(MENAFN- Mid-East Info) By Daniela Sabin Hathorn, senior market analyst at Capital

The Q3 earnings season has kicked off with a strong lead from banks as earnings have come in better-than-expected across the board with investment banking and market strength doing the heavy lifting. How net interest income evolves as rates get lowered will be key moving forward but for now banking stocks have seen a positive response. Meanwhile, the index level has been more tethered to macro headlines (tariffs, politics) than to the handful of early reports, so far producing modest, choppy gains rather than a broad risk-on surge. Day-to-day swings have been led by rate expectations and geopolitical headlines as investors weigh how earnings momentum stacks up against elevated multiples.

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Past performance is not a reliable indicator of future results.

If one thing is keeping the sentiment well supported is the expectation of imminent rate cuts from the Federal Reserve, backed up yesterday by Powell's commentary about the weak labour market in the US. Markets are pretty set on another 25bps cut at the end of the month; however, momentum may remain choppy as the data blackout makes the outlook of the future rate path more uncertain.

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