Highlights
U.S. stocks finished the week with mixed performance. Major large-cap benchmarks edged higher, helped by strength in mega-cap technology stocks tied to artificial intelligence spending. The Nasdaq Composite led the advance, while smaller-cap indexes slipped. Market participation remained narrow: although the S&P 500 posted a gain, most of its sectors declined, and the equal-weight S&P 500 trailed the traditional cap-weighted index. Earnings season accelerated, with FactSet data showing that by Friday morning, 64% of S&P 500 companies had posted results, and 83% beat earnings expectations. Tech results were mixed—Microsoft, Apple, and Meta fell after earnings releases, while Amazon and Alphabet gained. NVIDIA also rallied, topping a $5 trillion market cap midweek, marking a historic milestone as the first company to reach that level. Further, markets entered the week focused on trade talks between President Trump and China’s President Xi in South Korea. The two leaders agreed to a one-year pause in trade hostilities. The deal included lower U.S. tariffs on Chinese goods, Beijing halting restrictions on rare earth exports, and China resuming some purchases of U.S. farm products. While limited in scope, the truce helped support sentiment. In addition to this, the U.S. Fed was also under watch in the week. At its October meeting, the Federal Reserve lowered its benchmark rate by 25 basis points to 3.75%–4.00%, in line with market expectations. Chair Jerome Powell later signalled that another rate cut in December is not guaranteed, citing uncertainty and limited economic data due to the federal government shutdown. Across the Atlantic, the STOXX Europe 600 declined 0.32% after hitting a record high, as expectations faded for more near-term ECB rate cuts. The ECB left interest rates unchanged for a third meeting, noting inflation close to its 2% goal. President Christine Lagarde reiterated that decisions remain data dependent while emphasizing that the eurozone economy is still growing despite global uncertainties. In line with this, preliminary inflation data showed headline CPI easing to 2.1% in October, aligned with forecasts, while core inflation held at 2.4%. Eurozone GDP grew 0.2% in Q3, slightly above expectations, driven by France and Spain. Unemployment remained steady at 6.3%. Over in Asia, Japan’s stock markets surged, with the Nikkei 225 climbing 6.31% and the TOPIX gaining 1.91%. October marked the strongest monthly Nikkei performance since 1994. The Bank of Japan maintained its policy stance, and optimism around potential fiscal stimulus and upbeat U.S. tech earnings boosted sentiment. In contrast, Mainland Chinese equity markets were range-bound as growth concerns overshadowed optimism about reduced U.S. trade tensions. Following China’s Communist Party plenum, officials emphasized shifting toward consumption-led growth but stopped short of unveiling major stimulus or setting explicit consumption targets.
Data Highlights
The U.S. Federal Reserve cut its benchmark interest rate by 25 basis points to 4.00%, in line with market expectations. In Canada, the Bank of Canada also cut its policy rate by 25 basis points to 2.25% from the prior 2.50% as forecasted by analysts. The Eurozone economy expanded by 1.3% in Q3, modestly above the 1.2% forecast though slower than the previous 1.5%. The European Central Bank kept its key interest rate unchanged at 2.15%, in line with expectations. In the Eurozone, the inflation rate was reported at 2.1% year-on-year, slightly below the prior 2.2%. Australia’s Consumer Price Index was reported at 3.5%, higher than the 3.1% forecast by analysts. The Bank of Japan maintained its benchmark rate at 0.5%, in line with market expectations and unchanged from the prior decision.
Week Ahead
Australia Interest Rate Decision – Tuesday | Eurozone Retail Sales YoY, New Zealand Unemployment Rate Q3 – Wednesday | U.K Interest Rate Decision – Thursday| U.S Non-Farm Payroll, Canada Unemployment Rate – Friday
