Global stock markets performed sluggishly this week as fears of a full-scale conflict between Israel and Iran grew.
This drove up oil prices and raised concerns of accelerating inflation and disruption of international trade. Share prices were also held back by disappointing economic data in the US, while in Asia Chinese stocks slumped after officials in Beijing failed to provide additional stimulus measures.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.2% up for the week so far, with the S&P 500 gaining 0.5%. The week began positively in the wake of strong employment market data from the start of the month, but renewed tensions in the Middle East and the news that the US government was planning to take antitrust action against one of America’s biggest technology firms weighed on sentiment. Inflation data published on Thursday showed that prices continued to rise faster than the Federal Reserve’s 2% target in September, while statistics indicated that new unemployment claims had risen to their highest level in 12 months.
UK
In the UK, the FTSE 100 closed on Thursday 0.5% down for the week so far, after a rise in government bonds yields called into question the ability of the new Labour administration to borrow money to fund public services and infrastructure projects. Chancellor of the Exchequer, Rachel Reeves, is said to be considering a change to capital spending rules in order to raise state investment levels, but her plans could be hit by a negative reaction from financial markets. Reeves is also reportedly mulling a substantial increase in capital gains tax in her budget on 30 October. Elsewhere, house prices in Britain rose for a third straight month, while the latest planned restrictions on cross-border trade with the European Union were once again delayed.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 2.8% for the week, while France’s CAC 40 gained 3.2%. The high level of exposure of many European firms to the Chinese market was reflected in these advances, with strong share price rises recorded among the likes of luxury goods and motor manufacturers. The strong stock market performance came despite further gloomy economic reports, with latest figures showing a decline in eurozone output for the first time since the start of the year. There was also a fourth consecutive monthly fall in business confidence in Germany.
Asia
In Asia, the Hang Seng index in Hong Kong slumped 6.5%, giving up a large proportion of the gains made since the announcement of a raft of government economic support at the end of September. Investors had been hoping for additional stimulus measures to be announced at the start of the week; when they were not forthcoming, share prices in China suffered their most severe one-day losses since the global financial crisis. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 1.9% as weakness in the yen versus the US dollar boosted stocks in Tokyo. Investors in Japan are also hopeful that the new prime minister could boost economic growth if he is successful in forthcoming elections.
October 4 | October 10 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8280.6 | 8237.7 | -0.5 |
FTSE 250 | 20900.1 | 20708.4 | -0.9 |
S&P 500 | 5751.1 | 5780.1 | 0.5 |
Dow Jones | 42352.8 | 42454.1 | 0.2 |
DAX | 19120.9 | 19210.9 | 0.5 |
CAC 40 | 7541.4 | 7541.6 | 0.0 |
ACWI | 847.4 | 848.2 | 0.1 |
Hong Kong Hang Seng | 22736.9 | 21252.0 | -6.5 |
Nikkei 225 | 38635.6 | 39380.9 | 1.9 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 10 October 2024.
