United States: Major stock indexes rose, with smaller-cap stocks outperforming large-caps. Bitcoin extended its rally with a third consecutive week of 10%+ gains.
NVIDIA’s Q3 results met expectations, but lighter Q4 guidance tempered enthusiasm. Optimism around AI-driven clean energy boosted utilities, while Alphabet’s decline dragged communication services.
Positive labour market trends (jobless claims hit a 7-month low) and an annual increase in October home sales lifted investor sentiment.
US Treasury yields diverged, with short-term yields increasing from the prior week while long-term yields decreased. Municipal bonds saw strong demand, while investment-grade and high-yield corporate bonds gained amid favourable macroeconomic conditions.
Europe: The pan-European STOXX Europe 600 Index gained 1.06% on speculation that the European Central Bank (ECB) may lower rates in December following weak Purchasing Managers Index (PMI) data. National indexes showed mixed performance, with notable gains in the UK’s FTSE 100 (+2.46%) and losses in Italy’s FTSE MIB (-2.04%).
The Eurozone Composite PMI fell to 48.1 in November, signalling economic contraction across both manufacturing and services. The UK’s PMI also turned negative after a year of growth.
While weaker economic data raised expectations for monetary easing, a jump in negotiated wage growth (+5.4% in Q3) highlighted inflationary pressures, complicating the ECB’s decision-making.
UK inflation rose to 2.3% in October, exceeding forecasts, with core inflation climbing to 3.3%. This led markets to scale back expectations for rate cuts in 2025, while Bank of England policymakers expressed divided views on inflation risks.
Asia: The Nikkei 225 and TOPIX Index fell 0.93% and 0.56%, respectively, as geopolitical tensions drove risk-averse sentiment. The yen remained steady, while 10-year JGB yields neared a 13-year high of 1.1% amid expectations of a BoJ rate hike in December or January. Inflation data supported the BoJ’s hawkish stance, as Governor Kazuo Ueda highlighted rising wage-driven inflationary pressures.
Japan approved a JPY 39 trillion economic package to counter inflation’s effects, including energy subsidies, cash handouts to low-income households, and tax threshold adjustments to increase disposable income.
Chinese equities fell, with the Shanghai Composite down 1.91% and CSI 300 dropping 2.6%. Concerns about US-China relations under the incoming Trump administration dampened risk appetite, despite unchanged loan prime rates and prior stimulus measures for the housing sector.
Beijing announced a RMB 10 trillion debt swap to ease local government burdens, while youth unemployment fell to 17.1% in October, marking its second consecutive monthly decline. Policymakers appear cautious, awaiting clarity on US policy before further action.
