USA
U.S. equities advanced to fresh record highs as the Federal Reserve delivered a widely anticipated 25 bp rate cut, lowering the target range to 4.00–4.25%. Chair Powell emphasized that while inflation progress has been steady, a softer labor market and cooling job gains justified preemptive easing. The dot plot suggested scope for one or two more cuts this year, though larger reductions remain unlikely. Economic data were mixed: August retail sales rose a robust 0.6% m/m, supported by broad-based spending, while housing starts plunged 8.5% and builder sentiment remained weak. Initial jobless claims fell to 231k after the prior spike, signaling continued labor resilience. For the week, the S&P 500 gained 1.22%, the NASDAQ 2.21%, and the Dow 1.05%, all closing at record levels.
Europe
In Europe, sentiment was more cautious. The STOXX Europe 600 slipped 0.13%, with divergence across benchmarks: CAC 40 +0.36%, DAX −0.25%, and FTSE 100 −0.72%. The Bank of England kept Bank Rate steady at 4.0% and slowed its quantitative tightening program, after August’s rate cut, reflecting growing concerns about growth risks amid still-sticky inflation. U.K. CPI for August held at 3.8% y/y, keeping the U.K. the highest-inflation economy among G7 peers. Euro area industrial production posted a modest rebound (+0.3% m/m in July), hinting at stabilization but remaining well below pre-pandemic growth trends. With the Fed easing and European policymakers remaining cautious, investors rotated into defensive sectors, leaving European indices lagging U.S. markets.
Japan
Japanese markets faced policy-driven volatility as the Bank of Japan held its policy rate at 0.50% but surprised by announcing plans to gradually sell its ETF and J-REIT holdings, signaling further normalization after years of extraordinary support. Two members dissented, favoring a rate hike, while August core CPI slowed to 2.7% y/y, down from 3.1% but still above the BoJ’s 2% target. Markets interpreted the decision as a hawkish step, pushing yields higher and benefiting financials, though equity investors grew cautious over potential supply from asset sales. The Nikkei 225 rose 0.62% on strength in exporters, while the TOPIX slipped 0.41%, reflecting rotation within sectors.
China
Chinese equities underperformed as August macro data disappointed. Retail sales rose 3.4% y/y, industrial production 5.2% y/y, and fixed-asset investment just 0.5% y/y (Jan–Aug cumulative)—all below consensus. Property sector weakness remained a drag, and investor confidence stayed fragile despite government pledges of further pro-consumption policies. The Shanghai Composite fell 1.30%, while the Hang Seng added 0.59%, with Hong Kong buoyed by gains in tech and consumer names. Overall, the weaker activity data reinforced expectations of incremental stimulus, but investors remained skeptical over the effectiveness of policy in offsetting structural headwinds in real estate and local government finance.