Global stock markets had a largely positive week as a result of solid economic data, upbeat corporate earnings statements and further falls in oil prices.
However, there were indications of potential headwinds: the International Monetary Fund warned that levels of government debt in many countries were becoming unsustainable and could have a negative impact on long-term growth. Meanwhile, share prices in Asia were hit by fresh concerns about the extent and effectiveness of stimulus measures in China, and there were also signs of looming weakness in the global semiconductor sector following a period of impressive gains.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.9% up for the week so far, with the S&P 500 gaining 0.5%, as both indexes recorded all-time highs. Gains early in the week were underpinned by strong third-quarter trading statements from the banking sector. Meanwhile, data published on Thursday showed that retail sales had risen faster than expected in September. Despite a handful of blips in recent employment figures, most statistics continue to indicate that the US economy is on course to achieve a prized “soft landing” following the Federal Reserve’s post-pandemic monetary tightening programme.
UK
In the UK, the FTSE 100 closed on Thursday 1.6% up for the week so far. This followed economic data raised the likelihood that the Bank of England would be able to make two more interest rate cuts before the end of the year. Employment market figures issued on Tuesday revealed that wage growth had dipped below 5%, while Wednesday’s inflation statistics showed that the Consumer Prices Index had fallen to 1.7% – lower than analysts had expected. The news drove a fall in government bond yields, a development that should give chancellor of the exchequer, Rachel Reeves, more room to manoeuvre when she announces her spending and taxation plans in the 30 October budget.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 1.1% for the week, while France’s CAC 40 gained 0.1%. A record high for German shares was underpinned by a rise in economic confidence in the country, while the European Central Bank cut interest rates, as expected, on Thursday. ECB president, Christine Lagarde, warned that inflation in the eurozone could rise in the short term before falling back in line with the 2% target in 2025. Technology stocks lagged the wider market earlier in the week after a major semiconductor firm published a downbeat trading outlook, and worries about the impact of stimulus measures in China dragged on shares of luxury goods manufacturers.
Asia
In Asia, the Hang Seng index in Hong Kong fell 5.5% as investors continued to take a more sceptical view of recent government stimulus announcements. Officials’ failure to provide more detail regarding their plans to reboot China’s property market led to further losses – although Chinese stocks remain well above their August lows. Japan’s Nikkei 225 index of leading shares fell 1.8% as investors reacted with concern to the falls in the Chinese market. Stocks in Tokyo were also impacted by concerns about growth in the semiconductor sector, while data for August showed weakness in Japanese services and industrial output.
October 11 | October 17 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8253.7 | 8385.1 | 1.6 |
FTSE 250 | 20764.9 | 21100.9 | 1.6 |
S&P 500 | 5815.0 | 5841.5 | 0.5 |
Dow Jones | 42863.9 | 43239.1 | 0.9 |
DAX | 19373.8 | 19583.4 | 1.1 |
CAC 40 | 7577.9 | 7583.7 | 0.1 |
ACWI | 852.7 | 852.1 | -0.1 |
Hong Kong Hang Seng | 21252.0 | 20079.1 | -5.5 |
Nikkei 225 | 39605.8 | 38911.2 | -1.8 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 17 October 2024.
