US markets
US equities rebounded strongly on Friday, boosted by mega-cap growth stocks as Treasury yields stabilized. The bellwether S&P 500 climbed 1.6 percent, the blue-chip Dow Jones Industrial Average gained 1.2 percent, and the tech-heavy NASDAQ jumped 2.0 percent. All the three major indices gained over the week, supported by easing bond yields.
All the S&P sectors participated in the rally, led by information technology, communication services, consumer discretionary, and industrials. Mega-cap growth stocks provided much of the support to the markets, with NVIDIA, Meta Platforms, and Microsoft jumping between 2.5 and 3.0 percent. Genetic testing company Illumina tanked 8.1 percent after cutting its full-year profit forecast for the second straight quarter. Alcoholic beverages producer Diageo tumbled 12.2 percent after warning that profit and sales in the first half of its fiscal year would be weaker than expected. Hydrogen fuel cell specialist Plug Power plunged 40.5 percent after its third-quarter results fell short of estimates.
Focus this week will be on inflation reports, which are expected to bring some positive news, retail sales, and jobless claims, which will provide further clues on the interest rate oulook.
These price data reflect observations at market close: spot gold lost US$13.15 to US$1,946.70. The US dollar gained vs. major currencies. The US Treasury 30-year bond yield dropped by 4 basis points to 4.73 percent, while the 10-year note yield remained little changed at 4.63 percent.
European markets
European equities retreated on Friday, with recent comments from Federal Reserve (Fed) Chair Jerome Powell and European Central Bank President Christine Lagarde pushing back against expectations around rate cuts and weighing on market sentiment. The Europe-wide STOXX and the French CAC 40 both slid 1.0 percent, while the German DAX lost 0.8 percent and the UK FTSE 100 sank 1.3 percent. Over the week, the German DAX rose slightly, and the French CAC 40 remained unchanged, while the Europe-wide STOXX and UK FTSE 100 fell as investors remained concerned about the growth outlook amid growing evidence of an economic slowdown.
Nearly all the Europe-wide STOXX sectors finished in negative territory, with consumer discretionary, consumer staples, health care, and real estate posting the biggest losses, while energy and utilities held up. Luxury stocks were underperformers, pressured by a 5.2 percent drop in Richemont after the Swiss-based luxury group reported weaker-than-expected earnings, which also pulled down rivals LVMH, Kering, and Hermes International between 1.6 percent and 3.8 percent. Among other stocks, Diageo tumbled 12.2 percent as the British drinks giant warned that growth in operating profit will decline in the six months of its current financial year. Conversely, GN Store jumped 11.0 percent as the Danish hearing aid and headset maker targeted further cost savings from its reorganization, after announcing positive third-quarter results.
On the economic data front, preliminary estimates showed the UK economy grew slightly better than expected by 0.6 percent year-on-year in the third quarter of 2023, mainly supported by an accelerated expansion in household spending.
Asia Pacific markets
Asian equities broadly fell on Friday after hawkish comments from Fed Chair Powell reignited rate concerns.
Mainland China’s equities lost ground on Friday, with the CSI 300 index closing down 0.7 percent and the Shanghai index off 0.5 percent. A selloff in liquor and auto manufacturers weighed on the markets, while gas stocks bucked the downward trend due to a continuous rise in natural gas prices and the peak season. Hong Kong’s equities seesawed lower in the final hour of trading on Friday, with the Hang Seng index (HSI) sliding 1.8 percent, extending losses for a fourth consecutive session. The CSI 300 and the Shanghai indices extended their weekly gains, while the HSI fell sharply over the week, as investors analysed mixed October data while waiting for further stimulus measures to ensure a sustainable economic recovery.
Japanese equities saw mixed trends on Friday, tracking overnight losses in US markets following a hawkish tilt by Fed Chair Powell. The Nikkei index dipped 0.2 percent, while the broader TOPIX edged up 0.1 percent. In key stock movements, start-up investor SoftBank Group slumped 8.2 percent after disappointing earnings for April-September period, dragging the Nikkei index lower. Nissan Motor, down 4.5 percent, and Honda Motor, down 4.1 percent, were other notable decliners as their earnings results did not meet market expectations. Engineering company JGC Holdings, down 11.6 percent, and camera maker Nikon, off 10.5 percent, were also weighed down by disappointing earnings, while PC security company Trend Micro and chemical company Resonac Holdings rose between 10.5 percent and 13.5 percent on the back of positive results. Both indices rose for a second week in a row.
Taiwan’s TAIEX dropped 0.4 percent on Friday but finished 1.1 percent higher for the week. South Korea’s KOSPI slipped 0.7 percent on Friday but rose for a second consecutive week. Indian equities regained some ground on Friday, with the BSE Sensex up 0.1 percent. The index extended its weekly gain for a second straight week, boosted by energy stocks due to falling oil prices benefiting importers like India, as well as pharmaceutical stocks on the back of upbeat corporate earnings.
Australian shares snapped a two-session rising streak, with the All Ordinaries index closing 0.5 percent lower. In its quarterly statement on monetary policy, the Reserve Bank of Australia warned of upside risks to inflation, echoing Fed Chair Powell’s comments about interest rates. Financials led the decline, with the largest four banks losing between 0.8 percent and 1.8 percent. Energy stocks tracked oil prices lower, with sector giants Woodside Energy Group and Santos falling 2.0 percent and 0.7 percent, respectively. Gold stocks continued their downward trend as gold prices dropped due to a stronger US dollar and Treasury yields. The index ended the week flat.