North America
Last week, U.S. stocks showed mixed performance: the Dow and S&P 500 posted modest gains, while the Nasdaq and smaller-cap indexes declined. Investors pulled back from high-growth tech names due to valuation worries and questions around AI spending. Markets improved on Friday despite no major news. The week also saw the U.S. government shutdown end, but Thursday’s trading turned weak as uncertainty remained about how quickly things would return to normal. Confusion around upcoming economic data releases added to the cautious mood, although the BLS confirmed it will release the September jobs report on November 20. Fed officials gave cautious, mostly hawkish comments, leading markets to lower expectations for a December rate cut from 67% to about 46%. Small-cap stocks, which react more to interest rate expectations, fell the most. In bonds, Treasury yields edged higher, pushing prices down, while municipal bonds did better, thanks to strong demand for new issues. High-yield bonds rose earlier in the week but gave back some gains as broader market sentiment weakened.

Europe & UK
Last week, European stocks rose, with the STOXX Europe 600 Index up 1.77% after relief over the U.S. government reopening, though concerns about AI limited gains. Most major indexes advanced, including Germany’s DAX (+1.3%), France’s CAC 40 (+2.77%), and Italy’s FTSE MIB (+2.51%), while the UK’s FTSE 100 was mostly flat. Weak UK economic data raised expectations for a December Bank of England rate cut, as unemployment rose to 5% and wage growth slowed. UK GDP growth also lagged at 0.1% in Q3, with car production down sharply after a Jaguar Land Rover cyberattack. Eurozone industrial output was weaker than expected, rising only 0.2% in September after a 1.1% drop in August, with Ireland seeing a notable decline. In Germany, investor confidence fell, as concerns grew about the government’s ability to address economic challenges.

Japan
Last week, Japan’s stock markets rose, with the Nikkei 225 gaining 0.2% and the broader TOPIX Index up 1.85%, largely supported by positive sentiment from the U.S. ending its longest government shutdown. However, concerns about overvalued technology companies tied to artificial intelligence limited gains in Japan’s tech sector. Investor focus was also on Japan’s new prime minister, Sanae Takaichi, whose plans for looser fiscal policy and a cautious approach to interest rate increases pressured the yen, which weakened to around JPY 154.6 per dollar from JPY 153.4 the prior week. Takaichi signalled more flexible, multi-year fiscal targets and emphasized aggressive yet responsible government spending to support economic growth. In the bond market, the 10-year Japanese government bond yield rose slightly to 1.70%, and expectations shifted toward a potential Bank of Japan rate hike in January rather than December, as BoJ Governor Kazuo Ueda noted that underlying inflation is gradually moving toward the 2% target. Meanwhile, confidence among Japanese manufacturers improved, reaching its highest level in nearly four years according to the Reuters Tankan survey, with exporters in electronics and autos benefiting from the weaker yen boosting overseas demand.