US markets
US equities remained under pressure on Friday amid concerns over more interest rate hikes and an escalation in the Middle East conflict. Meanwhile, investors further digested Federal Reserve (Fed) Chair Jerome Powell’s speech a day before that US economy’s strength and tight labour markets could lead to higher-for-longer interest rates. The bellwether S&P 500 lost 1.3 percent, the tech-heavy NASDAQ sank 1.5 percent, and the blue-chip Dow Jones Industrial Average shed 0.9 percent. All three major indexes fell over the week as rising Treasury yields and the intensifying Israel-Hamas conflict dominated market sentiment.
All the S&P sectors ended in negative territory, with energy, information technology, consumer discretionary and financials suffering the largest percentage losses. Shares of mid-sized regional banks fell after a string of downbeat earnings reports added to worries that the boost to lenders was wiped off. Among individual stocks, inverter manufacturer SolarEdge Technologies tumbled 27.3 percent after cutting its sales forecast. Credit card company American Express fell 5.4 percent despite a third-quarter profit beat. Investors are looking ahead to corporate financial reports from mega-cap technology names this week such as Alphabet, Amazon.com, Meta Platforms and Microsoft.
These price data reflect observations at market close: WTI spot crude oil fell by US$1.32 to US$88.05, while spot gold gained by US$39.30 to US$1,993.85. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield fell by 2 basis points to 5.09 percent while the 10-year note yield fell by 6 basis points to 4.92 percent.
European markets
European equities closed lower on Friday, as rising government bond yields and fears of a wider Middle East conflict cast a shadow over market sentiment. The Europe-wide STOXX sank 1.4 percent, the German DAX lost 1.6 percent, the French CAC 40 slid 1.5 percent, and the UK FTSE 100 slipped 1.3 percent. All the major indices posted heavy weekly losses amid worries about the impact of the Middle East conflict, in addition to the US Fed Chair Powell’s comments which suggested interest rates may stay higher for a longer period.
Nearly all the Europe-wide STOXX sectors closed lower, with materials, financials and industrials hit hardest, while real estate eked out modest gains. Mining stocks were dragged down by a 7.2 percent slump in Boliden after the metals producer posted a slightly bigger-than-expected dive in third-quarter profit, hurt by high costs and lower mining grades. Travel and leisure stocks fell, with InterContinental Hotels Group sliding 4.5 percent after the company said some short-term financing challenges are holding back new hotel developments. Financial stocks were among other biggest drags, as UBS Group slipped 2.8 percent as the bank is set to overhaul the board of its domestic Swiss business after its takeover of Credit Suisse. Among individual stocks, cosmetics company L’Oreal dropped 1.5 percent following disappointing third-quarter sales in Asia.
On the economic data front, producer prices in Germany dropped more than expected by 14.7 percent year-over-year in September, marking the largest decline since 1949. The contraction was mainly due to a base effect and confirmed the disinflation trend. Elsewhere, retail sales in the UK fell more than expected in September. Nonetheless, it was the smallest decline on a yearly basis since sales started falling in April 2022.
Asia Pacific markets
Asian equities extended losses on Friday, tracking the broader weakness across global markets. Stocks posted weekly losses amid fears of the wider impact of escalation tensions in the Middle East. Meanwhile, the possibility of further rate hikes in the US, along with a surge in government bond yields and oil prices, added to risk-off sentiment.
Mainland China’s equities fell for a third session on Friday. CSI 300 dropped 0.6 percent, and the Shanghai index slid 0.7 percent. The People’s Bank of China kept its one-year and five-year loan prime rates unchanged at 3.45 percent and 4.2 percent, respectively, at its October fixing in a widely expected move. Meanwhile, the central bank injected a record 733-billion-yuan liquidity to the financial system via reverse repo contracts. Nevertheless, wind power advanced on the prospect of policy support and a noticeable resurgence in offshore wind projects. Lithium mining stocks as lithium prices rebounded. Real estate stocks eked out gains. Shanghai further relaxed the criteria for identifying first-home buyers. Hong Kong’s equities logged a third session of declines on Friday, with the Hang Seng index closing down 0.7 percent. The selling of foreign investors dragged all the three indices lower over the week, despite signs of stabilisation in China’s economic recovery.
Japanese stocks slid for a second straight session on Friday. The Nikkei index slipped 0.5 percent, and the broader TOPIX dipped 0.4 percent. Investors were in wait-and-see mode amid uncertainty over the movement of US long-term bond yields. Technology stocks tracked their US peers lower amid concerns over rising interest rates. Notable decliners were Toyota Motor, off 1.1 percent, Sony Group, off 0.7 percent, and SoftBank Group down 2.0 percent. Both indices posted negative weekly returns.
Taiwan’s TAIEX edged down 0.1 percent on Friday, while registering its first weekly loss in four. South Korea’s KOSPI tanked 1.7 percent on Friday, giving back gains from the previous week. Indian equities extended losses to a third consecutive session, with the BSE Sensex down 0.4 percent on Friday, pressured by consumer stocks amid disappointing corporate results. The index dropped 1.3 percent on a weekly basis, snapping a two-week rising streak.
Australian shares notched a second losing day on Friday, with the All Ordinaries index ending 1.2 percent lower. Investors traded cautiously ahead of domestic inflation data which will guide the direction of Reserve Bank of Australia’s monetary policy, while Australia’s employment data suggested a constrained job market. The possibility of a further policy tightening in the US, as indicated by the Fed Chair Jerome Powell, kept investors on edge. Losses were largely across the broad, led by mining stocks. Major miners BHP Group, Rio Tinto and Fortescue Metals Group dropped between 0.7 percent and 2.2 percent. Financial stocks also slipped, with the country’s largest four banks sliding between 1.2 percent and 1.8 percent. However, gold shares held up relatively well, as safe-heaven assets such as gold were bought up in times of global economic uncertainty. The index fell 2.1 percent over the week.