U.S. and European Stocks Dropped, Betting On “No Rate Cut” by Fed

The BLOM Stock Index (BSI) compiled by BLOM Invest Bank daily increased weekly by 1.77% to 2,158.13 points on October 25^th, 2024.

On the Beirut Stock Exchange (BSE), the real estate sector dominated trading, accounting for 92.69% of the exchange’s total trading value, while the remaining 7.31% were by the banking sector. The most noteworthy trades throughout the mentioned period included:

As for the BLOM Preferred Shares Index (BPSI), it remained constant at 27.78 on October 25th, 2024.

*Prices are as of the time of writing this report

US stock markets experienced a weekly decrease, with S&P 500 declined by 0.93% to record 5,809.86, the Dow Jones dropped by 2.08% to record 42,374.36, and NASDAQ fell by 0.4% to reach 18,415.49 on October 25^th, 2024. The US stocks started and ended the week in red as investors continued betting that the Federal Reserve will not cut rates as expected amid strong economic data.

*Prices are as of the time of writing this report

Across the Atlantic, European stocks also dropped this week, led by the CAC 40’s 1.69% and the DAX 1.16% decrease.  These moves are attributed to the cautiousness regarding the geo-political risks in the Middle East in addition to the digestion of corporate earnings this week. L’Oréal was down by 2.5% on Wednesday due to disappointing sales results in Q2 due to the decrease in demand in China. On Thursday, European markets rose supported by encouraging corporate results led by heavyweight luxury sector as Hermes and LVMH, but ended the week in red.

*Prices are as of the time of writing this report

Asians stock markets exhibited mixed performance in the week ending October 25^th, 2024. This week’s drop led by Nikkei 225 in Japan which fell by 2.74% to 37,913.92, as traders are cautious ahead of Japan’s general election this weekend which might raise concerns regarding political instability as latest forecasts suggests that ruling party “Liberal Democratic Party” might lose its majority. Similarly, the Hang Seng Index in Hong Kong dropped 1.03%, ending at 20,590.15, after a 25 bps interest rate cut on one-year and five-year loan prime rates in China. Moreover, investors were cautious ahead of China’s upcoming legislative meeting, anticipated to approve increased fiscal spending and raise the government bond issuance quota.

In contrast, the Shanghai Composite Index rose by 1.17% to 3,299.70 after the People’s Bank of China lowered the rates on the one-year and five-year loan prime rates by 25 basis points as part of a broader stimulus package to revive the economy. Moreover, it also kicked off a swap facility for the purpose of supporting the stock market activity.  This swap facility is exchanging CNY 50 billion worth of assets with insurers, securities firms, and institutional investors.

*Prices are as of the time of writing this report

As for the MSCI Emerging Market index, it fell this week by 1.78% to record 1,134.52 points. This drop is driven by the economic uncertainties and geopolitical tensions.

*Prices are as of the time of writing this report

Arab stock markets mainly dropped this week, with the Qatar Stock Exchange leading the losses of 3.1%, being the largest weekly losses in a year due to the escalations in the geo-political tension in the region that also affected several Gulf markets such as Abu Dhabi Securities Exchange and Saudi Stock Exchange that declined by 0.86% and 0.18% respectively.

However, some indices reported some gains, such as Egypt’s EGX 30 which rose by 1.36% to reach 30,552.82 and Dubai Financial Market that rose by 0.32% reaching 4,483.60.

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