Global Markets Weekly Wrap KW 44 : Global Markets Mixed as Tech Giants Drive U.S. Gains, Asia Surges

Global Markets Weekly Wrap KW 44 : Global Markets Mixed as Tech Giants Drive U.S. Gains, Asia Surges

The week in global markets unfolded with a sense of cautious divergence as major United States equity benchmarks moved in mixed directions large capitalization technology stocks continued to dominate the performance landscape and smaller capitalization shares lagged behind the broader indexes the Nasdaq Composite once again became the central engine of the rally driven by persistent enthusiasm surrounding artificial intelligence investments and the seemingly unstoppable momentum of the mega cap technology leaders the S&P 500 managed to close higher despite weakness across the majority of its sectors highlighting the extreme concentration of gains within a narrow group of dominant firms while seven of eleven sectors declined the market capitalization weighted index still advanced whereas the equal weighted version underperformed by two point six eight percentage points underscoring how dependent overall progress has become on a handful of influential names earnings season intensified as more than one third of S&P 500 constituents delivered their quarterly reports including five of the much discussed Magnificent Seven according to FactSet data roughly sixty four percent of companies had reported results by Friday morning and about eighty three percent surpassed consensus earnings expectations yet reactions were uneven Microsoft Apple and Meta Platforms all saw their shares slip following releases that failed to impress investors while Amazon and Alphabet traded higher NVIDIA meanwhile broke new ground propelling its market capitalization beyond five trillion dollars midweek a historic first for any publicly listed firm and a milestone that reflected the deep investor confidence in the semiconductor giant's central role in powering artificial intelligence infrastructure elsewhere sentiment received a temporary lift from geopolitical developments as the United States and China announced a one year truce in their ongoing trade dispute following a meeting in South Korea between President Donald Trump and President Xi Jinping the deal included a reduction of US tariffs on Chinese imports a suspension of Chinese export restrictions on rare earth materials and a resumption of Chinese purchases of US agricultural products such as soybeans though analysts described the concessions as limited the agreement nonetheless provided short term relief and helped bolster investor morale by easing fears of renewed tariff escalation during the same week the Federal Reserve captured market attention by lowering its target range for the federal funds rate by twenty five basis points bringing it to between three point seventy five and four percent as widely expected yet the decision exposed growing internal divisions two policymakers dissented one favoring a larger fifty basis point cut and another arguing to hold rates steady the contrast reflected a deepening split within the central bank as officials struggle to balance persistent inflationary pressures against a cooling labor market Chair Jerome Powell during his post meeting remarks emphasized that further easing at the December meeting was not a foregone conclusion and that given the lack of incoming economic data caused by the ongoing government shutdown policymakers would likely proceed cautiously the message dampened investor expectations for another cut and triggered a swift adjustment across the Treasury yield curve US government bonds ended the week lower with yields rising across most maturities following Powell's hawkish tone municipal debt showed resilience though it softened slightly in sympathy with Treasury volatility investment grade corporate bonds lagged as supply exceeded expectations while the high yield segment was initially buoyed by strong earnings and company specific developments before sentiment cooled in response to the Fed's stance by Friday's close the Dow Jones Industrial Average had gained modestly while the S&P 500 advanced and the Nasdaq Composite registered a larger rise small and midcap indexes however posted declines reflecting a continuation of the bifurcated market environment where scale and technology dominance remain decisive advantages

Across the Atlantic European equity markets presented a different rhythm as optimism about central bank easing faded and the pan European STOXX Europe 600 Index declined zero point six seven percent after briefly touching a new high France's CAC 40 and Germany's DAX each retreated while Italy's FTSE MIB rose and the United Kingdom's FTSE 100 managed a gain of zero point seven four percent supported by a weaker British pound which tends to lift the value of overseas earnings when translated back into sterling the European Central Bank maintained its benchmark rates unchanged for the third consecutive meeting as inflation stayed close to the two percent target President Christine Lagarde reaffirmed that the bank would continue to act on a meeting by meeting basis guided entirely by data rather than any predetermined path she noted that the euro area economy was still expanding at a modest pace even as external uncertainties persisted including the lingering effects of global trade frictions and geopolitical instability preliminary data confirmed that headline inflation in the eurozone slowed slightly to two point one percent in October from two point two in September aligning with forecasts the core measure which excludes energy and food held steady at two point four percent gross domestic product for the third quarter expanded by zero point two percent versus zero point one percent in the previous period beating expectations and signaling a modest pickup driven mainly by France and Spain unemployment remained steady at six point three percent for a third month reflecting a labor market that remains tight despite sluggish growth in the United Kingdom the housing sector showed surprising resilience the Nationwide House Price Index rose by zero point three percent in October following a zero point five percent gain in September while Bank of England data showed that mortgage approvals edged higher to sixty five thousand nine hundred the highest level in nine months reinforcing the view that the housing market has stabilized despite elevated borrowing costs

