USA
Last week, the economic picture remained broadly supportive of the “soft-landing” narrative. While detailed government data were somewhat muted due to the federal shutdown, private-sector indicators showed momentum: the US composite PMI signalled continued expansion, and there were further signs that inflation pressures are easing without a collapse in activity. The labour market remains tight though showing early signs of cooling, with initial jobless claims trending down but employment growth decelerating from earlier peaks. Against this backdrop, the Federal Reserve delivered a widely-expected 25 basis point rate cut, framing it as part of a “risk-management” easing cycle, signalling caution but providing tailwinds for equities. The equity market responded positively, with the S&P 500 reaching record highs and the NASDAQ Composite outperforming thanks to strong momentum in the tech/AI complex.
Europe
Across Europe, data for the week pointed to a modest re-acceleration of activity, particularly in services, although the manufacturing sector remains under pressure. The flash Eurozone Composite PMI rose to 52.2 in October, the highest in over a year, driven by robust services growth, while the manufacturing PMI held at ~50.0, indicative of stagnation rather than robust expansion. Inflation-wise, the region saw headline HICP easing towards the ECB’s target and unemployment remaining around 6.3% in September, offering some comfort. Yet the divergence across countries remained sharp: Spain and Greece saw positive PMI readings, while Germany and France continued to hover near, or in, contraction territory in manufacturing. The result has been mixed market performance: the STOXX Europe 600 drifted, with cyclicals and bank stocks (especially in Spain) outperforming, while defensives and France/Germany large-caps lagged.
Japan
Japan’s macro release for the period showed confirmed inflation above target and moderate growth expectations, which combined with a weak yen and global tech momentum to produce a strong risk-asset performance. The Japan CPI rose 2.9 % year-on-year in September, exceeding the Bank of Japan inflation target and keeping the door open for future monetary tightening. Meanwhile, the BOJ in its October Outlook described modest growth ahead, acknowledging export and industrial weaknesses but citing supportive financial conditions. On the equity front, the Nikkei 225 and TOPIX surged to record highs, buoyed by global AI/tech strength, a favorable currency cross (yen weakness), and optimism around domestic policy support for technology and industrial upgrading.
China
In China, the week brought sobering news: the official manufacturing PMI dropped to 49.0 in October, marking the seventh consecutive month of contraction and missing forecasts, while the composite PMI edged down to 50.0. Although the non-manufacturing PMI at 50.1 offered a sliver of positive momentum in services, the overall message remains that growth momentum is waning amid weak global demand and structural headwinds. With property investment still declining and exports under pressure from trade frictions, the Chinese market (including the Shanghai Composite and Hang Seng Index) remained range-bound and under-performing global peers. For global investors, China continues to be a cautionary story: decent but slowing growth, combined with policy support that remains moderate, means China is more of a tactical opportunity than a core growth engine in this phase.