InvestMacro

By the end of Friday, the Dow Jones Index (US30) rose by 0.09% (for the week +0.32%). The S&P 500 Index (US500) gained 0.26% (for the week, 0.08%). The Technology Index Nasdaq (US100) closed higher by 0.48% (for the week +0.61%). AMZN shares jumped over 10% after reporting that third-quarter cloud revenue increased by 20% and exceeded analyst expectations. This supported the entire technology sector. Positive momentum was also observed in companies related to the development of artificial intelligence: Palantir and Oracle shares added 3% and 2.8%, respectively. Netflix rose by 2.9% on news of a planned 10-for-1 stock split, while Tesla gained 3.1%.

The Canadian dollar fell below the 1.40 per USD mark following the release of a surprisingly weak GDP report, which fueled market expectations of a potential rate cut by the Bank of Canada. Canada’s GDP in September is expected to have grown by 0.1% month-over-month, while the August figure was revised down to 0.3%, the largest drop since December 2022. The weak data reflects the consequences of trade frictions with the US and the negative impact of higher Bank of Canada rates.

European stock markets mostly declined on Friday. Germany’s DAX (DE40) fell by 0.67% (for the week -1.54%), France’s CAC 40 (FR40) closed lower by 0.44% (for the week -1.41%), Spain’s IBEX 35 (ES35) dropped by 0.05% (for the week +0.72%), and the UK’s FTSE 100 (UK100) closed negative 0.44% (for the week +0.74%). Investors were taking profits and evaluating a busy week during which markets processed a significant volume of corporate earnings, macro statistics, and central bank decisions. The situation surrounding the one-year technology and trade truce between the US and China remained an additional factor of uncertainty. Focus also remained on the upcoming Bank of England meeting. A broad consensus suggests keeping the rate unchanged, but expectations of possible policy easing are already beginning to intensify.

Eight key OPEC+ participants are likely to approve another increase in the collective target oil production level by 137 thousand barrels per day. This would be the ninth consecutive monthly increase for Saudi Arabia, Iraq, Kuwait, Russia, UAE, Algeria, Oman, and Kazakhstan. The meeting takes place against the backdrop of recently imposed US sanctions against Russian oil companies Rosneft and Lukoil, creating uncertainty about Russia’s ability to maintain current production and export volumes. The group emphasized that it will approach the monthly production increase flexibly, adjusting it according to market conditions.

The US natural gas prices (XNG/USD) rose above $4.1 per MMBtu, reaching a seven-month high, amid a combination of increased demand for heating and projections of active LNG exports to Europe and Asia. Expectations of colder weather leading into the winter season have boosted gas consumption for heating.
Asian markets traded without a unified direction last week. Japan’s Nikkei 225 (JP225) rose by 5.02%, China’s FTSE China A50 (CHA50) fell by 1.59%, Hong Kong’s Hang Seng (HK50) dropped by 1.03%, and Australia’s ASX 200 (AU200) showed a negative result of 1.94%.

On Monday, the offshore yuan held near 7.12 per USD after two consecutive days of weakening. The private manufacturing PMI for October declined more than expected, continuing the negative trend confirmed by official statistics last week, which indicated that the industry’s downturn was the longest in nine years. Weak macro statistics once again amplified expectations of additional government support. On the trade front, China agreed to suspend new export control measures on rare earth metals and cease investigations into US semiconductor manufacturers. In response, the US will suspend a range of tariffs and forgo the planned 100% duty tax on Chinese exports.

On Wednesday, US stock indices showed mixed performance. The Dow Jones (US30) Index fell by 0.16%. The S&P 500 (US500) declined by 0.01%. The technology-heavy Nasdaq (US100) closed higher by 0.55%. The Federal Reserve announced a 25 basis point (bps) cut to the federal funds rate, bringing it to 4.00% at its October 2025 meeting, a move that fully aligned with market expectations. This was the second consecutive cut after the September decision. The regulator noted increasing risks in the labor market in recent months, while inflation has accelerated since the start of the year and remains relatively elevated. During the press conference, Chairman Jerome Powell stressed that a rate cut in December is not guaranteed, although investors still price in a high probability of another 25 bps move, consistent with the Fed’s September forecasts. Additionally, the central bank announced that the reduction of its balance sheet (Quantitative Tightening) will conclude on December 1st.

