US markets
US equities pared morning gains to end lower on Friday as the Middle East conflict offset upbeat quarterly earnings from major US banks. A surge in oil prices and inflation expectations also dented market sentiment. The bellwether S&P 500 lost 0.5 percent, the tech-heavy NASDAQ fell 1.2 percent, while the blue-chip Dow Jones Industrial Average (Dow) firmed 0.1 percent, supported by solid corporate results. Over the week, the Dow and the S&P 500 were lifted by dovish comments from top Federal Reserve officials, while the NASDAQ edged lower.
Among the S&P sectors, energy led the gains as oil prices rose amid fears that the Middle East war could deepen tight oil supply. Defensive sectors such as utilities, consumer staples and health care were among other top performers amid risk-off mood as the Israel-Hamas military clashes continued. Financials also improved as major lenders JPMorgan Chase, up 1.5 percent, Wells Fargo, up 3.1 percent, and Citigroup, down 1.3 percent, reported better-than-expected quarterly profits, helped by higher interest rates. Conversely, information technology, consumer discretionary and communication services took the hardest hit. Among individual stocks, asset manager BlackRock fell 1.3 percent due to a sharp drop in quarterly net inflows. UnitedHealth advanced 2.6 percent after beating third-quarter profit estimates. Discount store retailer Dollar General surged 9.2 percent after bringing back its former chief executive officer (CEO) Todd Vasos to replace CEO Jeff Owen. Boeing sank 3.3 percent after the aircraft maker and Spirit AeroSystems, down 0.9 percent, expanded the scope of their ongoing inspections on a production defect affecting 737 Max 8 aircraft.
On the economic data front, a survey from the University of Michigan’s survey showed consumer sentiment deteriorated in October. One-year inflation expectations rose to a five-month high of 3.8 percent, while the five-year forecast edged up to 3.0 percent.
These price data reflect observations at market close: WTI spot crude oil rose by US$4.75 to US$87.66 while spot gold rose by US$46.25 to US$1,919.30. The US dollar was mixed vs. major currencies. The US Treasury 30-year bond yield fell by 9 basis points to 4.78 percent while the 10-year note yield fell by 8 basis points to 4.63 percent.
European markets
European equities ended lower on Friday. A risk-off sentiment prevailed across global markets as the Middle East conflict intensified. Meanwhile, a surge in oil prices added to inflationary pressures. The Europe-wide STOXX slid 1.0 percent, the German DAX lost 1.5 percent, the French CAC 40 shed 1.4 percent, and the UK FTSE 100 slipped 0.6 percent. Major indices ended mixed over the week, with the STOXX rising amid hopes that major central banks are near the end of their monetary tightening cycle.
Nearly all the Europe-wide STOXX sectors closed in negative territory, with economic-sensitive real estate, financials, information technology and industrials suffering the largest losses. However, energy stocks held up relatively well as oil prices rallied amid fears that the Israel-Hamas conflict could widen to engulf oil-producing countries. Meanwhile, US tightened its sanctions programme against Russian crude exports, which deepened supply concerns. Energy giants BP, TotalEnergies and Shell rose between 1.3 percent and 2.2 percent. Among individual stocks, drugmaker Novo Nordisk added 0.9 percent after raising its outlook for its full-year sales and operating profit on soaring demand for weight-loss drugs. British American Tobacco shed 3.5 percent after the U.S. health regulator blocked the sale of six flavours of the main vape brand.
Asia Pacific markets
Asian equities slid on Friday, tracking overnight losses on Wall Street as hotter-than-expected US consumer inflation data reinforced the view that interest rates will remain higher for longer.
Mainland China’s equities retreated on Friday after the latest data suggested that economic recovery was still under pressure. China’s CSI 300 slid 1.1 percent, and the Shanghai index dropped 0.6 percent. Consumer prices were flat in September, closer to the deflationary level in July, while producer prices contracted at a slower pace. Exports and imports both shrank 6.2 percent year-on-year in September, as demand remained weak at home and abroad. Bucking the downward trend, weight-loss medication stocks continued their rising momentum amid expectations of rising demand, boosted by the recent success of the newest drugs. Banking shares held up relatively well, as a state-owned fund recently increased its stake in the country’s four major lenders. Hong Kong’s equities fell on Friday, with the Hang Seng index (HSI) closing down 2.3 percent, lagging behind regional peers. The CSI 300 and the Shanghai index slipped over the week, while the HSI posted strong weekly gain.
Japanese stocks retreated amid growing uncertainties in the global markets. The Nikkei index slipped 0.5 percent, and the broader TOPIX sank 1.4 percent. Most sectors registered losses, with financials and health care hit hardest. Notable detractors were witnessed from online services companies Rakuten Group and Recruit Holdings, off 4.3 percent and 3.5 percent, respectively. Carmakers Nissan Motor and Toyota Motor slid 2.7 percent and 1.9 percent, respectively. However, Fast Retailing, owner of the Uniqlo brand, was the leading performer on the Nikkei index after advancing 5.7 percent following a strong earnings report.
Taiwan’s TAIEX dipped 0.3 percent, while extending weekly gains to a third week in a row. South Korea’s KOSPI slid 1.0 percent, while posting its first weekly gain in four. Indian equities fell for a second session, with the BSE Sensex off 0.2 percent, pressured by losses from technology and banking shares. Nonetheless, the index posted a second straight weekly gain against the backdrop of strong domestic economic fundamentals.
Australian shares pulled back from a six-session winning streak, with the All Ordinaries index down 0.6 percent. The hotter-than-expected US inflation data fuelled worries over a higher-for-longer interest rate environment. Rate-sensitive technology stocks led the declines, with WiseTech Global off 1.6 percent, NEXTDC down 2.9 percent and Altium off 0.5 percent. The country’s four largest banks slid between 0.5 percent and 1.0 percent, respectively. Gold stocks also had a weak session. Nonetheless, Newcrest Mining rose 1.7 percent as the company’s shareholders agreed for a buyout offer from Newmont. The index posted positive returns over the week, supported by a dovish tone from US Fed officials.