Positive sentiment drives equity markets to new highs
Global equity markets surged last week and into Monday, buoyed by softer-than-expected inflation data from the US, a drop in Treasury yields, and renewed optimism over global trade developments. Major indices such as the S&P 500, Nasdaq, and Eurostoxx 50 hit fresh record highs, supported by gains in technology, communication, and industrial sectors.
US markets: Tech and communication stocks propel indices higher
Investor confidence was reinforced after US inflation data showed further signs of cooling. The Consumer Price Index (CPI) rose by 3.0% year-on-year in September, slightly below analyst forecasts. Core inflation also eased to 3.0%. This further fueled expectations of an interest rate cut by the Federal Reserve in the upcoming week.
The 10-year US Treasury yield dropped to 4.00%, adding to market momentum. Despite a brief resurgence in trade tensions following President Trump’s announcement of a negotiation halt with Canada, the market shrugged off concerns and maintained its upward trajectory.
Weekly recap: Economic strength supports market momentum
Markets gained over the week as investors welcomed signs of economic resilience. Flash PMI data indicated steady expansion in both services and manufacturing sectors, while corporate earnings added volatility but did not derail optimism. A combination of easing inflation, solid growth data, and anticipated policy support set a constructive backdrop.
Asian markets: Record gains on rate cut hopes and trade optimism
Asian markets mirrored Wall Street’s bullish momentum, driven by macroeconomic optimism and easing trade tensions across the region.
Regional highlights: Strong performance across Asia
Japan’s Nikkei surpassed 50,000 for the first time, while South Korea’s KOSPI also hit record levels. Markets in China, Hong Kong, Australia, and Singapore followed suit, driven by expectations of a US rate cut and progress in US-China trade discussions.
European markets: Eurostoxx 50 hits record on US data and trade hopes
The Eurostoxx 50 reached a new peak last Friday, helped by favorable US inflation data and a more constructive tone in US-China relations. Consumer-oriented stocks underperformed, with Kering sliding by approximately 4%, while Valeo gained 10.8% and Sanofi rose 2.5%, both supported by better-than-expected retail sales and business activity data across the region.
Currency and commodities: Dollar weakens, oil prices advance
Currency and oil markets responded sharply to macro developments, including inflation data and geopolitical shifts.
Currency markets: Risk-on sentiment lifts euro and Asian currencies
The US dollar came under pressure following the soft inflation report and dovish Fed expectations. The euro strengthened, along with Asian currencies such as the yen, yuan, and won, supported by optimism around trade and monetary policy.
Oil markets: Crude supported by trade talks and US sanctions
Oil prices inched higher during Asian trade. Brent crude rose 0.5% to $66.25, while WTI advanced to $61.77. US-China trade progress and new sanctions on major Russian oil firms fueled gains, along with easing concerns over excess supply.
Trade developments: US-China progress eases global concerns
US Treasury Secretary Janet Yellen and China’s Vice Premier He Lifeng announced a “substantial framework” for averting tariffs and export restrictions. The agreement will lead to high-level discussions between Presidents Trump and Xi. Areas of focus include soybean purchases and cooperation on drug enforcement to address the fentanyl crisis.
Elsewhere, US President Trump and Brazil’s President Lula agreed to initiate talks on tariffs and sanctions during the ASEAN summit, a move welcomed by Brazil’s beef and coffee industries. The discussions aim to resolve trade tensions following US tariff hikes, with Brazil seeking a suspension during negotiations.
Global economic updates
China: Industrial profits surge despite external pressures
Industrial profits in China rose 21.6% in September, following a 20.4% gain in August. High-tech and equipment manufacturers led the growth, though analysts caution the figures may be flattered by a low base effect. State-owned firms saw slight declines, while private and foreign firms posted gains despite ongoing trade tensions.
India: Economic growth upgraded on strong Q1 and tax cuts
India’s GDP is projected to expand by 6.7% this fiscal year, bolstered by a surprising 7.8% Q1 performance and Goods and Services Tax (GST) reductions that have lifted consumer demand. Analysts anticipate a 25 basis point rate cut by the Reserve Bank of India in December. Growth may strengthen further if US tariffs ease, although private investment remains weak amid global uncertainty.
