This week global equity markets were volatile, in a slight recovery from the resumption of the U.S.-China frictions in the previous week. In a sequence of earnings reports, large U.S. banks have posted significantly higher revenues and earnings in the third quarter. However, credit risks in the banking sector weighed on market returns later in the week. Federal Reserve Chair Jerome Powell signaled further rate cuts justified by labour market weakness. The Fed is also likely to pause its quantitative tightening measures.

In global geopolitics, President Trump and President Putin had a two-hour long phone call to discuss the Ukraine war, ahead of their meeting in Budapest. Nine high ranking generals were arrested by China for undisclosed reasons. Japan’s lower house scheduled the parliamentary vote to select the next prime minister of Japan on October 21st. President Trump proposed the possibility of an intervention in Gaza to disarm Hamas.

Global Updates
  • The MSCI All Country World Index rose over the week, despite exhibiting volatility. Third quarter earnings and resumption of China-U.S. frictions weighed on U.S. and international markets. 
  • ASML reported net sales of €7.5 billion in the third quarter, fueled by the demand for AI infrastructure. 
  • TSMC has reported a AI driven 41% jump in its third quarter revenues to $33.2 billion, which netted an EPS of $2.92 for investors. 
  • BOJ Governor Ueda clarified that any hike in the Bank of Japan’s key policy rate would be conditional on growth and inflation.
  • Economic uncertainty has driven gold futures past the $4,300/oz benchmark this week. The U.S. government shutdown and U.S.-China frictions have increased the perceived economic and market uncertainty. 
  • Nestle stock rose after the company announced its plans to cut 16,000 jobs. The company aims to improve operational efficiency and raise profitability. 
  • South Korea’s Kospi index rose to record highs on expectations of success in trade talks with the U.S. 
  • Oil prices are headed for a weekly loss due to the current oversupply in markets and the possibility of peace in Ukraine. The International Energy Agency has also projected a supply glut in 2026 based on increased crude inventories in the U.S. and China.
U.S. Equity
  • The S&P 500, Dow Jones and Nasdaq indices exhibited volatility. Earlier in the week the U.S. markets recovered slightly from the U.S.-China frictions which had developed in the previous week. The president had reacted to China’s restrictions on rare earth exports to the U.S., with the threat of further tariffs.  The expectations for a rate cut in the near future also rose after Federal Reserve Chair Jerome Powell indicated that weakness in the labour market could lead to further interest rate cuts. The Fed is also considering pausing its quantitative tightening measures.
  • In the three weeks of the U.S. government shutdown major economic reports have not been collected and published, which is likely to result in a time-gap in the official statistics. 
  • Goldman Sachs Group has posted $4.10 billion in third quarter earnings on a revenue of $15.18 billion.
  • JPMorgan Chase has reported a 9% growth in its third quarter revenue of $47.12 billion and 12% jump in profits to $14.39 billion. 
  • Zions Bancorporation announced that it will be taking a provision of $60 million and a $50 million charge-off in the third quarter, to manage defaults by two of its borrowers. Alliance Bancorp also announced a lawsuit for fraud against a borrower. Western Alliance Bancorp also announced their exposure to the same borrowers
  • Novo Nordisk, Eli Lilly stock price fell after President Trump commented on the pricing of their GLP-1 weight loss drugs.. 
  • Walmart has announced a collaboration with OpenAI to facilitate an improved retail experience for customers. 
  • Salesforce has projected an annual growth exceeding 10% in the next five years, driven by the demand for its Agentforce software. The company’s revenue is expected to be higher than $60 billion in 2030.
  • The Artificial Intelligence Infrastructure Partnership (AIP), which includes BlackRock, MGX, Microsoft and Nvidia, has agreed to a $40 billion deal for acquiring Aligned Data Centers from Macquarie Asset Management.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose over the week.
  • The U.S. 10-year Treasury yield dropped to 3.976% and the yield on the 2-year note dropped to 3.426% over the week, on expectations of a rate cut. 
  • The U.S. Dollar Index recovered this week to depreciate to 98.22, amid U.S.-China trade tensions and expectations of a rate cut.

HCM-030624-063.GWS