The Bank of Canada (BoC) cut its rate to 2.25% and signaled a potential pause in the easing cycle. The regulator indicated that the easing cycle is likely nearing its end, provided the baseline economic forecast remains unchanged amidst ongoing uncertainty. The Governing Council noted that trade conflict has caused structural damage to the economy, reducing its potential, which aligns with the 1.6% year-over-year GDP decline in the second quarter.

G7 nations plan to establish a critical minerals alliance to counter China’s dominance in global supply chains. The alliance aims to reduce China’s market influence, including its practice of dumping to push out Western projects and the imposition of export controls. Canada, in particular, expects economic benefits, leveraging its domestic resource base and ready-to-go infrastructure projects.

European stock markets traded with mixed dynamics yesterday. Germany’s DAX (DE40) fell by 0.64%, France’s CAC 40 (FR40) closed down 0.19%, Spain’s IBEX35 (ES35) gained 0.39%, and the UK’s FTSE 100 (UK100) closed 0.61% higher. Contradictory corporate results amplified uncertainty regarding the region’s economic outlook. The banking sector was the leader of the gains: Santander added 4% after publishing a record nine-month profit, and Deutsche Bank rose by 5% on strong investment division results. Mercedes-Benz climbed 4.3% as growth in premium segment sales ensured margin expansion and compensated for a decline in China revenue.

Today, the ECB will hold its monetary policy meeting. There is an almost 99% probability that the interest rate will remain unchanged at 2.15%. This stands in contrast to the situation at the US Federal Reserve (Fed).

WTI crude oil prices rose on Wednesday to around $60.6 per barrel due to a reduction in inventories. According to the EIA, US crude oil stocks fell by 6.9 million barrels, a more significant drop than expected. Gasoline and distillate inventories also decreased, while stocks at the Cushing, Oklahoma, hub increased. Indian refineries temporarily halted new purchases pending official instructions, though the state-owned IOC confirmed it would continue imports under contractual obligations. However, some analysts doubt that the sanctions will lead to a significant supply reduction, given reports that OPEC+ may consider another production increase at its next meeting to stabilize the market.

Asian markets also traded with mixed results yesterday. Japan’s Nikkei 225 (JP225) surged 2.17%, China’s FTSE China A50 (CHA50) gained 0.10%, Hong Kong’s Hang Seng (HK50) fell by 0.33%, and Australia’s ASX 200 (AU200) posted a negative result of 0.96%.

The Bank of Japan (BoJ) kept its key short-term rate at 0.5%, holding borrowing costs at their highest level since 2008 and extending the pause after the January hike. The regulator reiterated its readiness to tighten policy further if the economy evolves within its outlook. In its quarterly projections, the BoJ maintained its core inflation estimate for the 2025 fiscal year at 2.7%, expecting it to slow to 1.8% in 2026. The GDP growth forecast for 2025 was improved from 0.6% to 0.7%, facilitated by a new trade agreement with the US and the policies of Prime Minister Sanae Takaichi’s cabinet.

On Tuesday, US stock indices continued their ascent. The Dow Jones (US30) Index rose by 0.34%. The S&P 500 (US500) gained 0.23%. The technology-heavy Nasdaq (US100) closed up by 0.74%. All three indices set new historical highs amid expectations that the Fed would cut its rate by 25 basis points (bps) on Wednesday, a move the markets have almost entirely priced in.

Nvidia climbed 8% after announcing a $1 billion strategic investment in Nokia, which reinforces expectations for continued demand for chips and network infrastructure. UPS rose 8.1% thanks to an earnings report that beat analysts’ expectations. Microsoft jumped 2.3% after securing a landmark agreement with OpenAI, strengthening its commercial position in the AI sector.

Today, the US Federal Reserve (Fed) will hold its monetary policy meeting. The market is almost certainly expecting a 25 bps cut to the key interest rate. However, this decision is already priced in, so the main focus for investors will be on Powell’s press conference and the updates to the dot plot. A downward shift in the median outlook for the year-end rate level would increase the probability of additional cuts.

The Canadian dollar strengthened above 1.40 CAD per USD, remaining near its monthly highs. Markets have already priced in a 25 bps rate cut from both the Fed and the Bank of Canada (BoC) this week. Despite the overall easing, Canada maintains an advantage in real yield. Analysts believe that today’s BoC cut could be the final one in the current cycle, and the regulator’s rhetoric is likely to be neutral or slightly “hawkish” to keep inflationary expectations under control and support confidence amid an unemployment rate of 7.1%.

