Global Markets Navigate Risks and Opportunities

Global stock markets are reaching record highs, but investors are warning of potential triggers for a correction due to rising risks such as weaker consumer spending, faltering earnings growth, and a potential bond market revolt. Experts cite concerns including rising delinquencies in U.S. credit cards and auto loans, a 'growth freeze' scenario, an 'inflation heatwave', and a potential bond market revolt due to the unsustainable build-up of U.S. government debt. Trade wars and fiscal strains in the West are also considered live risks.

Asia-Pacific markets mostly rose on Monday as investors assessed China's manufacturing activity data. China's manufacturing PMI slowed to 50.6, missing expectations of 50.9. The Reserve Bank of Australia begins its two-day monetary policy meeting. South Korea's Kospi hit a new record high, rising 2.78%, while Hong Kong's Hang Seng index and mainland China's CSI 300 also saw gains. Japan's markets were closed for a public holiday. The article also mentions the performance of other regional markets and the previous week's U.S. market trends.

China's factory activity growth slowed down in October, missing market expectations due to a sharper drop in new export orders amid intensified trade tensions with the U.S. A private survey by RatingDog and S&P Global showed a decline in the China General Manufacturing PMI to 50.6 from 51.2 in September. Despite this, employment at factories showed the first expansion since March. The U.S.-China trade truce is expected to lead to a modest rebound in the manufacturing PMI in the coming months. China's exports have diversified to Southeast Asia and Europe, but the economy still shows signs of strain with slowing growth and contracting fixed-asset investment.

The article discusses the performance of U.S. stocks in October, attributing their gains to the enthusiasm surrounding artificial intelligence (AI). The S&P 500 ended the month 2.3% higher, while the Nasdaq Composite climbed 4.7%. The technology sector, particularly companies involved in AI, drove this growth. Nvidia reached a $5 trillion valuation, and other AI-related stocks like Amazon, Palantir, and Oracle saw significant increases. The article also touches on other news, including China's manufacturing PMI, Baidu's robotaxi rides, and Berkshire Hathaway's operating profit rebound. The overall tone is informative with a positive outlook on AI's impact on the market.

European stocks started the new trading week on a positive note ahead of key central bank decisions and earnings reports. The Stoxx 600 opened just above the flatline, with the FTSE up 0.3% and DAX rising 0.1%. Ryanair's strong earnings report kicked off the week's earnings season, with other major companies like BP, Ferrari, and BMW set to report. The Riksbank and Bank of England will announce interest rate decisions this week, while China's manufacturing activity slowed in October.

The US has imposed higher tariffs on Indian exports (50%) than on Chinese goods (47%) under President Donald Trump's administration, straining US-India relations. Experts attribute this to Trump's 'transactional' approach to foreign policy, marking a shift from the previous strategic altruism towards India. The relationship has further deteriorated due to issues like steep tariffs, a $100,000 fee for H1B visas, and Trump's claims of brokering a ceasefire between India and Pakistan. Meanwhile, US-China ties are improving after a meeting between Trump and Chinese President Xi Jinping, resulting in a trade truce and reduced tariffs on Chinese goods. Experts warn that if the US continues its transactional approach, it will drive the two countries further apart, compromising their strategic interests.

The article discusses the recent surge in U.S.-listed rare earths mining stocks, with some rallying over 300% as the global critical minerals race heats up. Rare earths are vital components in modern technologies, including smartphones, renewable energy applications, and defense systems. The emergence of critical minerals as a new arena of geopolitical competition has coincided with a rally in U.S.-listed rare earths mining stocks. Experts describe the current market as a 'rare earths boom' driven by the clean energy transition and geopolitical tensions between the U.S. and China. While some analysts are bullish on the outlook, others are skeptical about the long-term prospects.

The stock market was little changed on Monday morning as a new month of trading begins. S&P 500 futures ticked higher by 0.17%, while Nasdaq-100 futures were up 0.26%. Dow Jones Industrial Average futures advanced 49 points, or 0.1%. The gains were driven in part by continued momentum in the artificial intelligence trade and signs of easing trade tensions between the U.S. and China. More than 300 S&P 500 companies have posted third-quarter results, with over 80% beating expectations. Wall Street may get a seasonality boost in November, with the S&P 500 averaging a 1.8% gain historically. Investors are also keeping an eye on Washington, with the U.S. government shutdown delaying key economic data releases and the Supreme Court set to hear oral arguments on the Trump administration's tariffs.

The Economist's finance and economics section features various articles discussing global economic trends, market analysis, and the impact of geopolitical events on the economy. The articles cover topics such as the unpredictability of market volatility, Jamaica's recovery from Hurricane Melissa, the effects of national autonomy on global integration, India's IPO boom, and the role of artificial intelligence in improving market efficiency. Other articles examine China's secret stockpiles, the economics of smoking, and the potential impact of US sanctions on Russian oil. The section also includes a podcast featuring an interview with Gita Gopinath, the former second-in-command at the IMF.

The article discusses the growing concern among top financial leaders that certain assets are entering bubble territory, making a market crash more likely. Despite warnings from JPMorgan Chase's Jamie Dimon, Goldman Sachs' David Solomon, and Citigroup's Jane Fraser, the article argues that even the best traders struggle to predict sudden jumps in volatility, making it unlikely that Wall Street will see the next crash coming. The Bank of England and the IMF have also cautioned about the risk of a sharp market correction.