In summary
- A better week on both the political and trade fronts
- Fraud disclosures spark mid-week market jitters
- US shutdown continues
- The week ahead
A better week on both the political and trade fronts
Trade tensions between the US and China appeared to ease on news that President Trump would meet Chinese President Xi Jinping this week. This raised hopes that the additional tariffs of 100% on imports from China, planned for 1 November, would not go ahead. In Japan, the news that the Liberal Democratic Party has agreed a coalition deal with the Japan Innovation Party and that Sanae Takaichi is set to become the new Prime Minister later was well received by investors. Closer to home, France’s CAC 40 rose by +3.24% last week, helped by political stability after Prime Minister Lecornu survived two no-confidence votes. His decision to delay pension reforms until after the 2027 election helped ease political tensions, prompting the Socialist Party to back off from opposing the government. Finally in the UK, speculation about the upcoming UK Autumn Statement continued. Hopes that Chancellor Rachel Reeves might build a bigger fiscal buffer with unpopular tax and spending decisions led the UK 10-year gilt yield to drop -14.4 basis points to around 4.5%.
Fraud disclosures spark mid-week market jitters
In the middle of last week, market volatility surged following a series of unsettling developments. On Thursday, Western Alliance and Zions Bancorp revealed loan issues tied to alleged fraud, triggering a pullback in stocks; this came on the heels of bankruptcies at First Brands and Tricolor, stoking fears of rising credit risk. Commenting on this news, JPMorgan CEO Jamie Dimon said “When you see one cockroach, there are probably more”, highlighting concerns about broader vulnerabilities in the US financial system.The CBOE Volatility Index (often referred to as the fear gauge) responded by climbing to its highest level since April on Friday morning, before falling back over the course of the day.
US shutdown continues
The US government shutdown has now entered its 20th day, making it one of the longest in history—only two have lasted longer. So far, there is no sign of a deal between Republicans and Democrats to reopen the government. For investors, this means key economic data releases are being delayed, including the weekly jobless claims and September’s payrolls report. However, we will get the postponed inflation (Consumer Price Index (CPI)) data for September this Friday, which will be closely watched ahead of the US Federal Reserve’s meeting on 28 and 29 October. Expectations are for headline inflation at 3% year-on-year and 0.4% month-on-month, with core CPI forecast at 3% year-on-year and 0.3% month-on-month.
The week ahead
After last week’s strong earnings announcements from some of the major US banks, together with good numbers from technology companies ASML and Broadcom, we will hear this week from Netflix and Tesla. Other US companies reporting include oil giant Halliburton and defence contractor Lockheed Martin as well as General Electric and Coca-Cola. A significant number of European companies will also report earnings this week, including Barclays, Lloyds, NatWest, Heineken and SAP. In terms of economic data, the US October flash Purchasing Managers’ Index (PMIs) to be released on Friday will indicate how well the economy is performing going into Q4. The UK, Canada and Japan will also release inflation data.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
Weekly Market Commentary
In summary
A better week on both the political and trade fronts
Trade tensions between the US and China appeared to ease on news that President Trump would meet Chinese President Xi Jinping this week. This raised hopes that the additional tariffs of 100% on imports from China, planned for 1 November, would not go ahead. In Japan, the news that the Liberal Democratic Party has agreed a coalition deal with the Japan Innovation Party and that Sanae Takaichi is set to become the new Prime Minister later was well received by investors. Closer to home, France’s CAC 40 rose by +3.24% last week, helped by political stability after Prime Minister Lecornu survived two no-confidence votes. His decision to delay pension reforms until after the 2027 election helped ease political tensions, prompting the Socialist Party to back off from opposing the government. Finally in the UK, speculation about the upcoming UK Autumn Statement continued. Hopes that Chancellor Rachel Reeves might build a bigger fiscal buffer with unpopular tax and spending decisions led the UK 10-year gilt yield to drop -14.4 basis points to around 4.5%.
Fraud disclosures spark mid-week market jitters
In the middle of last week, market volatility surged following a series of unsettling developments. On Thursday, Western Alliance and Zions Bancorp revealed loan issues tied to alleged fraud, triggering a pullback in stocks; this came on the heels of bankruptcies at First Brands and Tricolor, stoking fears of rising credit risk. Commenting on this news, JPMorgan CEO Jamie Dimon said “When you see one cockroach, there are probably more”, highlighting concerns about broader vulnerabilities in the US financial system.The CBOE Volatility Index (often referred to as the fear gauge) responded by climbing to its highest level since April on Friday morning, before falling back over the course of the day.
US shutdown continues
The US government shutdown has now entered its 20th day, making it one of the longest in history—only two have lasted longer. So far, there is no sign of a deal between Republicans and Democrats to reopen the government. For investors, this means key economic data releases are being delayed, including the weekly jobless claims and September’s payrolls report. However, we will get the postponed inflation (Consumer Price Index (CPI)) data for September this Friday, which will be closely watched ahead of the US Federal Reserve’s meeting on 28 and 29 October. Expectations are for headline inflation at 3% year-on-year and 0.4% month-on-month, with core CPI forecast at 3% year-on-year and 0.3% month-on-month.
The week ahead
After last week’s strong earnings announcements from some of the major US banks, together with good numbers from technology companies ASML and Broadcom, we will hear this week from Netflix and Tesla. Other US companies reporting include oil giant Halliburton and defence contractor Lockheed Martin as well as General Electric and Coca-Cola. A significant number of European companies will also report earnings this week, including Barclays, Lloyds, NatWest, Heineken and SAP. In terms of economic data, the US October flash Purchasing Managers’ Index (PMIs) to be released on Friday will indicate how well the economy is performing going into Q4. The UK, Canada and Japan will also release inflation data.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
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