European stock markets traded with mixed dynamics yesterday. Germany’s DAX (DE40) fell by 0.12%, France’s CAC 40 (FR40) closed down 0.27%, Spain’s IBEX35 (ES35) gained 0.54%, and the UK’s FTSE 100 (UK100) closed 0.44% higher. The FTSE 100 set a new record high on Tuesday, supported by a rally in the banking, commodity, and defence sectors. HSBC led the gains, adding over 4% following strong quarterly results and a raised profitability outlook.

WTI crude oil declined for a third straight day amid sanctions and supply concerns. Last week, Washington imposed sanctions on major Russian oil companies (Rosneft and Lukoil) which led traders to closely monitor for potential supply disruptions. Indian refiners temporarily paused new orders for Russian oil. However, doubts persist in the market that the restrictions will be able to offset the oil surplus, as OPEC+ is considering another production increase at its upcoming meeting.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) dropped 0.58%, China’s FTSE China A50 (CHA50) rose by 0.75%, Hong Kong’s Hang Seng (HK50) fell by 0.33%, and Australia’s ASX 200 (AU200) posted a negative result of 0.48%.

The Australian dollar strengthened, reaching a three-week high, after fresh inflation data came in noticeably higher than prognoses and reduced expectations for an imminent policy easing by the Reserve Bank of Australia (RBA). Annual inflation accelerated to 3.5% in September, up from 3% in August and above the consensus projection of 3.1%, marking the highest level since July 2024. Against this backdrop, traders sharply cut bets on interest rate cuts. Markets are now pricing in a 90% probability that the RBA will keep the key interest rate at 3.6% on November 4th.

The Dow Jones Index (US30) rose by 0.71% by the end of Monday. The S&P 500 Index (US500) gained 1.23%. The Technology Index Nasdaq (US100) closed higher by 1.86%. Major Wall Street indices finished Monday with sharp gains after US and Chinese officials reported reaching a preliminary trade agreement during talks held over the weekend in Malaysia. The final details of the deal are expected to be agreed upon on Thursday at a summit between Presidents Donald Trump and Xi Jinping during the ASEAN conference. The US Treasury Secretary stated that the agreement means removing the threat of introducing 100% tariffs on Chinese imports, which were supposed to take effect on November 1, from the agenda. In turn, China agreed to refrain from restricting the export of rare earth metals for at least one year.

European stock markets were mostly up yesterday. Germany’s DAX (DE40) rose by 0.28%, France’s CAC 40 (FR40) closed with a gain of 0.16%, Spain’s IBEX35 (ES35) climbed by 0.87%, and the UK’s FTSE 100 (UK100) closed up 0.09%. Negotiations between the European Union and a Chinese delegation regarding Beijing’s new restrictions on rare earth metal exports will take place in Brussels this week, as Europe seeks to protect its industrial base and reduce dependence on Chinese raw materials. European Commission President Ursula von der Leyen stated that the EU will accelerate efforts to diversify supplies and conclude new critical mineral supply agreements with partners, including Ukraine, to reduce dependence on China and protect strategic industries.

WTI crude oil prices fell on Tuesday, marking the third consecutive session of decline, as concerns about market oversupply intensified following signals that OPEC+ might consider increasing production as early as December. Saudi Arabia is leaning towards a moderate production increase, aiming to regain market share, while the group of oil producers is set to meet on Sunday.

Platinum prices pulled back slightly from the three-week high reached in mid-October. Pressure on the metal came from a decrease in demand for safe-haven assets, as signs of progress in US-China trade negotiations boosted investors’ risk appetite. Despite the correction, platinum has appreciated by nearly 50% since the start of the year, outperforming gold and silver, thanks to constrained supply, robust industrial demand, and growing interest from investors seeking diversification amid geopolitical uncertainty.

Asian markets traded with mixed dynamics yesterday. Japan’s Nikkei 225 (JP225) rose by 2.46%, China’s FTSE China A50 (CHA50) gained 1.10%, Hong Kong’s Hang Seng (HK50) was up 1.05%, while Australia’s ASX 200 (AU200) showed a negative result of 0.19%.

US President Donald Trump and Japanese Prime Minister Sanae Takaichi signed a framework agreement on securing the supply of critical minerals and rare earth elements, aimed at reducing dependence on China and strengthening strategic supply chains. The agreement is part of a broader Washington initiative to reduce reliance on China, which controls over 90% of global rare earth element processing. On Thursday, Donald Trump will meet with Chinese President Xi Jinping to discuss trade relations and strategic stability issues.

