European equities ended the period modestly higher, supported by global expectations that major central banks may begin easing monetary policy in the coming quarters. Market performance across the region remained mixed, with Germany and Italy posting gains, while France and the UK lagged. Investor sentiment was shaped largely by fresh inflation readings and revised growth data.
Eurozone inflation ticked slightly higher in November, driven mainly by rising services prices, but the headline figure remains close to the target of the European Central Bank. Core inflation remained steady, signaling that price pressures are easing gradually rather than cooling sharply. This keeps policymakers cautious, while still leaving room for possible rate cuts in 2025.
Economic growth data delivered a modest upside surprise. Revised third-quarter figures showed eurozone GDP expanding more than initially estimated, supported by a recovery in investment activity. France and Spain made positive contributions, while Germany’s economy remained flat. The labor market continues to be a key pillar of stability, with unemployment near historic lows, helping sustain household income and consumer spending.
Germany also offered a rare positive signal from its manufacturing sector, as factory orders beat expectations, supported by large industrial and defense-related contracts. In the UK, the housing market demonstrated resilience despite concerns around budget changes, rising prices, and stamp duty adjustments. Stable home values and steady mortgage demand suggest consumers remain cautious but not under acute strain.
Overall, Europe remains caught between slow growth and lingering inflation pressures, but recent data indicates the region is avoiding a sharper economic slowdown for now.
Asia: Japan Signals Policy Shift as China’s Growth Challenges Persist
Asian markets delivered mixed performance, shaped largely by central bank guidance and domestic economic data. In Japan, equities came under pressure after stronger signals that the Bank of Japan may raise interest rates later this month. Rising government bond yields and a firmer yen added further pressure on stocks.
Governor Kazuo Ueda indicated growing confidence that inflation and economic conditions are evolving in line with expectations, opening the door to further policy normalization. Markets interpreted his remarks as a clear step toward tighter policy—an important shift after years of ultra-loose monetary settings. Meanwhile, Japanese household spending recorded its steepest decline of the year in October, highlighting the strain from persistently higher living costs.
In China, equity markets advanced despite renewed signs of economic weakness. Optimism around technology and artificial intelligence stocks helped offset disappointing data from manufacturing and services. Factory activity remained in contraction for an eighth consecutive month, while services activity slipped into contraction for the first time in nearly three years, largely reflecting ongoing stress in the property sector.
Even so, expectations remain that China will achieve its annual growth target, though subdued consumer confidence and real estate challenges continue to cloud the broader outlook.
Looking Ahead
Together, these developments suggest that global markets are entering the year-end period with cautious optimism. Central bank policy paths and incoming economic data remain the dominant drivers of investor sentiment. As the final weeks of the year unfold, attention will stay firmly focused on interest-rate signals and growth trends that will shape market direction in the months ahead.