Global Equities Enter Into Correction Territory

For the second consecutive week, the primary US stock indices concluded with losses, with market confidence dazed by a combination of inconsistent corporate earnings releases and worries surrounding elevated interest rates. 

The past fortnight witnessed a flurry of quarterly earnings reports, with nearly one-third of the S&P 500 Index slated for disclosure. Investors appeared particularly fixated on the outcomes from key tech giants like Amazon.com, Alphabet (Google's parent company), Meta Platforms (Facebook's owner), and Microsoft, all integral members of the influential tech-focused group known as the "Magnificent Seven." [EasyDNNnews:PaidContentStart]

These companies, which played a pivotal role in driving positive market performance earlier in the year, presented metrics that generally showcased robust growth surpassing consensus expectations. However, markets honed in on signs of escalating expenditures, which exerted downward pressure on their shares. 

Economic news throughout last week was marked by a notable development: a gross domestic product report that outperformed expectations, revealing a remarkable annualised growth rate of 4.9 per cent for the U.S. economy in the third quarter. This impressive expansion was chiefly propelled by vigorous consumer spending and represented the most robust performance since late 2021, more than doubling the growth seen in the second quarter. 

In the European market, the pan-European STOXX Europe 600 Index concluded the past fortnight with a 0.96 per cent decline, driven by concerns about interest rates, economic stability, and Middle East conflicts. Major stock indices across Europe followed suit, with Germany's DAX retreating by 0.75 per cent, France's CAC 40 Index easing by 0.31 per cent, Italy's FTSE MIB dipping by 0.25 per cent, and the UK's FTSE 100 Index experiencing a more substantial loss of 1.50 per cent. 

Eurozone government bond yields experienced slight relief as the European Central Bank (ECB) opted to keep short-term interest rates unchanged, raising expectations that interest rates may have reached their peak in the eurozone. The ECB, which had previously raised interest rates ten times consecutively, left its key deposit rate untouched at 4 per cent and reiterated the intention to maintain this level for an extended period to help bring inflation down to its medium-term target of 2 per cent. 

Japanese stock markets faced headwinds during the past fortnight, with the Nikkei 225 Index sliding by 0.86 per cent, and the broader TOPIX Index experiencing minimal change. The combination of rising bond yields and geopolitical tensions initially weighed on market sentiment, but investors seized opportunities during market lows, a resurgence in technology stocks, and a fresh injection of economic stimulus from China helped local stock markets recover their losses. The foreign exchange and bond markets witnessed substantial movements, along with growing inflation, spurring speculation about potential intervention by authorities and potential adjustments to the yield curve control policy by the Bank of Japan (BOJ) in its upcoming meeting. 

In China, equities trended upward as improved industrial profits hinted at a possible stabilization of the economy. The Shanghai Composite Index advanced by 1.16 per cent, while the blue-chip CSI 300 saw a gain of 1.48 per cent. Hong Kong's benchmark Hang Seng Index also registered a rise of 1.32 per cent during the holiday-shortened week. 

Notably, industrial profits in China increased by 11.9 per cent in September compared to the same period the previous year, marking the second consecutive monthly uptick, although it was a deceleration from the 17.2 per cent growth recorded in August. 

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