Global equity markets are entering the week with mixed momentum as softer US employment data reduces expectations for further Federal Reserve tightening but also raises concerns about economic growth. US equities remain supported by strong earnings expectations and AI-related growth, while Europe continues to face pressure from higher bond yields and Japan extends its exceptional 2026 performance.
US equities are starting the week cautiously following Friday's weaker-than-expected September employment report. The S&P 500 stands at 7,722.72, up 13.56% year-to-date, while the Nasdaq 100 has gained 22.80% to 30,807.93. The Dow Jones Industrial Average is up 7.03% at 51,176.96.
The 10-year Treasury yield, which closed Friday at 5.29%, remains an important constraint on further equity gains. S&P 500 futures have erased earlier advances of as much as 0.5% as investors balance reduced expectations for additional rate hikes against concerns that weaker employment data may signal slowing economic growth.
Attention is now shifting toward the upcoming earnings season. Goldman Sachs expects most S&P 500 companies to exceed third-quarter consensus estimates, with earnings per share forecast to grow 27% year-on-year, compared with 33% in the second quarter. AI infrastructure beneficiaries are expected to account for more than half of that growth. Morgan Stanley, meanwhile, sees increasing opportunities in industrials and selected cyclical companies following recent price weakness.
European equities continue to face a more difficult environment. The Euro Stoxx 50 stands at 6,238.50, up 9.34% year-to-date, while Germany's DAX has gained 2.82%. France's CAC 40 remains the weakest of the three, declining 0.83% this year.
Higher bond yields and a weakening Euro are weighing on sentiment and valuations. Goldman Sachs estimates that each 10-basis-point increase in German Bund yields has been associated with an approximately 1.2% decline in the Stoxx 600. Widening sovereign spreads are creating additional pressure, although positive earnings revisions are providing some support.
UK equities are positioned for a modest recovery following last week's global bond-market selloff. The FTSE 100 closed Friday at 10,461.95, up 7.88% year-to-date, with futures indicating a stronger opening. Elevated oil prices remain an important risk, although the softer US employment report and resulting decline in expectations for further Fed tightening are providing some relief.
Chinese equities remain among the weakest major global markets in 2026. The Hang Seng has gained 1.10% in the latest session but remains down 6.53% year-to-date, while the CSI 300 is broadly unchanged on the day and down 5.86% for the year. Mainland markets are returning from the Golden Week holiday, while persistent macroeconomic and geopolitical headwinds continue to weigh on sentiment.
Japan remains the clear standout. The Nikkei 225 has surged 2.40% to 69,946.86, extending its year-to-date gain to 36.92%, while the TOPIX has risen 21.71% this year.
The latest rally follows Friday's technology-led gains on Wall Street, with Japanese markets benefiting from strong earnings momentum, AI-related growth, and continued Yen weakness supporting export-oriented companies. The Nikkei's nearly 37% year-to-date advance makes it the strongest-performing major developed-market index globally by a wide margin.
