim OEMs with tight inventories and high legacy-chip exposure; prefer Tier-1s with multi-sourcing and higher software content. Keep event hedges into Q4.
• Rare earths—tactical relief, structural tightness: Maintain a barbell—select upstream producers plus downstream magnets/EV components. Use the one-year pause to build positions gradually; avoid single-supplier risk.
• China allocation—selective re-risking: Add incrementally to policy-aligned themes (AI, domestic tech, grid/renewables). Pair with FX and geopolitics hedges; stay underweight broad beta.
• Rates & USD path: If Fed easing and a softer dollar materialize, rotate toward Asia ex-Japan/China leaders and commodities tied to capex cycles.
• Portfolio construction: Prioritize balance-sheet strength and supply-chain redundancy; use options to buffer headline risk and maintain upside participation.

Economic Calendar