Commentary
In the US, the S&P 500, Dow Jones, and S&P MidCap 400 reached new highs, driven by better-than-expected earnings from major banks such as JPMorgan Chase and Wells Fargo. Growth stocks, particularly NVIDIA, outperformed, offsetting declines in Alphabet and Tesla. Economic concerns arose as inflation ticked up slightly, with core inflation rising to 3.3% y/y in September, and jobless claims surged to a 14-month high. These factors lessened hopes for a significant interest rate cut by the Federal Reserve in November. Long-term bond yields also increased, with the 10-year U.S. Treasury yield hitting its highest level since late July.
STOXX Europe 600 Index rose amid expectations of quicker interest rate cuts from the ECB and possible economic stimulus from China. Major stock indexes in Italy, Germany, and France advanced, while the UK’s FTSE 100 declined slightly. Germany faced challenges, with the government predicting a 0.2% economic contraction for the year, a downgrade from earlier growth estimates. The ECB remained cautious, signaling that a gradual reduction in interest rates might be appropriate if inflation trends align with projections, with further rate cuts expected in October.
In China, stock markets declined during a holiday-shortened week as optimism over Beijing’s stimulus measures faded. The Shanghai Composite fell 3.56%, and the Hang Seng Index in Hong Kong dropped 6.53%. Concerns remain over the effectiveness of China’s stimulus in reviving growth, as economic pressures persist.
