Markets were gripped by central bank week, with the US Federal Reserve, Bank of Canada, Bank of Japan, and the ECB all meeting. The Fed and Bank of Canada each cut rates by 25 basis points as expected, while the ECB and Bank of Japan stayed on hold but struck a cautious stance amid continued global uncertainty.
US-China trade tensions lessened after positive signals from the APEC summit, improving risk appetite globally. Meanwhile, earnings season reached its peak, with results from big tech and financials shaping sector sentiment.
FX Market reactions
- US Dollar: The dollar initially weakened as the Fed and BoC moved dovish, sending the DXY to multi-week lows, before stabilising late-week on better-than-expected US jobs numbers and a slight hawkish tilt in the Fed’s statement.
- Euro: The euro slid to three-month lows near 1.1530 as the ECB’s pause and political uncertainty in France weighed on sentiment, despite upbeat data from Germany.
- Sterling: The pound was little changed, trading defensively as inflation and deficit concerns persisted. UK data stayed soft overall.
- Yen: The yen was volatile but ended stronger as the BoJ held rates steady and signalled a more constructive tone going forward, while safe-haven flows emerged during bouts of global equity volatility.
Commodities Market reactions
- Gold & Silver: Precious metals pulled back after a multi-week rally as risk appetite improved and yields rebounded off recent lows, but volatility remained elevated in the sector.
- Oil: Crude oil prices found support after OPEC+ confirmed supply discipline, but upside was capped by surplus forecasts. Brent hovered in the mid-$70s, while WTI held above $70.
- Agriculture & Strategic Materials: Grains rose on renewed supply worries and robust demand. Copper showed resilience on global infrastructure hope, while volatility in rare earth minerals persisted as geopolitics remained front and centre.
Indices Market reactions
- US Equities: The S&P 500 reached record territory following upbeat tech and financial sector earnings, then faded late week as yields and the dollar firmed. Volatility climbed as traders digested policy and data surprises.
- Europe: European indices ranged, with cautious gains in core markets balancing weakness in French equities. Sector rotation favoured cyclicals and financials.
- Asia-Pacific: Indices were mixed. Japan’s Nikkei rose as BoJ policy steadied nerves, while China and Hong Kong lagged due to patchy macro data and lingering trade caution.
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