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Market sentiment soured amid uncertainties surrounding next week’s US election, exerting pressure on stock markets. The euro strengthened due to rising inflation, while the US dollar weakened ahead of the upcoming non-farm payroll report.
ADVERTISEMENTGlobal markets extended their losses for the week, with uncertainties surrounding the impending US presidential election.
Major benchmarks across the US and Europe appear set to close lower, influenced by the closely contested race between Trump and Harris. Michael McCarthy, Market Strategist and Chief Commercial Officer at Moomoo Australia remarked: «The US election result that global markets fear most is a stalemate – no clear winner,» adding: «Such an outcome would almost certainly derail the four-year-plus bull market in US stocks, pulling down global shares as well».
Meanwhile, the US dollar softened ahead of today’s non-farm payroll data amid expectations of a cooling labour market. Haven assets, such as gold, silver, and crypto-currencies, retreated from their weekly highs on Thursday, suggesting that investors are repositioning ahead of a potentially volatile period.
Yields on government bonds continued to rise amid inflation concerns, further fuelled by the ‘Trump Trade’. Crude oil rebounded from Monday’s sell-offs as traders reassessed Middle East tensions and Chinese economic data.
Europe
The Eurozone’s headline inflation rose to 2% in October from 1.7% the previous month, according to Eurostat’s flash estimate. Core inflation remained steady at 2.7% year-on-year, also exceeding expectations. This data may prompt the European Central Bank to adopt a more cautious approach to rate cuts, bolstering the euro, which reached a near two-week high against the US dollar.
European stock benchmarks all recorded declines this week. The Euro Stoxx 600 fell by 2.61%, Germany’s DAX dropped by 1.98%, France’s CAC 40 lost 1.96%, and the UK’s FTSE 100 slipped by 1.68% over the past five trading days.
At a sector level, all categories posted weekly losses due to risk-off sentiment, with the technology sector as the largest laggard. ASML shares declined by 6.64%, while SAP shed 1.76%. These declines mirrored Wall Street’s downturn, as the performance of major US tech companies weighed on growth stocks globally.
Mining stocks, however, outperformed, bolstered by positive Chinese manufacturing data. Over the past five trading days, Rio Tinto shares rose 1.16%, Glencore gained 1.09%, and Anglo-American climbed 1.01%.
On the earnings front, HSBC’s third-quarter profit exceeded expectations, and the bank announced an additional multi-billion share buyback programme, boosting its shares by 4.4% for the week. Conversely, UBS shares fell 4.5% due to regulatory uncertainties, with the bank warning that geopolitical events, the US election, and falling interest rates could impact its outlook for the final quarter.
In the UK, Labour’s recent budget proposals, which include a £41bn (€48.6bn) tax increase and higher welfare spending, have sparked concerns over economic growth.
Analysts worry that these measures could fuel inflation and lead to economic stagnation. The pound responded sharply, with GBP/USD falling to its lowest level since 15 August following the announcement.
Wall Street
US stock markets also followed a downbeat trajectory this week amid risk-off sentiment and mixed results from key tech earnings.
Over the past five trading days, the Dow Jones Industrial Average declined by 0.83%, the S&P 500 fell by 1.77%, and the Nasdaq Composite lost 2.29%. Within the S&P 500, ten of the eleven sectors posted weekly declines, with technology shares dampening overall sentiment, down 2.67% over the week. This trend may indicate that investors are shifting funds from growth stocks into safe-haven assets.
Alphabet shares rose by 5% on the week, buoyed by robust earnings as Google Cloud’s growth accelerated. In contrast, Microsoft slipped 4.33%, and Meta remained flat on a weekly basis as concerns over heavy AI infrastructure spending weighed on both companies’ profitability outlooks. Apple’s results disappointed due to persistent weakness in China, while Amazon beat market expectations across all key metrics.
The US economy grew by 2.8% in the third quarter, slightly below expectations, yet still reflecting a resilient trajectory, further supporting a soft-landing scenario. Market participants are now focused on the October non-farm payroll data, with consensus suggesting a potential slowdown in employment growth.
ADVERTISEMENTAsia-Pacific
Stock markets in the Asia-Pacific region were mixed amid divergent economic dynamics. Japan’s benchmark Nikkei 225 rose just under 1% for the week, erasing early gains as the yen strengthened following the Bank of Japan’s decision to hold interest rates steady at 0.25% while signalling the possibility of a rate hike in December.
Chinese stock markets rose on Friday following encouraging economic data, yet remained flat for the week. October’s manufacturing PMI expanded for the first time since April, indicating that recent stimulus measures may be starting to have a positive impact.
