USA
U.S. markets ended the week modestly higher as investors positioned ahead of the upcoming Federal Reserve meeting, with expectations centered on a 25-bp rate cut and cautious guidance. Macro data continued to support the “soft landing” narrative: initial jobless claims fell sharply to 191k, the lowest since 2022, indicating layoffs remain contained even as hiring slows. The ISM Manufacturing PMI held in contraction at 48.2, while ISM Services improved to 52.6, reinforcing that services continue to carry overall economic momentum. Disinflation also remained intact, with core PCE running near 2.8% YoY, supporting lower-rate expectations. Equity indices responded positively: NASDAQ gained 0.9%, S&P 500 rose 0.3%, and the Dow added 0.5%, led mainly by tech and cyclicals as markets priced a supportive macro backdrop heading into year-end.
Europe
European equities saw moderate gains, reflecting improving economic conditions, particularly in services. The Eurozone Composite PMI rose to 52.8, its strongest reading in 30 months, while inflation eased closer to target with headline CPI around 2.1–2.2% YoY. Labor markets remained resilient, with unemployment steady at 6.4%, signaling no imminent downturn. Sector performance showed notable strength in autos and retail, supported by improved global demand expectations and strong corporate updates. The STOXX 600 advanced 0.4%, Euro Stoxx 50 gained 1%, and Spain’s IBEX 35 outperformed on strength in financials. In contrast, the FTSE 100 declined 0.6%, pressured by weaker commodity prices and currency dynamics. Overall, Europe benefitted from a stable macro environment and easing inflation, though uncertainty around future ECB policy kept gains measured.
Japan
Japanese markets were mixed as investors weighed solid domestic activity against rising expectations of a Bank of Japan rate hike. The Composite PMI improved to 52.0, indicating expanding activity, supported by strong services demand even as manufacturing remained under pressure. The labor market stayed tight, with unemployment holding at 2.6%, but household spending data showed signs of softness, raising concerns about consumer resilience under higher rates. Bond yields climbed toward multi-year highs, reinforcing fears that the BoJ may continue normalizing policy. Equity markets reflected this divergence: the Nikkei 225 gained 0.5%, helped by exporter strength amid global risk-on sentiment, while the broader TOPIX slipped around 0.5%, weighed down by domestic financials and rate-sensitive sectors. Overall, markets remained cautious ahead of BoJ decisions that could significantly influence liquidity conditions.
China
Chinese and Hong Kong equities staged a rebound as investors anticipated additional 2026 policy support amid mixed economic signals. Growth remained uneven: manufacturing PMI improved slightly to 49.2 but stayed in contraction, while services PMI fell to 49.5, showing renewed weakness in domestic demand. Official Q3 GDP growth of 4.8% YoY underscored stabilization but highlighted the economy’s reliance on high-tech exports and external demand rather than internal consumption. With upcoming inflation data expected to show low CPI and persistent deflationary pressure at the factory gate, markets increasingly priced in further fiscal and monetary easing. This policy optimism supported strong market performance: the Shanghai Composite rose about 1.4%, and the Hang Seng gained roughly 2.5%, outperforming most global peers. Sentiment improved, but investors remain alert to structural risks in property and local government finances.