Global markets ended lower this week despite the gains in the U.S. markets. Asian markets were muted due to a technology selloff and decreasing investor confidence in Chinese stocks. The European Central Bank chose to cut rates to drive up a sluggish economy. Growth in sales and slowing unemployment raised investor optimism in American markets. TSMC profitability drove up chip stocks after an initial dip during the week. Tensions in the Middle Eastern continued to escalate as the Israeli military confirmed the death of Hamas leader Yahya Sinwar.

Global Updates
  • The MSCI All Country World Index marginally dipped this week with the sharp fall in European and Asian markets driven by tech selloffs and decline in luxury goods demand. The waning optimism for China’s ‘bazooka’ stimulus also weighed on Asian stock markets.
  • The U.K. recorded 0.3% growth in retail sales in September led by sales in tech products. U.K. consumer price inflation fell to 1.7% in September from 2.2% in August. 
  • The European Central Bank cut interest rates by 25 bps to 3.25%. This is the third rate cut by the ECB this year to promote economic growth. 
  • Eurozone trade surplus fell to 4.6 billion Euros in August driven by the declining exports to China.
  • China reported 4.6% year-on-year higher than expected economic growth in the third quarter, slowing down from the previous quarter’s 4.7% growth. Exports growth also slowed to 2.4% (in dollar terms). 
  • Gold reached a record high crossing the $2,700 per ounce level this week. Global demand for gold has been rising due to interest rate cuts by major banks and demand for risk-free assets.
  • Energy prices continued to decline this week. Brent crude futures reached $74.6 per barrel in a sharp decline, driven by concerns regarding future demand for energy and possibility of a global glut in supplies.
  • TSMC reported a 54% growth in third quarter profits, boosted by increasing demand of iZts chips for AI applications. The company’s net revenue of $10.1 billion exceeded expectations.
  • LVMH reported a 3% drop in third quarter sales, with revenues coming in at $20.8 billion. Barclays had initially estimated a 3% growth in sales for the company. LVMH attributed the drop in sales to the falling demand for luxury goods in China.
U.S. Equity
  • The S&P 500,  Dow Jones index &  Nasdaq indices rallied this week 
  • The U.S. Commerce Department recorded a higher than expected 0.4% growth in retail sales and 0.7% growth in core retail sales in September driven by the drop in gasoline prices. Weekly jobless claims also declined by 19,000 in the previous week. Given the positive data, the Federal Reserve is likely to opt for a smaller 25 bps rate cut.
  • McKinsey has laid off 500 employees from its China division. The company is dissociating from government linked clients to manage security risk of its China operations.
  • Blackstone reported a 9.9% growth in Assets under Management to $1.11 trillion, with $40.5 billion inflow from its credit and insurance business in the third quarter
  • Morgan Stanley reported higher-than-expected profits and earnings in the latest quarter. Profits grew 32% to $3.19 billion and revenue grew 16% to $15.38 billion.
  • United Airlines announced $1.5 billion share buybacks following higher than expected third quarter earnings and profits.
  • Nvidia Corp. and Micron stock dipped this week due to concerns of US restrictions on chip sales. Their stock eventually recovered due to resurgence in AI stocks. 
  • Advanced Micro Devices (AMD) stock has dropped as the company has been unable to convince investors of its competitiveness against Nvidia. Intel and AMD are teaming up to ensure compatibility of their chips to multiple software. 
  • Netflix stock gained after the company’s third quarter 15% growth estimate came in higher-than-expected, with 19% revenue growth in APAC region. The company also raised its profit margin outlook for next year to 28%.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose marginally this week.
  • The U.S. 10-year Treasury yield  rose to 4.1% and the yield on the 2-year note edged up to 3.97% over the week.
  • The U.S. Dollar Index rose marginally to 103.66 this week.
Sources

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