Weekly Recap: 17th - 21st
Global Market Overview:
Global markets endured one of their most volatile weeks in recent months, as geopolitical tensions, earnings uncertainty, and fading confidence in the AI-driven equity rally sent investors toward safe-haven assets. A string of mixed data points, hawkish central bank signals, and heightened geopolitical friction between China and Japan added further pressure to risk sentiment.
Japan
Tensions rose early in the week as China issued travel warnings and signalled potential economic retaliation following Prime Minister Sanae Takaichi’s remarks that any military action over Taiwan could be deemed a “survival-threatening situation.”
Japanese equities, particularly tourism and retail-related stocks, declined, though the Nikkei later rebounded after a multi-day selloff prompted buying interest.
By Friday, Japan approved its largest supplementary budget since the pandemic and issued its strongest yen-intervention warning yet, though the currency’s move was muted.
The JPY briefly touched ¥154.50 before strengthening to ¥153.40, with investors closely monitoring the Ministry of Finance for signs of market intervention.
U.S. & China
The week began with oil market focus as traders dismissed the likelihood of further OPEC+ supply cuts in 2026, while Brent crude held near $63.75 a barrel.
However, sentiment turned negative midweek after the Wall Street Journal reported that China was developing a rare earth export system excluding firms linked to the U.S. military — a move seen as escalating tensions just weeks after trade progress.
Markets grew increasingly cautious ahead of Nvidia’s earnings, which investors viewed as a bellwether for the broader AI sector. Despite a strong quarterly performance and upbeat forecast, tech volatility persisted, with Nvidia falling 3.2% by week’s end amid fears of stretched valuations and slowing AI spending momentum.
The Federal Reserve’s December rate-cut expectations also faded after the Bureau of Labor Statistics confirmed there would be no standalone October jobs report due to the earlier government shutdown, leaving policymakers with limited visibility.
Europe
European equities tracked global weakness through midweek, with the MSCI All Country World Index falling 3% — its steepest drop since April.
Italy’s CPI came in line with expectations, while central bank officials from the BoE, ECB, and Fed reiterated inflation vigilance in public remarks.
By Friday, sentiment remained cautious as the Bank of England’s 4% rate hold was reaffirmed, and the pound weakened following reports the UK government may abandon planned income tax increases in its next budget.
Across the region, mixed economic signals — particularly subdued PMIs in France and Germany — highlighted continued fragility in Europe’s manufacturing recovery.
Markets & Commodities
Risk aversion dominated markets, with global equities posting their largest weekly decline in seven months.
The MSCI Asia Pacific Index fell 1.7%, while the S&P 500 recorded a 3.6% intraday reversal, the sharpest since April’s tariff shock.
Safe-haven demand lifted gold above $4,000/oz, while Bitcoin dropped below $86,000, marking a 20% decline from early October.
Oil prices remained under pressure throughout the week, with Brent crude falling over 2% to below $63/bbl, as traders weighed OPEC+ production signals against global demand concerns.
Volatility surged — the VIX hit its highest level since April, reflecting nervousness around valuation risks and the durability of the AI rally.
Data & Earnings
With official U.S. data flow still recovering from the prolonged government shutdown, investors looked to corporate earnings and forward guidance for clarity.
• Nvidia, Alphabet, and Tesla dominated headlines, with Nvidia’s strong forecast sparking a short-lived rebound in global equities before profit-taking resumed.
• Other key results came from BP, AMD, Shopify, McDonald’s, Siemens, Qualcomm, and BMW, while Novo Nordisk and Palantir reported better-than-expected earnings.
• Treasuries rallied early in the week but later pared gains, with the 10-year yield closing near 4.09%.
Markets are now in a risk-off phase, awaiting upcoming U.S. CPI and jobs data, as well as next week’s Nvidia and semiconductor updates, which could determine year-end market direction.
