International markets posted mostly gains this week: MSCI EM closing at 62.34 (+2.67%), CAC 40 closing at 8,515.49 (+2.31%), FTSE 100 closing at 10,686.90 (+2.30%), Euro Stoxx 50 closing at 6,131.31 (+2.30%), ASX 200 closing at 9,081.40 (+1.61%), DAX closing at 25,260.69 (+1.09%), Nikkei 225 closing at 56,825.70 (-0.68%), Hang Seng closing at 26,413.35 (-3.06%). European indices outperformed on average (+2.00%); Asia-Pacific lagged (-0.71% average); Emerging Markets (MSCI EM) moved +2.67%.

The biggest loser on the FX front was the Japanese Yen, falling 1.53% against the dollar — a headwind for unhedged holdings in that currency. A weaker Yen signals the BOJ's accommodative stance remains intact — the carry trade is still alive. For dollar-based Japan ETF holders (EWJ), this currency drag partially offsets any equity gains. Elsewhere: the Euro lost 0.82% (Euro slide a headwind for unhedged EFA/FEZ holders); the Swiss Franc lost 0.92%; the British Pound lost 1.37%.

China dominated the international narrative this week. China's economy has an outsized reach across global markets — it's the top trading partner for most of Asia-Pacific and a critical source of demand for commodity exporters like Australia (AUD, EWA) and Brazil (EWZ). Weak Chinese data drags EM equities broadly (EEM, FXI) and tends to put downward pressure on industrial metals and energy, feeding back into commodity-linked currencies. Strong Chinese data has the opposite effect: a rising tide that lifts EM, APAC, and commodity-exposed portfolios.

On the data front: Japan Q4 GDP (Preliminary) missed at -0.4% vs. 0.3% expected. Growth disappointing raises the probability of earlier rate cuts — a potential tailwind for bond proxies and rate-sensitive sectors, but a warning sign for cyclicals. UK CPI (YoY) beat at 3.1% vs. 2.8% expected. Hotter-than-expected inflation complicates the rate-cut timeline — the relevant central bank has less room to ease, a headwind for rate-sensitive sectors and local bond proxies. China Caixin Services PMI beat at 52.3 vs. 51.8 expected. Chinese factory activity expanding above expectations is a green light for EM bulls — it supports commodity demand and lifts sentiment across Asia-Pacific and EM ETFs. The combination of sticky inflation and weak growth is a stagflationary signal — it puts central banks in a bind (can't cut without risking inflation; can't hold without deepening the slowdown) and argues for defensives over rate-sensitives.

Next week's international calendar is active. The ECB rate decision is the marquee event — markets will parse every word of the statement and press conference for signals on the pace of cuts. A cut flags the ECB is prioritising growth over inflation vigilance, lifting European equities (EFA, FEZ) but likely weakening the Euro — a headwind for unhedged holders. A hold keeps EUR supported but pushes out the rate-cut tailwind for rate-sensitive sectors; the BOJ meeting is the key risk event — any hawkish signal or rate hike would strengthen the Yen sharply, simultaneously lifting unhedged Japan ETF returns while compressing Nikkei gains for domestic investors. A dovish hold keeps the carry trade on and Yen weak. Central bank decisions in particular can drive sharp simultaneous moves in equities, bonds, and currencies — size positions before the announcement, not after. Secondary releases to monitor: Germany Ifo Business Climate, Australia Q4 GDP.

International markets were regionally split this week. The best performer was MSCI EM (Emerging Markets) at +2.7%, while Hang Seng (Asia-Pacific) was the weakest at -3.1%. European stocks had a solid week (up +2.0% on average) — a win if you hold European ETFs; Asia-Pacific declined (-0.7% average) — a soft week for the region; Emerging markets (MSCI EM) gained +2.7% — a positive week for EM-tilted ETFs.

China dominated the international narrative this week. Activity data from China has an outsized effect on EM equities and commodity-linked assets. the Japanese Yen weakened 1.5% against the dollar — a headwind for unhedged holdings in that currency. If you hold Japan ETFs without a currency hedge, some of those stock gains were offset by the weaker Yen.

UK inflation stayed sticky at 3.1%, above what was expected. The Bank of England is unlikely to cut rates soon — keeping pressure on UK consumers and mortgage holders, but supporting the pound. China's factory/services activity beat expectations — a positive signal for global growth and commodities. EM ETFs and commodity-linked holdings tend to benefit.

ECB Rate Decision is the key event next week. A cut signals the ECB is prioritising growth — positive for European equities (EFA, FEZ) but may weaken the Euro, creating a currency headwind for unhedged holders. A hold keeps EUR supported but delays the rate-cut tailwind for rate-sensitive sectors. Size positions before the announcement, not after.