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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Nikkei climbs as Takaichi nearer to PM job

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Nvidia to drive quarter of U.S. earnings growth - BofA

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China Q3 GDP growth slows to 4.8% y/y, but 1.1% q/q beats

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Wall St futures, Treasuries hang on to Fed rate cut hopes

(Updates prices)

By Naomi Rovnick and Wayne Cole

SYDNEY, Oct 20 (Reuters) - World stock markets rose on

Monday, as traders placed bets on Japanese stimulus and cheered

data suggesting China's economy was withstanding a U.S. trade

war.

Japan's Nikkei jumped 2.8% to a record peak on news

the Liberal Democratic Party and the Japan Innovation Party have

agreed to form a coalition government, setting the stage for

Sanae Takaichi, who is viewed as pro-stimulus, to become prime

minister.

Europe's Stoxx 600 share index bounced 0.7% higher

in early trade and Wall Street stock futures implied the

blue chip S&P 500 shared index would open about 0.4% higher and

the tech-heavy Nasdaq 100 would add 0.5%. It was a sign

that markets were setting aside renewed jitters about U.S.

regional banks for now.

CHINESE ECONOMY BEATS FORECASTS

Data earlier in the session showed China's economy grew 1.1%

in the third quarter, to top forecasts, while industrial output

also beat with a rise of 6.5%, helping to allay fears about

world growth as Beijing and Washington haggle over trade.

Investors were also keeping faith with high-flying

artificial intelligence stocks as the Wall Street earnings

season gathers momentum, with much riding on the AI titans'

continuing to show blockbuster profit growth.

"I wouldn't say it's early innings for big tech but I think

there's still enough scope for healthy returns," said Arbuthnot

Latham global investment strategy director Jason da Silva,

adding he was not selling out of the AI theme yet.

HIGH EXPECTATIONS FOR EARNINGS

According to LSEG IBES data, analysts have forecast 8.8%

year-on-year growth for S&P 500 companies overall for this

quarter.

BofA analyst Savita Subramanian expects 11% growth for tech

earnings and chipmaker Nvidia alone to drive a quarter of the

aggregate uplift in earnings per share, although the

stock has drifted lower this month as cautious investors cut

some exposure.

"Nvidia is a great company, we have it, we're investing in

it, there's no question that it's not the number one stock in

the world," Carmignac investment committee member Kevin Thozet

said.

He cautioned that there were signs of froth in other AI

stocks that were loss-making or valued at extremely high

multiples of expected earnings, but said it was too early to

exit the AI trade.

Earnings reports in upcoming days that could also influence

market sentiment include those from Tesla and Netflix ( NFLX )

, while consumer groups Procter & Gamble ( PG ) and

Coca-Cola might provide a snapshot of how the U.S economy is

coping with tariffs so far.

RATE CUT BETS STRONG

Signs of a weakening U.S. labour market have kept traders

anticipating more rate cuts from the U.S. Federal Reserve,

despite economists forecasting inflation will stick stubbornly

above the central bank's average 2% target.

Figures due on Friday are expected to show core U.S. price

growth held at 3.1% in September but, with Fed Chair Jay Powell

not pushing back against market bets, futures are fully pricing

a quarter-point cut this month and another in December, with

U.S. rates declining to 3% next year.

That theme continued supporting U.S. Treasuries on Monday,

despite the continuing government shutdown in Washington that

the White House has said would cost the economy about $15

billion a week.

The 10-year Treasury yield, which sets the tone

for global corporate and household debt costs, fell by almost 4

basis points last week and was trading at about 4.02%.

The Fed cut theme has also helped to further depress the

U.S. dollar against European and higher-yielding currencies,

with the euro edging up to $1.1662 on Monday after

withstanding pressure from last week's surprise credit downgrade

of France by ratings agency Standard & Poor's.

The greenback at least held its own against the Japanese yen

on Monday, as traders reduced the likely odds of a

Bank of Japan rate hike this month to just over 20% and viewed

the central bank as likely to support government stimulus

efforts over battling inflation.

In commodities, safe-haven gold remained about the only major

asset signalling any uncertainty about world growth or

geopolitics, holding at about $4,266% an ounce after climbing 6%

last week.

Amundi Investment Institute head of cross-asset strategy

Lorenzo Portelli said he was eyeing a $5,000 per ounce target

for gold as central banks kept adding to reserves and the

dollar's supremacy faded.

Oil was weighed down on Monday by OPEC+ supply plans and

international benchmark Brent crude eased 0.4% to $61.02

a barrel.