US Stock Market Preview: The three major stock index futures show mixed performance, US Dollar Index nears this year's high, Schneider Electric plans to acquire PTC (PTC.US) for $22.6 billion

Pre-market Market Movements

1. Before the U.S. market opened on Monday, October 5, the three main U.S. stock index futures showed mixed performances. At press time, Dow futures rose by 0.06%, S&P 500 index futures were up 0.01%, and Nasdaq futures fell by 0.21%.

2. At press time, Germany's DAX index increased by 0.14%, the UK's FTSE 100 rose by 0.51%, France's CAC40 fell by 0.76%, and the Euro Stoxx 50 increased by 0.01%.

3. At press time, WTI crude oil fell by 0.83% to $90.35 per barrel. Brent crude rose by 0.36% to $102.62 per barrel.

Market News

U.S. September ISM Services Index to Be Released Soon: Price and Employment Components Worth Watching. The U.S. Institute for Supply Management (ISM) will release the September ISM Services PMI on Monday. Data shows that the ISM Services PMI was 55.4 in August, up from 54.1 in July, marking the 26th consecutive month in expansion territory above 50. The business activity index rose to 61.7, while the new orders index climbed to 60.9, indicating continued strong demand for services. However, two sub-indices in the report are worth special attention. The employment index for August was only 47.8, in contraction for a second consecutive month; meanwhile, the prices paid index rose to 72.6, the highest since August 2022. This indicates that the current U.S. services sector is experiencing a mix of strong demand, sluggish employment, and elevated price pressures. Therefore, if September data continues to show the price index above 70 and further improvement in the employment component, it could reinforce the view that the economy remains resilient with persistent inflationary pressures, supporting market expectations for further Federal Reserve rate hikes.

Dollar Index Nears Year High Amid Rising Overbought Risk.Renewed fiscal pressures and political uncertainty in Europe have driven safe-haven buying of the dollar. Influenced by the weakening euro, the Bloomberg Dollar Spot Index rose as much as 0.4%, extending its three-week winning streak and approaching this year’s highest levels. However, several indicators show the dollar is already overbought, and the rally faces reversal risks. Markets are closely watching this week’s U.S. ISM Services PMI, employment data, the University of Michigan Consumer Sentiment Index on Friday, as well as the Federal Reserve meeting minutes (the first rate hike by the Fed in three years last month) and policymakers' speeches to assess the rate path. Credit Agricole’s Head of G10 FX Research, Marinov, warns that an overbought and overvalued dollar is vulnerable to negative data shocks. If investors reassess the FOMC’s hawkish consensus, the dollar may come under pressure; the bank’s models recommend going long GBP and SEK against the dollar.

Raw Sugar Futures Hit Near Two-Year High on Global Supply Squeeze Concerns. Raw sugar futures extended their rally as weather and production concerns among major global sugar-producing countries intensified, raising worries about tightening global supply. The most actively traded New York raw sugar futures surged up to 2%, reaching the highest level since December 17, 2024, continuing last week’s near 8% gain. White sugar futures also rose simultaneously. The El Niño weather pattern is raising supply concerns across the entire agricultural market, with sugar crops expected to be among the first affected. At the start of the year, the market generally anticipated a global sugar surplus, but weather risks are shifting this outlook. IG's Chief Market Analyst, Chris Beauchamp, commented, "Weather concerns are driving recent sugar price increases, and prices may further test August highs." Brazil, the world's largest sugar producer, is experiencing excessive rainfall, slowing cane harvesting and crushing progress. India, the second largest, is facing the weakest monsoon since 2015, likely leading to lower sugar production. In Europe, the EU’s agricultural resource monitoring department estimates that sugar beet yields will fall below the five-year average. Typically, lower output in one region can be offset by gains elsewhere, but if several leading sugar producers face adverse weather simultaneously, this buffer may be weakened.

Saudi Aramco CEO Warns: Global Oil Supply Buffers “Frighteningly Small”. Saudi Aramco CEO Amin Nasser said in London on Monday that global oil inventories for cushioning supply shocks are now “frighteningly small”, and unless the Strait of Hormuz reopens, market risks could escalate further. Nasser made these remarks just days after the G7 and its partners decided to release up to 100 million barrels of emergency oil and diesel reserves to ease rising fuel costs. “Until the Strait of Hormuz fully reopens and market confidence recovers, the harsh reality is that price pressures on both crude and refined products will persist,” Nasser said at the Energy Intelligence Forum in London. "Crude supply is already very tight, but refined products have risen even more." Nasser stated that releasing reserves will buy time for economies, but will not solve the fundamental supply-demand imbalance. He said that even if the critical Hormuz shipping chokepoint reopens, energy-consuming countries may need up to two years to refill inventories.

