2025 W40 Global DM Recap
Amid global macro turbulence and a U.S. government shutdown, how are S&P 500 earnings estimates achieving a rare upgrade, and what's fueling the record wave of positive guidance?
Markets Narratives
Macro Overview
Global macroeconomic conditions in Week 40 were influenced by the US government shutdown, which, paradoxically, fueled optimism for Fed rate cuts due to weak labor market data. Commodity markets showed mixed signals, with crude oil falling over 7% on increased supply expectations, while gold gained over 3% and copper jumped over 7%. Inflation concerns persisted, particularly in the Eurozone, where headline annual inflation accelerated to 2.2%, but were seen as contained by central bank officials. China continued to grapple with deflationary pressures and a slowing manufacturing sector.
Policy Insights
Monetary policy discussions were dominated by the US Federal Reserve's potential rate cuts, reinforced by weak ADP payroll data showing 32,000 jobs lost. European Central Bank maintained its key deposit rate at 2% but acknowledged rising eurozone inflation, though President Lagarde deemed it "quite contained." Japan's central bank continued its path towards higher interest rates, despite US tariff volatility, citing healthy business sentiment and likely another rate hike before year-end. China's policies focused on stimulating domestic consumption during a holiday period, while managing persistent deflationary pressures and mixed PMI readings.
