Global stock markets pause record rise: Analysis of investment strategies under tech giants' earnings reports and Fed policy week

The record rally in global stock markets paused during the Asian trading session, as investors prepared for a series of earnings reports from tech giants and major Central Bank policy decisions this week. The MSCI Asia-Pacific Index fell by 0.2%, while the Japanese and South Korean stock indices retreated from historical highs, and the Shanghai Composite Index broke the psychological barrier of 4000 points for the first time in a decade. This article will analyze Fed policy expectations, the outlook for tech stock earnings, progress in trade negotiations, and Bitcoin market dynamics, providing investors with a comprehensive market outlook.

Divergence in Asian Market Performance: Technical Adjustment After Historical Highs

Analysis of Major Index Performance

• Japan and South Korea stock markets: Retreated from historical highs, indicating that investors are taking profits ahead of important events.
• China Shanghai Composite Index: Breaks through the psychological barrier of 4000 points for the first time in ten years, reflecting increased market confidence.
• MSCI Asia-Pacific Index: fell 0.2%, but still remains at a relatively high level

This volatility occurred after the major US stock indices reached historic highs, against the backdrop of US-China trade negotiation representatives preparing a series of diplomatic achievements for this week's summit between Trump and Xi Jinping.

Easing Trade Tensions: Market Optimism and Reality Check

Trade Negotiation Progress and Market Impact

The easing of tensions in Sino-American trade has boosted the rise of the stock market, while American companies have maintained profit margins amid tariff impacts through price increases and cost reductions. This optimism will face a reality check this week, as investors focus on the following key factors:

• Fed Meeting: Seeking clear clues on the interest rate path
• Tech Giants Earnings Reports: Companies like Amazon and Microsoft will test the sustainability of profit growth.

Chris Larkin from Morgan Stanley E*Trade stated: “As the Fed prepares to cut interest rates, the continuation of this round of rise seems to depend on the performance of a series of important earnings reports this week.”

Foreign Exchange Market and Commodities: Market Dynamics Under Weakened Risk Aversion

Major Currency Trends

• Renminbi: Rises to nearly a one-year high, driven by optimistic sentiment from the China-U.S. trade agreement.
• Yen: Strengthening, the US dollar index has fallen slightly for the second consecutive day.
• Treasury Bonds: Little change, with a strong atmosphere of market watchfulness.

Commodity Performance

• Gold: Maintains around $4000 per ounce, trade negotiation progress weakens safe-haven demand.
• Copper Price: The copper price, a barometer of global economic growth, has risen, just about 60 dollars away from the record high set last year.

Tech Stock Focus: Layoffs and AI Chip Competition Running Parallel

Industry Dynamic Analysis

Reuters reported that Amazon plans to cut up to 30,000 jobs, while Qualcomm's stock rose to a 15-month high after the release of chips and computers targeting the profitable artificial intelligence data center market, aimed at challenging Nvidia's dominance in the fastest-growing sector of the industry.

Tech Giants Earnings Week

On Wednesday and Thursday, five companies that account for about a quarter of the U.S. benchmark index—Microsoft, Alphabet, Meta Platforms, Amazon, and Apple—will announce their earnings. The “Big Seven” index rose by 2.6%, indicating that the market remains optimistic about earnings expectations for tech stocks.

Bitcoin Market Analysis: Key Position Brewing Major Breakthrough

Market Position Structure and Liquidity Analysis

Bitcoin is currently at a critical decision point, and the holding data shows:

• Short Positions: $2.7 billion piled up above the current price
• Long Positions: $1.1 billion distributed below the current price

This position structure has formed a typical “liquidity vacuum zone,” indicating that significant price volatility is approaching.

On-chain Data Interpretation

• Supply Profit Margin: 83.6% of Bitcoin supply is currently in a profitable state.
• Market Health: When the profit ratio of BTC remains between 80% and 90%, the market tends to continue to expand, as holders resist selling.
• Risk Warning: Once this indicator exceeds 95%, it usually indicates that the market is overheated and a subsequent adjustment is expected.

Technical Outlook

The spot and futures CVD have flattened out for the first time since October 10, indicating that aggressive selling pressure has finally eased and the market has regained balance. Bitcoin is currently trapped in an important liquidity range, with $15.35 billion in short positions piled up at $126,400 above and $10 billion in long positions distributed at $104,400 below.

Geopolitical and Policy Outlook

Analysis of Trade Agreement Details

Although Trump expressed that he feels “good” about the agreement with China, analysts warn that the deal signed by the leaders of the two countries in South Korea overlooks thorny issues. Fundamental disputes regarding national security seem to remain unaddressed, as does Trump's core mission to rebalance trade.

Fawad Razakzada from City Index and Forex.com stated: “Although these developments have boosted market sentiment, analysts still doubt whether fundamental issues such as national security and technological competition will be fully resolved. However, traders have embraced the sentiment of risk appetite.”

Japan Policy Dynamics

Trump praised Japan's new Prime Minister, Fumio Kishida, for plans to increase national defense spending, and the two sides signed a key mineral framework agreement in Tokyo. Kishida is implementing the trade agreement brokered by his predecessor, which includes an ambiguous commitment from Japan to provide $55 billion in funding for U.S. projects.

Conclusion

This week, the market will face multiple key tests: the Fed's policy direction, the sustainability of tech stock earnings, specific details of trade agreements, and the breakout direction of the Bitcoin market. Although the stock market has hit historical highs, investors need to be wary of the following risk points:

1. Technology Stock Valuation: There is uncertainty whether the earnings report can support the current high valuation.
2. Policy Risk: The Fed's policy path may deviate from market expectations.
3. Geopolitics: Insufficient details in trade agreements may trigger subsequent fluctuations.
4. Bitcoin Market: Liquidity risk under high leverage positions

For investors, maintaining a cautiously optimistic attitude, focusing on assets with strong fundamentals, and implementing good risk management is a wise choice in the current environment. The market's performance after reaching record highs will provide us with important signals regarding the resilience of the global economic recovery.