DBS CIO: Nvidia (NVDA.US) Forward P/E Only 17x, AI Tech Stocks Far from Bubble Territory. DBS Group’s Chief Investment Officer Hou Wey Fook stated that Nvidia's price-earnings ratio and expected 70% earnings growth next year indicate that AI-driven tech stocks are far from bubble territory. Data shows that Nvidia is currently trading at about 17 times its forecast earnings for the next 12 months. Hou compared this valuation with Cisco Systems' 100x valuations before the dot-com bubble burst. “If the flagship enterprise of AI trades at a mere teens multiple, how can one call this a bubble?” he commented in an interview, adding that the rally in semiconductors and AI still has “tailwinds.” Still, Hou advocates a “barbell” strategy to “control overall portfolio volatility”: combining growth tech stocks with investment-grade fixed income products for stable returns, while hedge funds and gold serve as intermediate risk diversification tools.

Individual Stock News

Schneider Electric Plans $22.6 Billion Acquisition of U.S. Engineering Software Developer PTC (PTC.US). French company Schneider Electric has reached an all-cash acquisition deal with U.S. industrial software company PTC, valuing PTC at $22.6 billion, aiming to enhance its industrial AI business portfolio. Schneider Electric announced on Monday a $205 per share cash offer to acquire PTC, representing a 42% premium over the stock’s last closing price. PTC’s board has decided to recommend shareholders approve this deal. PTC shares surged 36% in pre-market trading.

Qualcomm (QCOM.US) and Huawei Reach Multi-Year Patent Licensing Agreement. Huawei and Qualcomm announced Monday that they have reached a comprehensive multi-year patent licensing agreement, covering cross-licensing of various patents in 5G, computing, artificial intelligence, and networks, including Qualcomm acquiring certain U.S. patents from Huawei. The deal will be completed upon receiving necessary regulatory approvals. Reportedly, this is the first patent licensing deal between Huawei and Qualcomm covering 5G technology. Qualcomm shares rose over 4% in pre-market trading.

BP (BP.US) Aims to Improve Capital Efficiency, CEO Accelerates Restructuring after Six Months in Role. BP CEO Meg stated that shareholder capital efficiency needs to be improved. Six months into her tenure, she is actively reshaping the oil giant. Speaking at the Energy Intelligence Forum in London on Monday, Meg said, “Decision-making is very important. In the past, we did not manage shareholder capital prudently.” As BP's first externally appointed CEO, Meg has quickly pushed for restructuring after years of lackluster performance. Measures include divesting low-return assets, streamlining company structures, and appointing a new chairman. In August, she noted BP had not fully realized its potential and “lost too much value.” The Iran war has driven up oil and gas prices, giving Meg some impetus for the restructuring. However, she refused to disclose when BP would resume share buybacks, saying only that the company would continue to pay down debt and not increase spending. “In our industry, BP has been the most leveraged company for over a decade,” Meg said.

From Micron (MU.US) to Foxconn: AI Sector Outperforming Expectations, Global Infrastructure Spending Remains Hot. Nvidia (NVDA.US) partner Foxconn announced better-than-expected quarterly revenue, indicating that global AI infrastructure spending remains elevated. For the three months ending September, Foxconn’s revenue totaled NT$3.03 trillion (approximately $95.4 billion), up 47% year-on-year. Analysts’ average estimate was NT$2.83 trillion. Before Foxconn’s strong revenue was announced, Micron Technology last week issued upbeat guidance, further confirming that AI spending continues to climb. Despite calls by OpenAI’s Sam Altman and Anthropic’s Dario Amodei to slow AI's pace and ensure it remains under human control, the AI spending boom has not shown signs of abating.

Morgan Stanley Reinstates Nvidia (NVDA.US) as Top Semiconductor Pick; Industry Bottleneck Shifts to Data Center Infrastructure, SpaceX and Amazon Partnerships Unlock Growth Potential. Morgan Stanley’s latest research report names Nvidia (NVDA.US) once again as its top pick in the semiconductor sector, maintaining an “overweight” rating with a target price of $300. The firm believes industry bottlenecks are quickly shifting from semiconductor capacity constraints to the speed of new data center construction and financing models. Nvidia, leveraged by its product architecture, global client ecosystem, and financing support, is fully positioned to benefit from the industry’s tailwinds, while new clients and Muse intelligent agent initiatives bring incremental opportunities, offering upside for the company's valuation. Morgan Stanley highlights that Nvidia is trading at only 15 times its fiscal year 2028 earnings forecast, making it highly attractive; even if the P/E does not expand, earnings growth alone should provide solid investment returns.

Key Economic Data and Upcoming Events

Beijing Time 22:00 U.S. September ISM Non-Manufacturing PMI