A cautious tone spread across global markets as investors balanced easing inflation pressures against signs of cooling economic momentum in major economies.
Equity markets in the U.S. and Europe traded narrowly mixed, reflecting growing confidence that central banks are nearing the end of their tightening cycles, even as growth indicators soften. In the U.S., investors continued to parse economic data suggesting inflation is moderating without a sharp downturn, reinforcing expectations that the Federal Reserve will keep policy rates on hold for longer rather than resume aggressive hikes. The S&P 500 hovered near recent highs, supported by large-cap stocks such as Microsoft (MSFT), which has remained a bellwether for risk appetite and earnings resilience.
In Europe, stocks showed limited direction as investors assessed weaker manufacturing activity alongside improving financial conditions. The European Central Bank’s cautious stance has helped stabilize bond markets, but concerns about sluggish growth in Germany and France capped equity gains. Financial shares lagged, while defensives and select technology names provided modest support.
Asian markets were similarly restrained. Chinese equities struggled to gain traction amid ongoing questions about the durability of the country’s economic recovery, despite targeted policy support. Meanwhile, Japan’s market remained underpinned by a weaker yen, which continues to benefit exporters and attract foreign capital.
In currency markets, the U.S. dollar held firm, reflecting its safe-haven appeal as global growth expectations are revised lower. Treasury yields were little changed, signaling that investors see fewer near-term policy surprises from the Federal Reserve. Commodity prices were mixed, with oil steady as supply discipline from major producers offset concerns about demand growth.
Overall, markets appear to be entering a consolidation phase, with investors increasingly focused on earnings quality, balance-sheet strength, and policy clarity. While expectations of imminent rate cuts have moderated, the absence of new inflation shocks has kept risk assets supported, suggesting volatility may remain contained in the near term.
