By Bas Kooijman CEO and Asset Manager of DHF Capital S.A
United States: Economic Strength Lifts Market Sentiment
U.S. financial markets closed the holiday-shortened week on a strong note, supported by encouraging economic data and continued optimism around artificial intelligence. Major stock indices advanced, with the S&P 500 and the Dow Jones Industrial Average both reaching new record highs. Although trading volumes were lighter due to the holiday period, overall investor sentiment remained positive. The key highlight was the release of third-quarter economic growth figures, which showed the U.S. economy expanding at an annualized rate of 4.3%, the fastest pace seen in two years. This result exceeded market expectations and marked an acceleration from the previous quarter. Increased consumer spending was the primary driver of this growth, underscoring the resilience of the U.S. consumer despite higher borrowing costs and ongoing inflation concerns. Other economic indicators presented a more mixed picture. Durable goods orders declined in October, largely due to a drop in transportation-related purchases. However, orders excluding defense and aircraft often viewed as a measure of underlying business investment continued to rise, signaling steady corporate activity. Consumer confidence weakened for the fifth consecutive month, reflecting concerns about job security and household income prospects. At the same time, labor market data remained relatively stable, with new unemployment claims falling week over week, even as continuing claims edged higher. In fixed income markets, U.S. Treasury yields ended slightly lower, while corporate bonds performed well as investors responded favorably to the stronger-than-expected growth outlook.
Europe: Recovery Expectations Tempered by Caution
European equity markets delivered modest gains during the holiday-shortened week, with the region’s main benchmark ending slightly higher and just below record levels reached earlier in the period. Market sentiment was supported by expectations of improved earnings and a gradual economic recovery, although caution remains widespread. Germany’s central bank revised its outlook, forecasting a slow but steady recovery after several years of economic weakness. Growth is expected to resume gradually, supported by government spending and a potential recovery in exports. However, business sentiment surveys suggest that confidence among companies remains subdued. A significant proportion of German firms expect economic conditions to deteriorate in the coming year, citing uncertainty around demand and broader economic conditions. Market performance across Europe was mixed. Germany’s equity market edged higher, while France, Italy, and the United Kingdom recorded small declines. In the UK, recent business surveys offered contrasting signals. Some data pointed to continued weakness following November’s budget, while other indicators showed improving confidence and stabilizing expectations for economic activity. Interest rate expectations remained a key focus for investors. Market participants increasingly anticipate further rate cuts in the months ahead, following signs of easing inflation and a softening labor market. Overall, European markets continue to balance cautious optimism about medium-term recovery with ongoing near-term uncertainty.
Asia: Technology Momentum and Policy Signals Support Markets
Asian markets recorded solid gains over the week, led by strong performances in Japan and mainland China. In Japan, equity markets rose as technology stocks benefited from continued enthusiasm surrounding artificial intelligence and innovation-led growth. Japanese government bond yields edged higher as investors continued to expect further monetary policy tightening. While recent inflation data came in slightly below expectations, policymakers reiterated that progress toward their inflation targets remains on track. The Japanese yen strengthened modestly against the U.S. dollar, supported by official comments emphasizing readiness to address excessive currency volatility. Chinese equity markets also moved higher despite the absence of new economic data during the week. Recent indicators have highlighted slowing consumer spending and weaker investment activity, particularly in the property sector. Even so, most analysts expect China to meet its official annual growth target, supported by policy measures and economic stabilization efforts. Looking ahead, global investors remain focused on economic resilience, monetary policy direction, and structural trends particularly in technology and artificial intelligence as key factors shaping market performance across regions.
Looking Ahead –
As the year draws to a close, markets continue to balance economic resilience with policy uncertainty, keeping investors focused firmly on growth sustainability in the months ahead. While near-term uncertainty persists, underlying economic stability across major regions continues to provide a supportive foundation for global markets.