GLOBAL MARKETS — Global equity markets opened the week with modest gains as investors weighed geopolitical risks, upcoming monetary-policy decisions and a packed schedule of corporate earnings that could influence market direction.
MSCI’s All-World index edged higher on Monday after losing nearly 1% the previous week. In Europe, the STOXX 600 rose 0.4%, supported in part by gains among industrial companies.
US stock futures also moved upward, with both S&P 500 and Nasdaq futures increasing 0.3%. The gains pointed to a slight improvement in investor sentiment ahead of several important economic developments.
Oil prices offered some relief, falling around 2% to $114.60 per barrel following reports of diplomatic efforts to reduce tensions between the United States and Iran.
Despite the decline, concerns about energy supplies persisted. Brent crude futures had climbed 6.2% over the previous week, recording their highest weekly close since mid-2022 after attacks by Yemen’s Houthi movement in Saudi Arabia heightened fears of possible supply disruptions.
On Monday, the Houthi group claimed responsibility for attacks on Saudi Arabia’s East-West crude oil pumping stations and Riyadh airport. Riyadh had not immediately confirmed those specific claims.
Investors were also focused on a series of central-bank meetings scheduled for the week. The US Federal Reserve was broadly expected to keep interest rates unchanged at its October meeting, although markets continued to price in the possibility of another increase in December.
The Bank of Japan and European Central Bank were likewise expected to maintain their existing policy settings. New Zealand’s central bank, meanwhile, was widely anticipated to raise interest rates on Wednesday.
Upcoming economic data could influence the policy outlook. US core inflation was projected to remain elevated at 3.1% in September, while economic growth was expected to reach an annualised rate of 3.2%. Investment in data centres was among the contributors supporting economic expansion.
Analysts at Goldman Sachs expected the Federal Reserve to hold off on raising rates in October before implementing another increase in December. They cautioned that persistently high oil prices could spread inflationary pressures more broadly if the energy shock intensified or continued longer than anticipated.
Bond markets continued to reflect uncertainty over the outlook. Yields on 10-year US Treasury securities remained around 5%, below the peak of 5.36% recorded earlier in October.
In foreign exchange trading, the US dollar gained 0.3% against the Japanese yen, reaching approximately 157.28 yen. The euro rose 0.1% to $1.121, while sterling traded at $1.3346 ahead of Britain’s new finance minister, John Healey, delivering his first budget on Wednesday.
Corporate earnings were another major focus for investors. Alphabet, Microsoft and Amazon were due to release their results during the week, alongside approximately one-third of the companies in the S&P 500.
The reports are expected to shed light on whether investment in artificial intelligence can be sustained, particularly given the substantial sums being spent on data centres and semiconductor infrastructure.
Investors are increasingly assessing whether revenue from AI-related products and services will be sufficient to justify the scale of spending. Performance from the leading technology companies could therefore affect valuations across markets, extending beyond the technology sector itself.
With central-bank decisions, inflation releases, energy supply concerns and major technology earnings converging in the same week, investors face several interconnected sources of uncertainty. An unexpected development in any one area could shift market expectations for equities, bonds and currencies.
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