Global stock markets endured a difficult week as concerns about rising geopolitical instability and an uncertain outlook for world trade came to the fore.
With the likelihood of a Republican victory in next month’s US presidential election thought to have risen in recent days, investors’ focus has turned to the possible impact of Donald Trump’s economic policies – in particular, his plans to impose swingeing tariffs on imports into America. Meanwhile, the International Monetary Fund (IMF) has warned that markets may be underestimating wider geopolitical risks, not least the chances that the current conflict in the Middle East could escalate dramatically.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.1% down for the week so far, with the S&P 500 falling 0.9%. Investors’ hopes that the Federal Reserve will continue to cut rates in the months ahead declined on fears that the economic policies enacted by a second Trump administration could lead to higher inflation. Treasury yields rose past the 4.25% level during the week before easing back on Thursday. Corporate results were largely positive in the US, although recent earnings data has largely come in below analysts’ expectations.
UK
In the UK, the FTSE 100 closed on Thursday 1.1% down for the week so far after latest data showed further declines in private sector activity and consumer confidence. Share prices in London were also hit by comments from senior Bank of England officials that suggested the battle against inflation was far from over – and that further cuts in interest rates might not be as rapid as investors have been expecting. There was some good news in the shape of an upgrade in the IMF’s forecasts for UK GDP growth in 2024, while sentiment was also supported by positive quarterly earnings statements from the financial sector. However, the immediate future for UK equities is likely to depend on the market’s reaction to next week’s budget.
Europe
In Frankfurt, the DAX index ended Thursday’s session down 1% for the week, while France’s CAC 40 fell 1.4%. European stocks are seen as particularly vulnerable to Trump’s tariffs, while latest data showed a further decline in business activity in Germany. However, there were some reasons for optimism in Europe’s largest economy, with this month’s fall in manufacturing output less severe than analysts had expected.
Asia
In Asia, the Hang Seng index in Hong Kong lost 1.5%, with the news of a fresh round of interest rate cuts at the start of the week doing little to capture the imagination of Chinese investors. The uncertain outlook for China’s economy was underlined by the IMF’s decision to downgrade its growth forecasts for the country. Meanwhile, in Tokyo the Nikkei 225 index of leading shares fell 2.2%. Ahead of this weekend’s national elections, political uncertainty has also played a central role in the Japanese stock market, while latest economic data indicated a slowdown in business activity this month.
October 18 | October 24 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8358.3 | 8269.4 | -1.1 |
FTSE 250 | 21149.6 | 20790.6 | -1.7 |
S&P 500 | 5864.7 | 5809.9 | -0.9 |
Dow Jones | 43275.9 | 42374.4 | -2.1 |
DAX | 19657.4 | 19453.7 | -1.0 |
CAC 40 | 7613.1 | 7503.3 | -1.4 |
ACWI | 856.7 | 845.7 | -1.3 |
Hong Kong Hang Seng | 20804.1 | 20489.6 | -1.5 |
Nikkei 225 | 38981.8 | 38143.3 | -2.2 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 24 October 2024.
