Asian Markets Show Divergence
Asian markets opened with mixed performance as investors reacted to central bank decisions and regional economic developments. In Hong Kong, the Hang Seng Index fell by 0.2%, closing at 18,226.58, reflecting ongoing concerns about economic growth and external pressures. In contrast, China’s Shanghai Composite Index saw a modest increase of 0.4%, ending at 2,748.92. This rise was attributed to a boost from the People’s Bank of China, which reduced its 14-day reverse repurchase rate to 1.85% from 1.95%. The move was aimed at stimulating liquidity and supporting the economy after leaving key lending rates unchanged the previous week. Meanwhile, Japanese markets were closed for a public holiday, but attention remained focused on the Bank of Japan’s decision on Friday to maintain its benchmark interest rate at 0.25%. This contributed to the yen’s weakening, with the currency trading at 143.56 to the U.S. dollar, down from last week’s peak of around 140.
European Markets React to Weak Data
In Europe, the mood was cautious as major indices reflected growing concerns over economic slowdowns in key markets. In Paris, the CAC 40 dropped by 0.3% to 7,481.56 after September’s factory activity data came in weaker than expected, with the composite Purchasing Managers’ Index (PMI) falling below the 50 mark, signaling a contraction. This disappointing result suggested that the robust growth observed in the French economy during August had quickly evaporated. In Germany, manufacturing data also painted a bleak picture, with the PMI for September falling to 40.3, well below forecasts. Despite this, the DAX managed to climb by 0.4%, reaching 18,796.33, possibly reflecting some optimism about economic resilience in the face of weaker industrial performance. In London, the FTSE 100 followed suit, rising by 0.4% to 8,258.47, helped by gains in financial and energy stocks, as investors weighed the Bank of England’s recent decision to keep interest rates steady at 5%.
Wall Street Pauses After Record-Setting Week
After a record-setting performance last week, U.S. markets took a breather. Futures for both the S&P 500 and the Dow Jones Industrial Average remained relatively unchanged, signaling a cautious start to the week. On Friday, the S&P 500 slipped 0.2% to close at 5,702.55, while the Nasdaq Composite fell 0.4% to 17,948.32. However, the Dow Jones Industrial Average managed to post a small gain of 0.1%, closing at a new record high of 42,063.36. These movements came after the U.S. Federal Reserve cut its main interest rate for the first time in over four years, signaling a potential shift in policy. The Fed’s decision reflects a growing consensus that inflation, which has subsided from its peak two summers ago, is now less of an immediate threat, allowing the central bank to focus on keeping the job market robust and steering the economy clear of a recession. However, concerns remain that the central bank may have delayed rate cuts for too long, potentially slowing hiring and economic momentum.
Oil and Currency Movements
In commodities, oil prices saw minor declines as global supply and demand dynamics remained in focus. U.S. benchmark crude slipped by 12 cents to $70.88 per barrel, while Brent crude, the international benchmark, lost 8 cents, settling at $74.41 per barrel. On the currency front, the euro weakened against the U.S. dollar, falling to $1.1096 from $1.1162. This decline reflected broader concerns about economic growth in the Eurozone, as well as the potential impact of U.S. monetary policy changes on global exchange rates.
