Europe
European markets softened after touching new highs earlier in the week. The pan-European STOXX Europe 600 Index slipped 0.67%, reflecting fading hopes for further rate cuts from the European Central Bank (ECB). France’s CAC 40 and Germany’s DAX retreated 1.27% and 1.16% respectively, while Italy’s FTSE MIB rose 1.62%. In the UK, the FTSE 100 gained 0.74%, supported by a weaker British pound that benefited exporters and multinationals.
The ECB kept rates unchanged for a third consecutive meeting, citing inflation near its 2% target and stable growth conditions. President Christine Lagarde reaffirmed that policy decisions would remain data-dependent, as uncertainty persists around trade and geopolitical tensions. Preliminary Eurozone data showed inflation slowing slightly to 2.1% in October from 2.2% in September, while core inflation held at 2.4%. Economic growth modestly improved, with GDP expanding 0.2% in the third quarter slightly better than expected driven by France and Spain.
The UK housing market also showed resilience. House prices rose 0.3% in October, and mortgage approvals reached a nine-month high, reflecting gradual stabilization after a
challenging year for property. Overall, Europe remains in a phase of cautious optimism, balancing easing inflation with restrained expectations for further monetary stimulus.
U.S. markets ended the week with a mixed performance, reflecting both optimism around large-cap technology stocks and caution in broader sectors. The Nasdaq Composite led the way, lifted by continued enthusiasm for artificial intelligence-driven companies, while smaller-cap indexes fell behind. Market gains were concentrated among a few major technology names, with seven of the S&P 500’s eleven sectors actually finishing lower.
Earnings season remained in full swing, with over one-third of S&P 500 companies having reported results. Roughly 83% of them exceeded analysts’ expectations. However, investor reactions varied: Microsoft, Apple, and Meta saw shares dip following their reports, while Amazon and Alphabet advanced. NVIDIA briefly surpassed a USD 5 trillion market capitalization — the first company ever to do so underscoring the continued dominance of AI-linked growth stocks.
On the policy front, the Federal Reserve cut interest rates by 0.25 percentage points to 3.75%–4.00%, as expected. Yet Chair Jerome Powell tempered expectations for further easing in December, emphasizing caution amid limited data due to the government shutdown. U.S. Treasury yields rose following Powell’s hawkish tone, pushing bond prices lower, while corporate bonds lagged Treasuries as investors recalibrated expectations for the remainder of 2025.
Asia and Emerging Markets
Japan’s markets surged to record levels, with the Nikkei 225 up 6.3% for the week and posting its strongest monthly gain since 1994. Investor confidence was buoyed by the Bank of Japan’s decision to hold rates steady and growing speculation about a forthcoming fiscal stimulus package. Robust corporate earnings and upbeat U.S. tech performance further fueled momentum. However, the yen weakened to around JPY 154 per U.S. dollar, prompting government officials to voice concern over potential speculative volatility.
Governor Kazuo Ueda of the BoJ indicated that the likelihood of a future rate hike is increasing, but that decisions will hinge on wage negotiations and inflation trends early next year. Inflation in Tokyo rose 2.8% year over year in October, remaining above the bank’s target, while retail sales unexpectedly rebounded by 0.5%.
In China, equities ended mixed. The Shanghai Composite inched up 0.11%, while the CSI 300 fell 0.43%. Markets reacted to news of a one-year trade truce between the U.S. and China, which eased near-term tensions but did little to dispel concerns about China’s slowing growth. At the conclusion of the country’s fourth plenum, Beijing pledged to shift its economic model toward domestic consumption, a positive signal for long-term stability, though investors still await more concrete policy measures to restore momentum.
Looking Ahead –
Amid diverging policy paths and uneven breadth, investors should stay selective, focus on quality earnings, and remain agile as the data set the next move. As policy signals evolve and leadership narrows, maintaining diversification and a long-term view will matter more than ever. By Bas Kooijman ,CEO and Asset Manager of DHF Capital S.A
