• US Nonfarm payrolls for September surpassed estimates, ending the data drought caused by the government shutdown, with traders expecting a rate hold from the Fed in December. 
  • A new stimulus package was announced in Japan that is intended to boost growth despite inflation remaining above the BOJ’s 2% target. Japan’s finance minister warned of a possible intervention in the FX markets due to yen weakness. 
  • Nvidia reported another strong earnings report due to high demand for its AI chips from tech giants. 
  • Oil remains pressured due to possible peace talks between Ukraine and Russia, alongside concerns of inventory surpluses. 

As the trading week comes to a close, markets reacted to some key developments in areas like central bank commentary, data releases, high-profile earnings, and new government policies that affected sentiment worldwide. 

Data Returns with a Surprise: US Jobs Beat Expectations 

The long-awaited US labor market report for September was released on Thursday and showed that the US economy added more jobs than expected. Nonfarm payrolls showed an increase of 119,000 jobs in September, above the forecast of 50,000. ⁽¹⁾   

However, the unemployment rate edged up to 4.4%, the highest since October 2021. Average hourly earnings also came in mixed at 0.2% MoM and 3.8% YoY, compared to their forecasts at 0.3% and 3.7%.  ⁽²⁾  

The September labor market report ends a data drought that began in early October due to the government shutdown, which ended after 44 days. Government agencies, including the Bureau of Labor Statistics, the Bureau of Economic Analysis and others, were restricted from gathering data during the shutdown period. 

Traders continue to price in a rate hold from the Federal Reserve in December, as this is the last jobs report the Fed will get before the meeting. Hawkish commentary from the October meeting has shown that the Fed will likely keep rates unchanged until the end of the year. 

Japan Unveils $135.5B Stimulus Package 

Japan announced a stimulus package to the tune of 21.3 trillion yen ($135.5 billion) on Friday. Prime Minister Sanae Takaichi is willing to support Japan’s slowing economy and offer support to consumers who have been impacted by inflation. ⁽³⁾  

The stimulus package was announced to support economic growth and improve defense capabilities. 

The stimulus package from the current government comes as Japan has seen inflation remain above the Bank of Japan’s 2% target, with statements from senior officials on price growth creating new concerns. The headline inflation figure for October rose to 3% from 2.9%, while core inflation came in at 3%. ⁽⁴⁾  

BOJ Governor Kazuo Ueda informed the Japanese parliament that the central bank should be cautious that a weak yen could heavily impact inflation by pushing up import costs and prices. Japan’s Finance Minister Satsuki Katayama also warned of yen volatility and reportedly hinted at a possible intervention in the FX market. 

Weak economic growth also added concerns to the picture, with Japan’s economy contracting in Q3, the first time in six quarters that the economy contracted at 0.4%. 

Nvidia Delivers Another Blowout Quarter as AI Demand Surges 

Nvidia reported yet another robust earnings report this past week and provided stronger-than-expected guidance on sales for Q4. Nvidia’s earnings per share came in at $1.30, higher than the forecast of $1.25, while revenue came in at $57 billion, also higher than its forecast of $54.92 billion. ⁽⁵⁾  

The chipmaker expects around $65 billion in sales in Q4, higher than analysts’ estimates of $61.66 billion. Nvidia also said that net income in Q3 rose 65% to $31.91 billion from $19.31 billion. ⁽⁶⁾  

Nvidia’s performance has evolved to become an important gauge for how the AI boom is holding up. Its most recent earnings have helped ease off some fears of a potential AI bubble.  

Nvidia still stands as the world’s most valuable company due to sky-high demand for its AI chips. Nvidia relies on Microsoft, Amazon, Google, Oracle, and Meta as its main customers.  

If Nvidia continues to show strong chip demand, markets may interpret this as fuel for the AI rally. 

Oil Extends Declines as Ukraine Peace Talks Raise Supply Risks 

Oil continued to slide after Ukrainian President Zelensky agreed to work on a peace plan after the US had sanctioned two Russian oil companies, which will take effect on Friday. 

The peace plan was drafted by the US and Russia, and Zelensky expects to talk with US President Trump next week. The proposals include Ukraine surrendering some territory and removing sanctions. ⁽⁷⁾  

European diplomats expressed skepticism about any deal, noting that Russian President Putin has a track record of appearing to accept overtures when under pressure.  ⁽⁸⁾  

If the peace deal shows progress and removes sanctions, it would add more supply to the oil market that could face large inventory surpluses in 2026. OPEC+ and other oil producers have recently pushed up production. ⁽⁹⁾ 

What to Watch Next Week 

  • US PPI 
  • US Retail Sales 
  • US CB Consumer Confidence 
  • Australia CPI 
  • New Zealand Interest Rate Decision 
  • UK Autumn Budget 
  • US Prelim Q3 GDP 
  • US Core PCE Index 
  • Germany CPI 
Sources: ⁽¹⁾ ⁽²⁾ ⁽⁵⁾ ⁽⁶⁾ CNBC, ⁽³⁾ ⁽⁴⁾ Reuters, ⁽⁷⁾ ⁽⁸⁾ ⁽⁹⁾ Bloomberg