This week, risk appetite in global financial markets rebounded overall.
In the stock market, both the S&P 500 and the Nasdaq reached new short-term highs this week. The market’s focus appears to have shifted from defensive, risk-averse strategies back to expectations of interest rate cuts and the realization of AI-driven earnings, with tech and chip stocks once again leading the gains;South Korea’s stock market also strengthened significantly, with the KOSPI Index rising 11.5% for the week, ending a seven-week losing streak and returning to a technical bull market.
In the foreign exchange market, the U.S. Dollar Index remained largely flat for the week. Improved inflation data prompted the market to scale back expectations for Fed rate hikes, putting the dollar under pressure at one point, but safe-haven demand driven by the situation in the Middle East limited its decline. On Friday, U.S. retail sales unexpectedly contracted month-over-month, accelerating the dollar’s decline.
Major non-U.S. currencies showed divergent trends.The euro fluctuated lower as the market focused on the European Central Bank’s remaining policy room; the yen traded weakly, with USD/JPY rising above 159 again, while the risk of intervention by Japanese authorities and the central bank’s rate hike path remained in focus; the Australian dollar was supported by improved risk appetite but remained vulnerable to commodity price volatility.
In the precious metals market, spot gold rose to near a two-month high midweek, peaking at nearly $4,450 per ounce during the session, before falling to around $4,320 due to profit-taking. It rebounded on Friday, marking its second consecutive week of gains.
Crude oil prices rose initially but then fell. Early in the week, tensions between the U.S. and Iran, along with shipping risks in the Strait of Hormuz, drove both benchmark crude prices to surge sharply. However, following a significant increase in U.S. crude inventories and the International Energy Agency’s downward revision of demand forecasts, oil prices retreated accordingly, with the market returning to the narrative of ample supply and slowing demand.