Dow Jones & Nasdaq 100 Rally in Asian Trade on Hopes of Trump-Xi Deal

US stock futures climbed in early trading on Thursday, October 30, as investors bet on diplomacy over discord ahead of President Trump’s meeting with Chinese President Xi. The CSI 300 and the Shanghai Composite Index reversed early losses, rising 0.14% and 0.09%, respectively.

The Trump-Xi meeting coincided with the Bank of Japan’s monetary policy decision amid speculation over a December rate hike. A hawkish Bank of Japan policy outlook could drive demand for the yen, potentially triggering a yen carry trade unwind.

Bank of Japan Stands Pat, USD/JPY Reclaims 153

The Bank of Japan kept the interest rate at 0.5% on Thursday, October 30, in line with market expectations. It was the first BoJ meeting since Liberal Democratic Party leader Sanae Takaichi became Prime Minister.

Notably, two policymakers dissented, mirroring September’s 7-2 split, in favor of keeping interest rates steady. Despite the dissenting votes suggesting hawkish views, the yen was under pressure. The BoJ’s GDP and inflation forecasts fueled uncertainty about the monetary policy outlook, weighing on the yen.

According to the BoJ’s Quarterly Outlook Report:

• The year-on-year rate of increase in consumer price index (CPI, all items less fresh food) is likely to decelerate to a level below 2 percent through the first half of fiscal 2026, with the waning of the effects of the rise in food prices, such as rice prices.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates and the projected year-on-year rates of increase in the CPI (all items less fresh food) are more or less unchanged.

The Outlook Report also commented on uncertainty about how the global economy and prices will respond to trade and other policies, stating:

“With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2026. Risks to prices are generally balanced.”

Notably, a softer inflation outlook and downside risks could temper bets on a December BoJ rate hike. USD/JPY rose 0.17% to 152.984, pulling back from an early high of 153.135.

Why Traders Should Monitor BoJ Policy and USD/JPY Trends

A softer inflation outlook and fading bets on a December rate hike weighed on the yen, fueling yen carry trades. Traders typically borrow the cheaper yen at a lower borrowing cost, investing in riskier assets with leverage.

For context, the Bank of Japan cut purchases of Japanese Government Bonds (JGBs) and unexpectedly raised interest rates on July 31, 2024. USD/JPY plunged from 153.889 on July 31 to 141.684 on August 5, triggering a yen carry trade unwind (please refer to the chart above). The Nasdaq 100 tumbled 11.2% between July 31 and August 5.

Trump-Xi Meeting in Focus

While markets react to the BoJ’s GDP and inflation outlook, updates from President Trump’s meeting with Chinese President Xi will influence market sentiment.

A US-China trade deal, including lower US tariffs on Chinese shipments, could drive demand for risk assets, sending US stock futures to record highs.

This morning’s gains reflect market optimism given Beijing and Washington’s efforts to ease trade tensions ahead of the meeting. Despite the bullish outlook, traders should closely monitor developments, with stalled trade talks likely to trigger a flight to safety.

US Stock Futures: Capitol Hill and Earnings in Focus

US stock futures hovered close to or at record highs on Thursday after a mixed session the previous day. The Dow Jones E-mini gained 113 points, the Nasdaq 100 E-mini advanced 113 points, and the S&P 500 E-mini climbed 26 points.

While US-China trade developments will be pivotal, corporate earnings will also influence demand for US stock futures. Amazon.com (AMZN) and Apple Inc. (AAPL) are to release results on Thursday, October 30.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Following the morning gains, US stock futures traded comfortably above key technical levels, signaling bullish momentum.

The near-term trends will hinge on the outcome of Trump-Xi talks, corporate earnings, and US Senate votes on stopgap funding bills. Key levels traders should monitor include:

Dow Jones

• Resistance: the October 28 record high of 48,214, then 48,250.
• Support: 47,500, 47,000, the 50-day EMA (46,356).

Nasdaq 100

• Resistance: October 30 record high of 26,399, then 26,500.
• Support: 26,000, 25,750, 25,500, 25,000, the 50-day EMA (24,731).

S&P 500

• Resistance: October 29 record high of 6,952, then 7,000.
• Support: 6,750, the 50-day EMA (6,671), and 6,500.

Market Outlook: Trade Talks, Earnings, and Capitol Hill Take Center Stage

Traders should brace for another crucial session, with a potential US-China trade deal, corporate earnings, and a Senate vote likely to influence risk sentiment.

While corporate earnings will influence demand for tech stocks, the outcome of the Trump-Xi meeting will be the key market driver. Meanwhile, an extended US government shutdown could test the appetite for risk assets. The shutdown extended to 29 days on Wednesday, October 29.

Follow our live coverage and consult the economic calendar for real-time market updates.