Update Equities: Fed reassures markets
Global equities continued their upward trend this week, driven by economic and geopolitical factors. In the US, major indices extended their recovery from a sharp decline that had put them into correction territory.
This rebound was fuelled by a shift in sentiment following a retail sales report indicating a limited and modest economic slowdown rather than an impending recession. In addition, Federal Reserve Chair Jerome Powell reassured investors that the central bank saw no immediate need for major policy adjustments. These events helped restore confidence, leading to a recovery in the US market.
European markets also continued their upward trajectory, particularly after Germany approved an ambitious fiscal expansion plan aimed at increasing government spending on defence and infrastructure projects. Emerging markets, particularly in Asia, also saw gains after Chinese authorities introduced a “Special Action Plan to Boost Consumption,” designed to raise incomes, stabilize the real estate and equity markets and improve health care and pension services.
In terms of sectors, energy, industrials, and financials were among the best performers. In Europe, industrial companies such as Rheinmetall and Schneider Electric benefited from optimism surrounding Germany’s increased infrastructure and defence spending. The energy sector also performed well, supported by rising oil prices, as geopolitical tensions in the Middle East escalated. The banking sector saw significant gains, reaching levels not seen since 2008, with major financial institutions such as Santander, HSBC and BNP Paribas leading the rally. Conversely, defensive sectors, such as telecommunications, consumer staples and utilities were not favoured in this risk-on environment.
At the company level, Alphabet announced the USD 32 billion acquisition of cloud security firm Wiz, aiming to strengthen its artificial intelligence and risk management capabilities. The deal is expected to close in 2026. Boeing surged by 6.84% after stating that new tariffs would have no immediate impact on its business. In contrast, General Mills was under pressure following a downward revision of its annual sales forecast. Tesla also continued its decline, while reports from China indicated that electric-vehicle maker BYD had introduced new cars capable of charging in just five minutes. In Europe, Sodexo (food service) cut its 2025 guidance, as the economic slowdown in North America triggered a profit warning.