Commentary
The US economy added 254,000 jobs in September (nearly twice the expected amount) which helped stocks overcome concerns about Middle East tensions and a dockworkers’ strike on the East Coast. Unemployment dipped to 4.1%, but wage growth also surged, raising concerns about inflation. Oil prices spiked due to the conflict in the Middle East, boosting energy shares but weighing on sectors like consumer discretionary. Despite this, US Treasury yields reached their highest levels in nearly two months as investors reacted to strong economic data.
In Europe, the growing unrest in the Middle East led to significant drops in stock markets across the region. The STOXX 600 Index fell 1.80%, with Italy, France, and Germany facing more substantial losses. Meanwhile, Eurozone inflation dropped below the ECB’s target to 1.8%, fueling expectations of a potential interest rate cut in October. ECB President Christine Lagarde hinted at a shift toward easier monetary policy to support growth, while in the UK, Bank of England officials debated the pace and scale of future rate cuts depending on inflation trends.
In China, stocks surged as government support measures boosted market confidence, with the Shanghai Composite and CSI 300 Indexes rising sharply. However, factory activity contracted for the fifth straight month, with a PMI of 49.8 signaling continued weakness in demand. The real estate sector remained troubled, with new home sales from top developers falling by nearly 38% year-over-year in September.
