Highlights
U.S. equities posted mixed results over the week. The Dow Jones Industrial Average and the S&P 500 eked out slight gains, while the Nasdaq Composite, the S&P Mid-Cap 400, and the small-cap Russell 2000 all declined. For most of the week, markets were pressured by worries about high valuations and intensifying scrutiny of artificial intelligence–related spending, prompting investors to rotate out of growth stocks that had helped drive recent record highs. A turbulent but catalyst-light session on Friday ultimately enabled some indexes to rebound and finish the week in positive territory. Investors continued to focus on economic data. The White House warned that both October employment and inflation reports might be cancelled, while the Bureau of Labor Statistics (BLS) emphasized that determining new reporting schedules would take time. On Friday afternoon, the BLS confirmed it would publish the September jobs report on Thursday, November 20. Comments from several Federal Reserve officials, viewed as hawkish, also weighed on stocks. St. Louis Fed President Alberto Musalem argued for caution, while Cleveland Fed President Beth Hammack noted that monetary policy must stay “somewhat restrictive” due to stubborn inflation. Atlanta Fed President Raphael Bostic said on Wednesday that labour market signals were “ambiguous” and not strong enough to justify aggressive policy action, especially given persistent inflation risks. As a result, the likelihood of a rate cut at the Fed’s December meeting declined to about 46% by Friday afternoon—down from around 67% the previous week and nearly 95% a month earlier, according to the CME FedWatch tool. Over in Europe, the pan-European STOXX 600 rose 2.15% benefiting from relief that the U.S. shutdown had ended, though a cooling mood around AI-linked stocks limited the advance. A disappointing batch of U.K. economic reports prompted investors to increase bets on a December rate cut by the Bank of England. Unemployment for the three months through September rose to 5%—the highest since early 2021—while wage growth excluding bonuses slowed to 4.6% from 4.8%. Meanwhile, GDP grew only 0.1% in Q3, below expectations, and contracted 0.1% in September. In Asia, Japanese equities advanced, with the Nikkei 225 up 0.20% and the TOPIX gaining 1.85%. The reopening of the U.S. government boosted global sentiment, although worries about stretched valuations in AI-exposed sectors continued to pressure Japan’s tech companies. Expectations of looser fiscal policy under new Prime Minister Sanae Takaichi—and the perception that the Bank of Japan will be cautious with rate hikes—pushed the yen lower. Takaichi has signalled support for expanded, longer-horizon fiscal targets aimed at encouraging growth. Mainland Chinese markets pulled back as investors took profits after the CSI 300 hit a near four-year high the prior week. The CSI 300 fell 1.08%, while the Shanghai Composite dipped 0.18%. Fresh data signalled that China’s economy slowed entering the fourth quarter. Industrial output rose 4.9% year over year in October—below expectations—while retail sales increased 2.9%, marking a fifth consecutive month of deceleration. Despite the soft October data, many economists still believe China can achieve its roughly 5% annual growth target, especially after the recent one-year trade truce agreed with the U.S. Moreover, Beijing has authorized RMB 1 trillion in new stimulus since late September, and analysts expect these measures to begin supporting activity in the near term.
Data Highlights
In the U.K, unemployment rate climbed to 5.0%, exceeding both the 4.9% forecast and the previous 4.8%. U.K. GDP growth eased to 1.3%, slightly below both the forecast and prior reading of 1.4%. In the Eurozone, employment rose 0.5% year-on-year, higher than market expectations of 0.4%. Australia’s unemployment rate improved to 4.3%, beating analysts forecast of 4.4% and marking an improvement from the prior 4.5%. In China, the unemployment rate edged down to 5.1%, matching analysts’ forecasts.
Week Ahead
China GDP Growth Rate QoQ, Canada Inflation Rate YoY – Monday | U.K Inflation Rate – Tuesday | U.S Non-Farm Payroll – Thursday| Japan Inflation Rate YoY – Friday
