USA

The U.S. stock market closed on a positive note last week, the S&P 500 rose by 0.85%, the NASDAQ gained 0.80%, and the Dow Jones Industrial Average advanced by 0.96%. While corporate earnings season began on a positive note, persistent inflationary concerns and geopolitical risks kept market sentiment cautious.

The week’s headline economic data came from the U.S. retail sales report, which posted stronger-than-expected growth of 0.7% in September. This reflected resilient consumer spending, despite higher inflation and rising interest rates. The strength in retail sales raised concerns that the Federal Reserve might continue its hawkish stance in the near term. Inflationary pressures remained in focus, with the Producer Price Index (PPI) rising by 0.5% in September, higher than the expected 0.3%. Core PPI, excluding food and energy, also ticked up by 0.3%. The inflation data continued to fuel speculation that the Fed might hold rates higher for longer, dampening investor enthusiasm.

Major U.S. banks reported their quarterly results, largely beating expectations. JPMorgan Chase and Bank of America both reported solid earnings growth, driven by higher net interest margins because of elevated interest rates. The Fed’s rate path remains uncertain, with markets pricing in a lower likelihood of a rate cut before the end of the year, as the central bank continues to monitor inflationary pressures. Geopolitical tensions and the direction of oil prices are expected to play a significant role in market movements over the coming weeks.

Europe

Major indices across Europe posted mixed results last week. The Stoxx 600 increased by 0.58%, with broad-based gains across various sectors. However, the FTSE 100 in the UK dropped by 1.27%, while Germany’s DAX 40 rose by 1.46%, France’s CAC 40 gained 0.46%, A key event was the European Central Bank’s (ECB) decision to cut its key interest rates by 25 basis points, lowering the main refinancing rate from 3.5% to 3.25%. All three key ECB rates were reduced by the same margin, reflecting the central bank’s attempt to support growth while navigating persistent inflationary pressures. Industrial production in the Eurozone showed positive momentum, increasing by 1.5% in August, driven by strength in Germany and France, especially in the consumer goods and energy sectors. However, intermediate goods remained under strain, and core inflation held steady at 4.5%, keeping inflation concerns at the forefront. Geopolitical tensions in the Middle East also weighed on sentiment, particularly in the energy sector, as oil price volatility added pressure to European markets. Investors are now closely watching further economic data and corporate earnings, as well as the ECB’s future actions, to assess the region’s growth outlook.

Japan

The Nikkei 225 decreased by 1.58%, while the Topix index fall by 0.64%. On the economic front, Japan's September trade balance data showed a return to a surplus, driven by strong export growth, particularly in the automotive and machinery sectors, despite global economic uncertainties. The yen remained under pressure, trading near a 12-month low against the U.S. dollar, which helped boost exporter stocks, as a weaker yen increases the competitiveness of Japanese goods overseas. Meanwhile, inflation concerns persisted, as Japan’s Consumer Price Index (CPI) rose by 3.1% year-on-year in September, keeping inflation above the Bank of Japan's (BOJ) target. However, the BOJ maintained its ultra-loose monetary policy stance, signaling no immediate rate hikes. This continued accommodative policy, combined with fiscal stimulus expectations, supported market sentiment. Investors are now focusing on corporate earnings and the government’s anticipated stimulus package, which is expected to address economic recovery efforts and inflation control. Geopolitical tensions and global supply chain issues remain risks, but Japan’s economic fundamentals and fiscal support measures continue to provide optimism in the near term.

China

The Chinese stock market experienced mixed performance last week, as the Shanghai Composite Index rose by 1.36%, while the Hong Kong Hang Seng Index edged down by 2.11%. Investor sentiment was weighed down by concerns over weak economic data and the ongoing property market crisis. China’s Q3 GDP growth came in at 4.9% year-on-year, slightly above expectations but still highlighting the country's slower post-pandemic recovery. Industrial production grew by 4.5% in September, showing signs of stabilization in the manufacturing sector, but retail sales growth slowed to 4.3%, reflecting weaker consumer confidence.

Inflation data was also in focus, with China reporting a 0.2% rise in the Consumer Price Index (CPI) in September, signaling muted inflationary pressures. The Producer Price Index (PPI) fell by 2.5%, marking the 12th consecutive month of decline, underscoring weak demand in the industrial sector.

On the policy front, the People's Bank of China (PBoC) maintained its accommodative stance, keeping interest rates unchanged to support growth. However, concerns about slowing global demand and the impact of geopolitical tensions, particularly U.S.-China relations, continued to weigh on investor confidence. Looking ahead, market participants are closely watching for further government stimulus and potential developments in the property sector, which remain critical for China’s economic outlook.