USA

The past week was dominated by a sharp risk-off move in technology stocks amid an ongoing federal government shutdown, which has frozen key official releases such as payrolls, CPI, and weekly jobless claims. As a result, investors were left trading on private activity data and corporate earnings rather than fresh hard data. The ISM Manufacturing PMI for October printed at 48.7, marking an eighth consecutive month of contraction and falling below expectations—reinforcing the narrative of a cooling goods sector. Earlier data had already shown moderating but still above-target inflation and a labor market loosening only gradually, while the shutdown’s delay of new figures added to uncertainty about the Fed’s next steps. By the end of the week, around 91% of S&P 500 companies had reported Q3 results, with 82% beating EPS estimates—the highest beat rate since 2021—which helped cushion sentiment outside of mega-cap tech. Even so, worries about overheated AI spending, stretched valuations, and collapsing consumer sentiment triggered heavy de-risking in growth stocks. The Nasdaq fell about 3% for the week, its worst performance since April, while the S&P 500 dropped roughly 1.6%, and the Dow also booked a meaningful weekly loss despite small gains on Friday. Consequently, U.S. markets ended their first down week in a month, with defensives and value stocks outperforming, tech leading lower, and investors increasingly pricing in both further Fed cuts and rising recession risk.

Europe


In Europe, the data flow continued to signal a “low-growth, disinflating” environment. Final Q3 euro area GDP figures confirmed a modest 0.2% q/q expansion, with stronger-than-expected performance in France offsetting near-stagnation in Germany. Earlier headline CPI readings near 2.1% y/y underscored that the inflation shock is fading back toward the ECB’s target. Labor markets remain relatively resilient, with only gradual softening in unemployment, and PMIs still consistent with weak but positive overall activity: manufacturing remains in contraction, while services continue to carry growth. In the UK, investors digested the Bank of England’s decision to leave the Bank Rate at 4.0% in a finely balanced vote. Cooling wage growth and softer PMIs strengthen the case for future cuts, even though inflation remains above target. Equity markets largely took their cue from Wall Street: concerns about U.S. tech overvaluation and a potential AI bubble spilled over into European growth names, particularly in information technology and other high-multiple sectors. The STOXX Europe 600 fell about 1.2% on the week—its sharpest drop since early autumn—with tech leading losses, while autos and select banks held up better. Major national indices such as the FTSE 100, DAX 40, CAC 40, and IBEX 35 all ended lower, broadly mirroring the pan-European decline, as investors rotated from growth into defensives and debated how soon the ECB and BoE might follow the Fed in cutting rates.

Japan


Japan’s macro picture continued to reflect a two-speed economy. The latest S&P Global/au Jibun Bank PMIs (for October) indicated that manufacturing remains under pressure, with the Manufacturing PMI at 48.2—its fourth straight month in contraction—amid weak external demand for autos and electronics. Meanwhile, the Services PMI stayed in firm expansion territory above 53, leaving the Composite PMI modestly above 50. Inflation remains above the Bank of Japan’s 2% target, driven by services and wage growth, though no major new inflation or GDP data were released this week. Market focus stayed on how persistent price pressures might eventually force the BoJ to normalize policy more decisively.
Japanese equities were hit hard by the global tech sell-off: chipmakers and factory automation firms tracked U.S. peers lower, and the Nikkei 225 fell roughly 4% between Monday and Friday—from about 52,350 to just over 50,250—with particularly sharp declines mid-week. The broader TOPIX also moved lower, though somewhat less dramatically, as domestic financials and defensives helped cushion losses. Overall, Japanese asset performance was driven more by global risk sentiment than local data, as a stronger yen and a rotation out of richly valued growth names contributed to an outsized correction in one of 2025’s best-performing equity markets.

China

In China, the week was dense with macro releases, offering a clearer read on both domestic and external demand. The Caixin (private) Manufacturing PMI for October slipped to 50.6 from 51.2, remaining in expansion but signaling a loss of momentum in new orders and exports. Official CPI inched up just 0.2% y/y, while PPI stayed in deflation near −2.1%, highlighting subdued pricing power despite targeted stimulus—an environment that supports consumers but weighs on industrial profits. Trade data released late in the week showed exports down roughly 1.1% y/y, including a steep drop in shipments to the U.S., while imports were only marginally positive, underscoring the fragility of both external and internal demand despite some easing in U.S.-China trade tensions. Equities, however, outperformed most developed markets: the Shanghai Composite rose about 1.1% on the week to 3,997, marking its third consecutive weekly gain, as investors bet that softer data will prompt additional targeted policy support. The Hang Seng was more volatile—ending lower on Friday after weak trade figures but supported earlier in the week by rotation into beaten-down China-sensitive cyclicals. Overall, Chinese markets traded through the disappointing macro prints, pricing in the likelihood of further easing measures and an eventual export recovery once global demand and trade policy stabilize.