It was a highly volatile week which cannot be characterized by a single theme. Yen had a sharp and robust rally against all major currencies, continuing its rebound from the 38-year lows hit earlier this month, with market participants unwinding their long-held short positions. Alongside Yen, Swiss Franc and Dollar also emerged as winners, although they trailed significantly behind the Yen. Conversely, Australian Dollar took the bottom spot, followed by New Zealand Dollar and Canadian Dollar. These positions highlighted clear risk aversion sentiment. The risk-off sentiment, however, was not uniformly reflected across all markets. In the US, while NASDAQ and S&P 500 had significant declines, DOW managed to post a weekly gain, with Russell 2000 also showing resilience. In Europe, FTSE and DAX ended the week higher, with the strong rebound on Friday, whereas CAC hit new lows for the year. In Asia, Japan's Nikkei extended its plunge from record highs to hit the lowest level in three months, while China's SSE resumed its downtrend . Multiple themes are at play in the current market environment, creating a complex and even contradictory picture. Sector rotation within stocks is a notable trend. At the same time US election risk is also weighing on sentiment. Global monetary policy easing continues, with the notable exception of Japan. Meanwhile, economic slowdown in China is deepening, as evidenced by recent data and the government's panic efforts to stimulate growth through rate cuts. However, amidst these diverse factors, the de-inversion of yield curve in the US stands out as a particularly significant development from a medium-term strategy perspective... |