Equities on the move: Major company highlights
IBM and AMD make a quantum leap
IBM reported it has successfully run a quantum error-correction algorithm using readily available AMD chips, marking a major step toward commercial quantum computing. The breakthrough enables real-time error management on conventional hardware and was completed a year ahead of schedule. IBM aims to launch its Starling quantum computer by 2029. IBM shares rose 7.88%, while AMD gained 7.63%.
Baidu rises on robotaxi growth and Ark Invest purchases
Baidu shares climbed more than 5% in Hong Kong amid enthusiasm for its international robotaxi expansion and renewed interest from Cathie Wood’s Ark Invest. A new partnership with Switzerland’s PostBus highlights Baidu’s global push, while Ark also increased holdings in Baidu and Alibaba.
Novartis to acquire Avidity Biosciences
Novartis announced a $12 billion cash deal to acquire Avidity Biosciences, paying $72 per share — a 46% premium. Avidity will spin off its early-stage cardiology programs into a new company. The deal is expected to close in the first half of 2026, pending regulatory approval, and aims to strengthen Novartis’s pipeline in RNA-targeted therapies.
Other key moves
- Procter & Gamble beat quarterly estimates with revenue rising 3% to $22.39 billion, driven by beauty and hair-care products. Margins dipped 50 basis points due to discounting and restructuring. Tariff costs fell after Canada lifted duties. Growth in China’s premium segment and strong US demand supported results.
- Deckers Outdoor shares fell over 15% after the company lowered its annual sales forecast to $5.35 billion, citing softer US demand, economic uncertainty, and tariffs. Despite beating Q2 earnings estimates, analysts flagged ongoing pressure on UGG and Hoka brands and heightened competition. Shares are down 50% year-to-date.
- Safran raised its full-year guidance after third-quarter revenue increased 18.3% to €7.85 billion. Propulsion revenue rose 25.6%, supported by strong aftermarket demand. The company expects full-year revenue growth of 11–13%, higher operating income and free cash flow, benefiting from a catch-up effect in LEAP engine deliveries.
- Porsche reported a larger-than-expected Q3 operating loss of €966 million, impacted by restructuring costs tied to its EV strategy overhaul, US tariffs, and weaker China sales. The company anticipates a trough in 2025 and recovery in 2026. Job cuts, price hikes, and cost restructuring are planned. CEO Oliver Blume will step down, with Michael Leiters taking over.
- HSBC will set aside $1.1 billion in Q3 to cover potential litigation costs related to the 2009 Bernard Madoff investment fraud. A Luxembourg court partially rejected HSBC’s appeal. The charge is expected to impact its common equity tier 1 (CET1) ratio by 15 basis points, but dividend guidance and return on tangible equity excluding notable items remain unchanged.
- CRH was initiated with an “overweight” rating by J.P. Morgan and a December 2026 price target of 9,645 GBp. The bank cited strong cash flow, EBITDA growth, and capital return strategy, though it noted risks tied to US housing, European recovery, and dollar strength.
- Coinbase was upgraded to “overweight” by JPMorgan, with a revised price target of $404 by December 2026. The bank cited easing risks and new monetization strategies including a potential Base token and improved USDC yield products. Coinbase’s vertical integration and stabilizing market share support long-term profitability.
- Kering was downgraded to “hold” from “buy” by HSBC, despite a 120% share price increase since April. The target price was raised to €370, implying limited upside. Kering’s 2025 outlook is muted, with revenue and EBIT expected to fall before recovering in 2026–2027 through portfolio adjustments.
Upcoming data and events to watch
This week’s key events include monetary policy decisions from the Federal Reserve, European Central Bank, Bank of Japan, and Bank of Canada. US economic data will be limited due to the government shutdown, but investors will monitor:
- Tech earnings from Microsoft, Apple, Alphabet, Meta, and Amazon
- Reports from Visa, Mastercard, UnitedHealth, Eli Lilly, Exxon, and Chevron
- Developments in US-China trade negotiations
- GDP releases, China’s PMI, and inflation data from the Eurozone and Australia
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