US markets
US equities extended their winning streak on Friday as Treasury yields declined further on the back of weaker-than-expected economic data. The bellwether S&P 500 climbed 0.9 percent, and the blue-chip Dow Jones Industrial Average rose 0.7 percent, while the tech-heavy NASDAQ jumped 1.4 percent. All three major indices gained sharply over the week, supported by easing bond yields and rising bets that the Federal Reserve (Fed) had reached the end of its rate-hiking campaign.
On the economic data front, a jobs report from the Labor Department seemed to confirm that the Fed is nearing the end of its monetary tightening cycle. The US nonfarm payrolls rose much less than expected in October, while the unemployment rate unexpectedly ticked up to 3.9 percent, the highest reading since January 2022. Separately, the Institute for Supply Management’s non-manufacturing purchasing managers’ index (PMI) showed that growth in the services sector slowed more than expected in October.
Nearly all S&P sectors ended in positive territory, with real estate, materials, and communication services leading the gains. The energy sector was the sole decliner, weighed down by a fall in oil prices as concerns over higher interest rates and Middle East tensions eased. Among individual stocks, payment service provider Block rallied 10.7 percent after raising its annual adjusted profit forecast. Conversely, Apple slipped 0.5 percent as its sales forecast for the holiday quarter missed expectations. Cybersecurity solutions provider Fortinet tumbled 12.4 percent following a downbeat fourth-quarter revenue forecast.
These price data reflect observations at market close: WTI spot crude oil fell by US$1.70 to US$81.36, while spot gold gained US$11.56 to US$1,995.41. The US dollar fell against major currencies. The US Treasury 30-year bond yield fell by 7 basis points to 4.75 percent while the 10-year note yield fell by 11 basis points to 4.56 percent.
European markets
European bourses closed mixed on Friday. The Europe-wide STOXX edged up 0.2 percent, and the German DAX firmed 0.3 percent, while the French CAC 40 slipped 0.2 percent, and the UK FTSE 100 dropped 0.4 percent. Still, all the major indices booked solid gains over the week, supported by upbeat earnings, cooling inflation, and falling government bond yields along with decisions by the Federal Reserve, the Bank of England, the European Central Bank, and others to hold interest rates steady. Expectations grew that major central banks had reached the peak of their rate hikes.
Among the Europe-wide STOXX sectors, real estate, information technology, and consumer discretionary posted the biggest gains, while energy and healthcare declined. Rate-sensitive real estate stocks led the advance as government bond yields eased amid rising hopes for an end to monetary policy tightening by major central banks. Automobile stocks rose amid a slew of corporate updates. BMW climbed 2.4 percent after beating market expectations for third-quarter results, while Volvo Cars rallied 3.7 percent after sales rose 10 percent year-on-year in October, driven by higher sales of its fully-electric cars. Luxury giants were among the other top performers, with Kering up 2.9 percent on a stock rating upgrade to ‘buy’ from ‘hold’ by Deutsche Bank. Peer Richemont and LVMH rose 2.6 percent and 0.2 percent, respectively. Conversely, energy stocks tracked oil prices lower as supply concerns driven by Middle East tensions eased.
On the economic data front, the eurozone seasonally-adjusted unemployment rate unexpectedly increased to 6.5 percent in September. Amongst the largest economies within the currency bloc, the lowest jobless rate was recorded in Germany, while the highest rates were observed among Spain, Italy, and France.
Asia Pacific markets
Asian equities broadly gained on Friday, tacking a positive mood across global markets. Investors became more confident that interest rates in Western countries had peaked after major central banks, led by the US Fed, kept them unchanged during their meetings in the week. Japanese markets were closed for a holiday.
Mainland China’s equities rebounded on Friday. A private survey showed Chinese services activity grew at a slightly faster pace in October, up for the 10th month. The CSI 300 index gained 0.8 percent, and the Shanghai index added 0.7 percent. Robotics stocks surged as authorities published the guidance for robotics innovations which includes cloud computing and related technologies. Hong Kong equities rose for a second straight session on Friday, with the Hang Seng index closing up 2.5 percent, outperforming regional peers. The stock rally overnight on Wall Street boosted internet stocks, with Alibaba Group Holding and Tencent Holdings jumping 3.0 percent and 5.3 percent, respectively. All the three indices logged their second strong weekly gains as the government continued its efforts to stabilize the economy.
Taiwan’s TAIEX rose 0.7 percent on Friday, finishing 2.3 percent higher on a weekly basis. South Korea’s KOSPI jumped 1.1 percent on Friday, registering its first weekly gain in three. Indian equities extended gains on Friday, with the BSE Sensex up 0.4 percent. The index gained 0.9 percent over the week, supported by solid earnings, easing inflation, steady demand and a stable interest rate outlook.
Australian shares rose for a four consecutive session in a row, with the All Ordinaries index closing 1.1 percent higher. Rate-sensitive sectors including financials and real estate led the gains after the US Fed’s decision to leave rates on hold raised hopes of an end to tightening. Australia’s largest four banks rose between 0.9 percent and 1.7 percent. Mining shares rose on higher iron ore prices in the wake of stimulus measures from China, with major miners BHP Group and Rio Tinto up 0.3 percent and 0.7 percent, respectively. Technology stocks tracked their US peers higher, while energy stocks fell on easing oil prices. However, gains were capped due to the increasing bet on another rate hike by the Reserve Bank of Australia on the back of strong inflation and other economic data. Still, the index booked a weekly gain of 2.3 percent.