Bas Kooijman
Market Insights-
As we start a new week, let’s take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital S.A.
United States – Markets React to Renewed Trade Pressures and Policy Signals
U.S. equity markets ended the week lower as a mix of trade tensions and political uncertainty unsettled investors. The Nasdaq Composite and S&P 500 initially held firm, supported by continued enthusiasm for artificial intelligence–related companies. A major boost came from Advanced Micro Devices’ announcement of a strategic partnership with OpenAI, which lifted AMD’s shares by more than 20% early in the week. However, optimism faded quickly after President Donald Trump hinted at a potential “massive increase” in tariffs on Chinese goods in response to China’s new export restrictions on rare earth minerals.
The resulting sell-off reflected concerns about a possible re-escalation in the U.S.–China trade conflict — a dynamic that markets had largely priced out earlier this year. Meanwhile, the ongoing U.S. government shutdown added to the unease, delaying key economic data releases and limiting visibility into near-term economic trends. With data scarce, attention has shifted to the upcoming corporate earnings season, beginning with JPMorgan Chase’s report on October 14. Analysts expect the S&P 500 to record its ninth consecutive quarter of year-over-year earnings growth, though results will likely be scrutinized closely for signs of slowing momentum.
Minutes from the Federal Reserve’s September policy meeting revealed cautious support among policymakers for further rate cuts. The Fed acknowledged persistent inflation pressures alongside a weakening labor market, suggesting that risks to both price stability and employment have grown. While most members agreed that easing could be warranted later this year, others urged restraint, noting that current policy settings may not yet be restrictive enough to require a shift.
Despite these uncertainties, consumer confidence held steady. The University of Michigan’s October survey showed only minor changes in household sentiment, with modest improvement in short-term financial outlooks offset by softer expectations for durable goods purchases. Inflation expectations for the year ahead edged down slightly, indicating that consumers still see price pressures gradually easing.
In the bond market, U.S. Treasuries rallied as investors sought safety amid renewed trade fears and the lingering shutdown risk. Yields declined sharply, while investment-grade and high-yield corporate bonds lagged as trading volumes fell and investors turned more selective. By week’s end, the Dow Jones Industrial Average had declined 1,278 points, the S&P 500 lost 163 points, and the Nasdaq Composite dropped 576 points, reflecting a broader retreat in risk appetite.
Europe – Economic Strains Deepen Amid Political Turmoil
Across Europe, markets lost ground as the STOXX Europe 600 Index slipped 1.1% for the week, with investors taking profits following record highs earlier in the month. Germany’s
DAX and France’s CAC 40 both weakened, while Italy’s FTSE MIB and the UK’s FTSE 100 also declined.
Germany’s economy showed renewed signs of strain. Industrial output fell 4.3% in August — a sharper drop than expected — driven largely by a steep decline in automotive production. Weakness spread across machinery, electronics, and pharmaceutical manufacturing. Exports also surprised on the downside, falling 0.5% from July, with shipments to the United States plunging more than 20% year-on-year. The data raised fears that Europe’s largest economy could be edging closer to recession.
In response, Germany’s coalition government announced an economic support package combining budget cost-cutting measures with targeted subsidies for domestic electric vehicle purchases. The move aims to bolster key manufacturing sectors while keeping fiscal pressures contained.
Elsewhere, the United Kingdom’s housing market softened. Halifax reported a 0.3% month-on-month decline in house prices in September, while data from the Royal Institution of Chartered Surveyors showed continued weakness in buyer demand and property sales. Although home values remain slightly higher than at the start of the year, rising borrowing costs and uncertain economic prospects continue to weigh on the sector.
France faced renewed political turbulence as Prime Minister Sébastien Lecornu resigned following disputes within the government coalition. President Emmanuel Macron’s efforts to form a new cabinet were met with resistance from opposition parties, prompting far-right leader Jordan Bardella to call for fresh legislative elections. Political instability added to market caution across the region.
Asia and Beyond – Political Shifts and Mixed Economic Signals
In Asia, Japan’s stock markets posted strong gains, with the Nikkei 225 up over 5% for the week. Investors welcomed the election of Sanae Takaichi as head of Japan’s ruling Liberal Democratic Party, viewing her victory as a signal for continued economic stimulus. The yen weakened to its lowest level in years on expectations of expansionary fiscal policy and ongoing loose monetary conditions. However, uncertainty returned after the LDP’s coalition partner, Komeito, withdrew its support, raising the possibility of new elections.
Economic data from Japan showed slowing wage growth but improving household spending, suggesting that domestic consumption may still provide some support despite inflation pressures.
In China, markets reopened after the Golden Week holiday to a muted response. The Shanghai Composite posted modest gains, but Hong Kong’s Hang Seng Index fell sharply. Early indicators pointed to weaker consumer spending during the holiday, reflecting subdued confidence despite Beijing’s push to rebalance the economy toward domestic consumption. Analysts are now looking ahead to China’s upcoming policy meeting later in October, where leaders are expected to outline new economic and social priorities for the next five years.
Across global markets, the week underscored a growing sense of caution. Trade tensions, political uncertainty, and uneven data continue to challenge investors, even as opportunities persist in selective sectors. The coming weeks — marked by earnings reports, policy signals, and geopolitical developments — will likely set the tone for markets into year-end.
Looking Ahead –
As markets navigate a complex landscape of trade disputes, policy shifts, and political change, investors remain focused on stability, adaptability, and the search for sustainable growth in the final months of the year.
Kooijman is the CEO and Asset Manager of DHF Capital S.A
