Last Tuesday, both silver and gold hit new record highs. After breaching $4,000 the previous week, the price of gold continued to rise last week and is up almost 59% over the year. However, despite the impressive year, the rise in gold had been outpaced by silver which has risen more than 85% year-to-date following its surge last Tuesday. Economists attribute the notable surge last week to increased demand ahead of the Indian wedding season. Over the year, the rise in the price of silver is driven by a combination of its growing use in technology products and its role as a substitute asset to gold.
French conglomerate of luxury goods, LVMH, reported impressive earnings last Tuesday. The results exceeded analysts’ expectations, and the stock spiked 12% upon release of the news. This positive sentiment spread into the wider luxury goods market and the luxury heavy CAC-40 index in France closed 2% up last Wednesday. This is the largest single day movement for the index this year.
Dutch chip equipment producer, ASML, also saw it’s shares rise last Wednesday after a positive earnings report. This rise came despite concerns raised by the ASML management team that future revenues from China could decline in light of ongoing geopolitical tensions and improved domestic capabilities in China.
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US Equity Market:
Last week, movements in US equity markets were dictated by the softened stance towards a proposed additional 100% tariff on China administered by the US which rocked markets recently.
Following the announcement, the S&P 500 fell 2.7% and the Nasdaq index fell by 3.6% as investors reacted to fears that global trade tensions could re-escalate. However, last Monday this threat was dampened and markets responded favourably. The S&P 500 and Nasdaq composite jumped 1.6% and 2.2% respectively by close. However, as of Friday close, the indices continue to remain below their respective levels before the recent sell-off.
The first round of Q3 corporate earnings releases began last week and it was positive news all round for the major financial institutions. Corporates such as JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo and Citigroup recorded earnings comfortably ahead of analysts’ expectations. Most of this outperformance was driven by their respective investment banking and trading divisions.
UK Equity Market:
Economic data released last week by the Office for National Statistics (ONS) revealed that the UK economy grew 0.1% over August, in line with analysts’ expectations. The low figure once again reiterates the challenges facing UK Chancellor Rachel Reeves as she prepares for her Autumn budget later next month.
The ONS also released August payroll data revealing a minor rise in payroll employment and an implied stabilisation in the UK jobs market. However, despite the observed stabilisation in the broader market, a survey conducted by the Institute of Student Employers forecasted a fall in graduate hiring again this year, following after an 8% drop last year.
Over the week to Friday, the FTSE 100 index remained broadly flat. Sterling now trades at 1.34 against the dollar.
Inflation, Interest Rates and Bond Markets:
As expected, the US government shutdown has delayed the release of both the US Consumer Price Index and Producer Price Index prints. Despite the delay, both reports are expected to be released ahead of the next Federal Reserve meeting on 29th October.
What’s on the horizon
The National Bureau of Statistics of China released its third quarter economic growth figures today. These indicated growth slowed to the weakest pace in a year. As the primary measure of China’s economic performance, it reflects the total monetary value of all goods and services produced in China over the third quarter. As the world’s second largest economy, China’s economic growh figures are closely monitored by global investors, policymakers, and economists for insights into domestic growth trends. Economic growth data can influence foreign exchange markets, monetary policy decisions, equity performance, and commodity demand, especially given China’s role as a major global consumer and exporter.
The US is due to release unemployment data on Thursday and Consumer Price Index (CPI) inflation data on Friday, subject to a resolution of the US government shutdown which has entered its third week. The UK CPI reading for September is set to be released on Wednesday and will provide an insight into the stubbornness of inflation within the country. The CPI reading is a crucial factor used when making monetary policy decisions, so this will be closely watched by economists and investors domestically and globally.
Corporate earnings season also continues this week with Tesla, Netflix, Coca-Cola and Proctor & Gamble all releasing their third quarter earnings figures.