In Asia Japanese equities surged to new record levels as the Nikkei 225 jumped six point three one percent and the broader TOPIX gained one point nine one percent marking the strongest monthly performance since January nineteen ninety four optimism was fueled by the Bank of Japan's decision to leave interest rates unchanged alongside expectations of forthcoming fiscal stimulus robust earnings from global technology peers including Amazon and Apple also helped lift investor sentiment Bank of Japan Governor Kazuo Ueda maintained a cautious but slightly hawkish stance hinting that the likelihood of a rate increase was rising while refraining from specifying any particular inflation threshold for action he instead emphasized the importance of observing wage negotiations especially in the automotive sector which is heavily influenced by trade tariffs the yen weakened to about one hundred fifty four per dollar compared to one hundred fifty two point nine previously as prospects of imminent rate hikes diminished prompting new Finance Minister Satsuki Katayama to warn against speculative volatility the yield on ten year Japanese government bonds hovered near one point six five percent essentially unchanged inflation pressures remained evident with core consumer prices in Tokyo's Ku area climbing two point eight percent year over year in October exceeding expectations and remaining above the central bank's two percent objective retail sales recovered with a zero point five percent annual increase following a prior decline while unemployment steadied at two point six percent matching the highest level since mid twenty twenty four
Mainland Chinese markets experienced a more subdued week as concerns about long term growth overshadowed the slight easing of trade tensions following the US China truce the CSI 300 Index fell zero point four three percent while the Shanghai Composite edged up zero point one one percent and the Hang Seng in Hong Kong dropped nearly one percent investors appeared disappointed by the lack of decisive policy measures from the government after the conclusion of the fourth plenum a key four day meeting of top Communist Party officials where leaders pledged to shift toward a growth model centered more on domestic demand and consumption although analysts viewed this focus as a step in the right direction the absence of concrete targets for boosting household spending relative to gross domestic product tempered optimism currently household consumption accounts for about forty percent of Chinese GDP compared with a global average near fifty six percent according to the World Bank data and many observers believe stronger policy incentives will be required to close that gap going forward

In Latin America the political and economic story of the week unfolded in Argentina where President Javier Milei's La Libertad Avanza alliance performed significantly better than expected in midterm legislative elections securing around forty one percent of congressional seats compared with forecasts near thirty five and even capturing victory in the Province of Buenos Aires a region previously considered out of reach analysts attributed the outcome to a combination of Milei's more conciliatory tone the fragmented state of the opposition strong diplomatic backing from the United States including a twenty billion dollar swap arrangement with the Treasury and fears among voters that reversing Milei's reforms could worsen financial instability according to T Rowe Price's Aaron Gifford the results provide Milei with a renewed mandate to advance his sweeping economic agenda emphasizing labor and tax reform and encouraging foreign investment the country's currency regime remains a central challenge yet progress is expected in that area as well Gifford anticipates that business and consumer confidence will strengthen inflation will decline and monetary conditions will ease possibly allowing Argentina to regain access to international debt markets before year end further north in Chile monetary policymakers kept the benchmark interest rate unchanged at four point seven five percent in a unanimous decision citing a need for additional information before continuing with normalization the central bank's statement acknowledged that global markets have performed favorably since the last meeting with Latin American currencies appreciating and copper prices rising sharply due to supply constraints and geopolitical influences domestic conditions appear mixed while mining and certain business services have weakened wholesale and retail trade along with manufacturing show steady improvement private consumption remains consistent with forecasts and investment has become more dynamic particularly in machinery and equipment the labor market however presents contrasting signals with modest job creation but a slightly lower unemployment rate inflation both headline at four point four percent and core at three point nine percent remains aligned with projections yet policymakers consider the outlook uncertain enough to justify patience before adjusting policy again

By the end of the week global investors faced a complex mosaic of signals the United States continued to wrestle with a narrow technology dominated equity advance fueled by the artificial intelligence boom but constrained by limited market breadth and cautious monetary guidance Europe navigated a plateau phase marked by stabilizing inflation and fading rate cut hopes Japan celebrated record equity highs underpinned by steady policy and a weaker yen China sought clarity on structural reform amid waning confidence and Latin America balanced reform momentum with macroeconomic vigilance together these movements illustrated a world economy still expanding but increasingly reliant on selective growth engines central bank caution and political recalibration the coming weeks promise further tests as investors weigh earnings data inflation updates and evolving trade narratives that continue to define the rhythm of global markets