USA
The U.S. stock market closed on a positive note last week, the S&P 500 rose by 1.11%, the NASDAQ gained 1.2%, and the Dow Jones Industrial Average advanced by 1.21%. The week was marked by anticipation of key macroeconomic data and the Fed's upcoming decisions. Despite mixed economic signals and geopolitical risks, the market showed neutral momentum with localized fluctuations. The recently published jobs report exceeded expectations, reducing the probability of a Fed rate cut by the end of the year. The Fed’s meeting minutes revealed that not all members supported a 50 basis point cut. It is expected that the Fed may pause or cut rates by only 25 points in the November meeting. Brent crude temporarily rose above $80 per barrel amid escalating conflict between Israel and Gaza and potential action against Iran. However, oil prices later fell due to uncertainty over Israel's response. Hurricane Milton, approaching the U.S., raised concerns about supply disruptions but had no long-term impact on prices. The start of the earnings season supported markets. The banking sector outperformed expectations, contributing to a 1.9% rise in the XLF ETF. Nvidia led a strong rebound in the tech sector after an initial decline. However, energy stocks and Chinese companies remained under pressure. The September CPI report exceeded forecasts, increasing inflation risks. However, a surge in unemployment benefit claims partially eased inflation concerns. Investors' focus is now on the upcoming October jobs report, which could determine the Fed’s future policy direction.
Europe
Major indices across Europe posted mixed results last week. The Stoxx 600 increased by 0.66%, with broad-based gains across various sectors. However, the FTSE 100 in the UK dropped by 0.33%, while Germany’s DAX 40 rose by 1.32%, France’s CAC 40 gained 0.48%, and Spain’s IBEX 35 rose 0.52%. Retail sales in Europe showed modest month-over-month growth of 0.2%, while household spending in Japan rose by 2.0% after a decline in the previous month. The Eurozone's industrial sector rebounded in August, offering a glimmer of hope to its struggling factories as European Central Bank officials prepare for another interest rate cut. According to EU data released on Tuesday, industrial production across the 20 countries using the euro rose by 1.8% month-on-month, surpassing the 1.6% increase anticipated by economists surveyed by The Wall Street Journal. This marks the fourth time in 2024 that output has grown rather than declined in what has been a challenging year for the industry. Germany and France, the Eurozone's largest economies, played key roles in this recovery, posting strong gains in factory output. Growth was seen in most sectors, including consumer goods, capital goods, and energy, although intermediate goods experienced a slight decline. Despite this progress, Eurozone factories are still producing less than they did in 2021, before the full-scale Russian invasion of Ukraine, which severely impacted the sector. Ongoing geopolitical tensions and weak demand from export markets have further weighed on industrial performance. The ECB began cutting interest rates earlier this summer to alleviate pressure on investment and demand and is expected to reduce rates again at its governing council meeting in Frankfurt on Thursday.
Japan
The Nikkei 225 increased by 2.51%, while the Topix index rose by 0.45%. The market experienced volatility during the week, driven by investor concerns around inflation, potential monetary policy changes, and economic conditions in key export markets like the U.S. and Europe. Inflation continued to run above the Bank of Japan’s target, with headline inflation at 3.3% in October. Goods inflation remained high, driven by rising food prices. This sparked expectations that the Bank of Japan might soon shift its monetary policy stance, possibly raising interest rates for the first time in years.
China
The Hong Kong Hang Seng Index decreased significantly 6.53% over the week, continuing its Early in the week, Chinese stock markets experienced volatility, with investors reacting to various economic reports and policy measures. The CSI 300 index remained relatively flat, while the Hang Seng index in Hong Kong dipped due to concerns over the lack of clarity on fiscal stimulus. By midweek, sentiment improved slightly due to positive market expectations around government actions, but this optimism was tempered by weak economic fundamentals. Data for this period showed a decline in export growth and persistent deflationary pressures. The Producer Price Index (PPI) fell by 2.6% year-on-year in October, while the Consumer Price Index (CPI) saw a slight dip, highlighting subdued demand and weak industrial activity. These indicators raised concerns about China's broader economic outlook, especially as the country grapples with challenges in the property sector and muted domestic consumption. Despite initial hopes that the Chinese government would announce significant stimulus measures, no concrete new fiscal initiatives were confirmed during the week. This left markets somewhat disappointed, especially as authorities emphasized longer-term industrial policies over immediate consumption boosts.