Five things to watch in markets in the week ahead

Investing.com - A potentially renewed trade spat between the U.S. and China is in focus, although U.S. stock futures surged on Monday after comments from President Donald Trump seemingly aimed to ease some of the tensions. Artificial intelligence will also likely be front and center again, with cloud software group Oracle due to hold a much-anticipated event this week. Earnings from ASML and TSMC may offer another glimpse into the AI boom, while bank earnings are due to kick off the quarterly earnings season.

1. Trade tensions in focus

Fresh statements from President Trump on U.S. trade ties with China were grabbing much of the attention of investors as the new trading week began.

Over the weekend, Trump said that everything would be "fine" and Washington was not looking to "hurt" China, a seemingly less strident tone than the one taken by the president late last week.

On Friday, Trump reignited market worries around a trade war between the world’s two largest economies by suggesting he could slap additional levies of 100% on goods incoming from China. He also warned of new U.S. export controls on "any and all critical software" by November 1 and cast some doubt over a high-profile meeting with Chinese courterpart Xi Jinping in South Korea later this month.

Stocks on Wall Street slumped at the time. Yet futures were pointing higher on Monday, with analysts at Capital Economics noting that this dispute could still blow over should "cool heads prevail."

2. Oracle AI World event

While speculation has cropped up around the prospect of renewed international trade tensions, one theme remains in constant view for markets: soaring enthusiasm around artificial intelligence.

The AI boom and expectations for massive expenditures on developing the nascent technology has been the driving force of much of the gains in stocks so far this year, but some doubts have started to swirl around the sustainability of this euphoria, with observers especially flagging the circular nature of recent dealmaking in the sector.

"AI is the single most important force in the entire market," analysts at Vital Knowledge said in a note, adding that "catalysts related to it are crucial."

As a result, traders will likely be keeping tabs on any announcements or developments out of Oracle’s AI World event in Las Vegas this week.

The conference, which is due to run until October 16, comes after the software giant’s shares spiked to a record high in September. At the time, the company said booked revenue at its cloud unit is expected to surpass half a trillion dollars -- a possible sign of surging demand from businesses for AI-enhanced cloud tools. Any further updates from Oracle, particularly around cash flow and margins, will likely be closely monitored, the Vital Knowledge analysts said.

3. ASML, TSMC to report

Outside of Oracle, earnings from Dutch semiconductor equipment supplier ASML and contract chipmaking titan TSMC could provide even more insight into the state of the AI craze.

In July, ASML warned that it may not be able to achieve revenue growth in 2026, citing the impact of chip manufacturers delaying finalizing investments in factories in the U.S. because of tariff-related uncertainty.

The statement overshadowed key quarterly net bookings of 5.54 billion euros which exceeded forecasts by 25%, due in large part to strong demand for ASML’s EUV lithography machines -- advanced chip circuit printing systems used in everything from Apple’s iPhones to Nvidia’s cutting-edge processors.

Taiwan Semiconductor Manufacturing Co, the world’s biggest maker of advanced AI chips, is anticipated to report a 28% jump in third-quarter profit, Reuters has reported.

TSMC, who is due to report its latest results for the three months through September 30 on Thursday, is tipped to post record net profit of T$415.4 billion, the news agency said, citing LSEG SmartEstimate. The company has already said revenue in the third quarter would rise by 30%.

4. Bank earnings ahead

Away from the AI, results from large U.S. banks are scheduled to be released later this week, in what is typically the start of the quarterly reporting period.

JPMorgan Chase is set to kick off the slate of results on Tuesday, and will be joined by Wall Street giants like Goldman Sachs, Citigroup, and Wells Fargo. Bank of America and Morgan Stanley will then unveil their numbers on Wednesday.

Although analysts have noted bullishness around the banking sector, some uncertainty is hovering around how a decline in yields could impact net interest income and whether weak employment figures may dent credit quality.

Markets will also likely be looking to the lenders to provide fresh insight into the state of the American economy, which has recently been more difficult to ascertain due to an ongoing U.S. government shutdown that has postponed the release of several crucial data points. Any commentary could have a knock-on effect on investor sentiment that has become increasingly wary of the longevity of the AI euphoria and frothy stock market valuations.

JPMorgan CEO Jamie Dimon himself has warned that U.S. equities could be at risk of a sharp correction within in the next six months to two years.

5. Gold’s new record

Gold prices jumped to fresh all-time highs on Monday, approaching the $4,100-per-ounce mark, as the threat of renewed U.S.-China trade tensions boosted demand for safe-haven assets.

Spot gold rose 1.4% to $4,075.25 per ounce by 05:51 ET (09:51 GMT), after touching a record $4,078.05 earlier in the session. U.S. gold futures climbed 2.4% to $4,097.02/oz. Silver also peaked, riding the momentum in precious metals.

Bullion prices spiked after Trump ratcheted up trade tensions on Friday, unsettling financial markets and sending investors pouring into safe-haven assets including gold. The yellow metal is typically viewed as a bastion for investment during times of economic or political uncertainty.

While Trump’s shift in tone has helped to calm some nerves, traders have remained wary of unpredictable policy changes from the White House.