The Australian dollar reached its highest level in nearly three weeks on Tuesday, thanks to a weaker US dollar. The American currency declined as markets had almost fully priced in an expected 25 basis point rate cut by the Fed, while optimism surrounding a potential US-China trade deal reduced demand for safe-haven assets. Domestically, investors’ attention is focused on the upcoming release of third-quarter inflation data and the monthly Consumer Price Index for September, due out on Wednesday, which may provide new signals regarding future moves by the Reserve Bank of Australia (RBA). RBA Governor Michele Bullock warned that a sudden reversal of optimism in global financial markets could trigger financial instability and accelerate the process of cutting interest rates.

On Friday, the Dow Jones Index (US30) rose by 1.01% (for the week, +1.93%). The S&P 500 Index (US500) gained 0.79% (for the week, +1.52%). The Technology Index Nasdaq (US100) closed higher by 1.04% (for the week, +1.47%). All three stock indices closed at new record highs on Monday, after soft US inflation data fueled expectations for Federal Reserve interest rate cuts later in the year and injected optimism into investor sentiment. The US Consumer Price Index (CPI) report for September (+0.3% m/m and +3.0% y/y) was slightly weaker than market expectations (+0.4% m/m and +3.1% y/y). Furthermore, the core CPI report for September (+0.2% m/m and +3.0% y/y) was also weaker than market expectations (+0.3% m/m and +3.1% y/y). A decline in inflation “without sacrificing growth” is perceived as the ideal scenario for a bull market.

On the corporate front, shares of AMD and IBM jumped by 7.5% and 8.8% respectively, following the announcement of the successful launch of IBM’s quantum error correction algorithm on AMD chips, a major step for the development of quantum computing that sparked a positive reaction across the sector. Intel rose by 1.6% after returning to profitability and publishing an optimistic prognosis. The banking sector also strengthened amid expectations that monetary policy easing would stimulate lending activity.

US President Donald Trump stated on Saturday that he is raising tariffs on goods from Canada by another 10%, over and above what they currently pay. The US Department of Commerce, the White House, and the Canadian Prime Minister’s Office have not yet commented on the situation. Experts note that this move could complicate bilateral trade relations, especially amidst existing disputes.

European equity markets were mostly up on Friday. Germany’s DAX (DE40) rose by 0.13% (for the week, +0.85%), France’s CAC 40 (FR40) closed down by 0.01% (for the week, +0.15%), Spain’s IBEX35 Index (ES35) gained 0.44% (for the week, +0.79%), and the UK’s FTSE 100 (UK100) closed 0.70% higher (for the week, +3.11%).

WTI crude oil prices reached their highest level in over two weeks on Monday, as an improved outlook for a US-China trade deal raised expectations for an increase in global energy demand. US Treasury Secretary Scott Bessent stated that negotiations with Chinese Vice Premier He Lifeng had led to “substantial progress,” which would be solidified at a meeting between Presidents Trump and Xi Jinping at the end of the week. Beijing confirmed that a preliminary consensus was reached on a number of key topics. Oil prices received additional support from supply concerns regarding Russia, following the sanctions imposed last week against Rosneft and Lukoil, which together account for about 50% of oil production in Russia and around 25% of its exports.

Asian markets traded with mixed dynamics last week. Japan’s Nikkei 225 (JP225) rose by 2.00%, China’s FTSE China A50 (CHA50) gained 3.23%, Hong Kong’s Hang Seng (HK50) was up by 1.07%, while Australia’s ASX 200 (AU200) showed a negative result of 0.07% for the past week. Asian stocks opened with solid gains on Monday. Negotiators from the US and China stated that they had reached a consensus on key issues, including export controls. Further support for the market came from data published on Monday showing that China’s industrial profits grew by 21.6% y/y in September, the fastest growth since November 2023, strengthening investor confidence in a sustained recovery of the industrial sector.

In Australia, investors focused on the anticipated Q3 inflation data and the monthly CPI for September, which could be pivotal for the Reserve Bank of Australia’s (RBA) next steps. Analysts estimate that the RBA is close to achieving its inflation and employment targets, but new data might reveal persistent price pressures. If the figures confirm sustained growth in consumer prices, it could lead the central bank to refrain from further policy easing at its meeting next week.