Market Overview

Both European and US markets are poised to conclude the week on a positive note, while Asian markets exhibit a mixed performance due to varying economic conditions across regions. In Europe, the DAX index celebrated a notable high on Thursday, following the European Central Bank’s (ECB) third rate cut of the year. Meanwhile, Wall Street continued its upward trajectory, propelled by robust corporate earnings reports. In contrast, Chinese stock indices extended their downward trend as additional stimulus measures fell short of market expectations.

Europe

European markets have shown a commendable increase this week, with the Euro Stoxx 600 rising by 0.98%, Germany’s DAX climbing by 1.08%, and France’s CAC 40 gaining a modest 0.08% over the past five trading days. The British FTSE 100 also recorded a significant rise of 1.59%, buoyed by strong performances in banking stocks, following positive earnings reports from major US banks.

At the sector level, financials and industrials led the gains, as banking stocks surged on the back of optimism surrounding US earnings. Additionally, the defence sector continued its upward trajectory amidst ongoing geopolitical uncertainties in the Middle East. In contrast, the consumer and technology sectors fell short, largely due to significant declines in shares of LVMH and ASML, which reported disappointing third-quarter earnings results.

One of the standout performers this week was Airbus, whose shares skyrocketed by over 12% following rumors of a substantial order from Etihad Airways and an upgrade from JP Morgan. This surge also positively impacted Rolls-Royce, resulting in a 7.3% increase in its stock over the week. Furthermore, major European banks such as HSBC, UBS, BNP Paribas, and Barclays all saw gains ranging from 1% to 4%.

On the earnings front, ASML released its results a day ahead of schedule, revealing that its key metric—bookings—significantly underperformed analysts’ expectations. As a result, its shares plummeted by 16% on Tuesday, marking the largest single-day drop in 26 years. The Dutch firm also downgraded its 2025 guidance, attributing the weaker demand to potential links with China’s export restrictions. Similarly, LVMH experienced a revenue decline for the first time since 2020, primarily due to a slowdown in Chinese consumer demand, leading to a 7% drop in its shares over the week.

The euro weakened further against the US dollar following the widely anticipated ECB rate cut. The EUR/USD pair fell to slightly above 1.0830 during Friday’s Asian session, reaching its lowest level since August 5. Notably, Eurozone inflation was revised down to 1.7% year-on-year, down from the initial estimate of 1.8% in September, reinforcing expectations for an accelerated ECB rate-cut cycle. ECB President Christine Lagarde remarked, “We are breaking the neck of inflation.”

Wall Street

US stock markets are also expected to finish the week in positive territory, buoyed by strong corporate earnings and resilient economic data. The tech sector kicked off earnings season with Netflix reporting results that surpassed market expectations across all major metrics, resulting in a more than 5% spike in its share price during after-hours trading. This optimism is likely to continue fueling Wall Street’s momentum as it heads into Friday’s session.

Over the past five trading days, the Dow Jones Industrial Average increased by 0.88%, the S&P 500 rose by 0.46%, and the Nasdaq Composite gained 0.17%. Within the S&P 500, six out of eleven sectors posted weekly gains, with sectors benefiting from lower interest rates, such as utilities and real estate, leading the charge with increases of 2.49% and 1.34%, respectively. Conversely, both technology and energy stocks underperformed, each declining by over 1%.

Nvidia shares surged to an all-time high earlier in the week but retraced some of their gains as the US committed to ongoing restrictions on chip exports to China, despite the sustained strong demand for artificial intelligence GPUs. Many semiconductor stocks faced declines this week, largely influenced by ASML’s sharp drop, as regulatory challenges weighed heavily on market sentiment. Investors are now closely monitoring upcoming quarterly earnings reports from major tech firms anticipated in the coming weeks.

Additionally, Morgan Stanley reported robust third-quarter results, with its shares climbing by more than 9% over the week. The investment bank’s profit surged by 32%, driven by strong performance across its wealth management, equity trading, and investment banking divisions.

Asia-Pacific

In the Asia-Pacific region, stock markets exhibited a mixed performance this week. Japanese and Chinese markets experienced declines, while Australian markets remained buoyant. Over the week, the Nikkei 225 decreased by 1%, the ASX 200 rose by 0.8%, and the Hang Seng Index saw a substantial drop of over 4%.

China’s housing ministry briefings failed to meet expectations, leading to a continued retreat in regional equity markets. However, stronger-than-expected GDP growth, along with better-than-expected data for retail sales, industrial production, and fixed asset investment in September, sparked a widespread rebound in Chinese markets on Friday.