This is our weekly market update, a data-packed show where we start in the US, cross to Europe and Asia and end in Australia, covering crypto and commodities along the way.
The wild ride on the markets continued this week, with the S&P 500 and the Dow scoring record closing highs on Friday, thanks to big boosts from financial stocks after banks reported strong quarterly results despite the fact the latest inflation data fueled expectations for a smaller U.S. Federal Reserve rate cut in November. Traders kept bets steady for a roughly 88% probability the Fed would cut rates by 25 basis points at its November meeting, and a 12% chance it will leave rates unchanged. A slower pace of interest rate cuts potentially presents pressure on Wall Street, given that U.S. stock valuations scaled record highs on expectations of a sharp reduction in rates.
Major financial companies kicked off earnings season with upbeat comments from their top executives that should further ease investor worries that elevated borrowing costs were weighing on consumers and pushing the economy to the cusp of a downturn.
The US reporting season will gather momentum over the next three weeks amid general optimism. Still, concerns persist that stock prices have risen too fast, that the labour market is weakening fast and investors are on alert for geopolitical and US presidential election shocks.
European stock markets traded marginally higher on Friday, as investors digested lackluster British growth data.
China’s highly anticipated announcement of financial stimulus plans on Saturday was big on intent but low on the measurable details that investors need to ratify their recent return to the world’s second-biggest stock market. Saturday’s news conference by Finance Minister Lan Foan reiterated Beijing’s broad plans to revive the ailing economy, with promises made on significant increases to government debt and support for consumers and the property sector.
The Australian share market edged lower on Friday as traders awaited further signs of direction in the global economy after evidence of weakness once again reared its head in the US.
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