Market sentiment remains cautiously optimistic
Recent sessions across global equity markets indicate that investor sentiment remains relatively constructive. Major indices like the S&P 500 have continued to trade near local highs, supported by expectations that central banks may soon ease monetary policy.
The US Federal Reserve (Fed) and European Central Bank (ECB) are both seen as approaching the end of their tightening cycles. This has provided a supportive backdrop for equities, particularly growth stocks, which are sensitive to interest rate expectations.
However, this optimism is not without risk. Investors remain highly reactive to incoming macroeconomic data, especially inflation readings and labour market indicators, which continue to shape expectations around the timing of potential rate cuts.
Macro factors continue to drive direction
The broader macroeconomic environment remains the key determinant of market direction. While inflation has moderated in several major economies, it remains above central bank targets, limiting policymakers’ flexibility.
At the same time, economic growth data presents a mixed picture. The US economy has shown resilience, while parts of Europe continue to struggle with weak industrial output and subdued demand.
China’s economic outlook also remains uncertain, with ongoing concerns about the property sector and slower-than-expected recovery. This creates an additional layer of risk for global markets, particularly for export-driven economies.
