Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
Access both platforms from your single Saxo account.
London Quick Take – 11 November - FTSE 100 hits record high as investors raise rate cut bets, AI stocks lead Wall St rally
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
For more Budget coverage check our first podcast episode with BlondeMoney's Helen Thomas
US500 chart: After the 50-day SMA (not shown on 4hr chart) and trend support held the bounce has taken price action to retest support at the 23.6% retracement level of the rally post 10 October around 6,820.
Key Points
- FTSE 100 jumps 1% to 9,900
- Soft UK labour market data raises rate cut bets
- AI stocks jump to lead Wall Street recovery
- Hopes high for end to US government shutdown
FTSE record high - 10k by Christmas
The FTSE 100 soared 1% to fresh all-time highs on Tuesday morning, almost touching 9,900 as global equity markets enjoy a relief rally on hopes the protracted US government shutdown would end soon, whilst a bounce in AI stocks lifted sentiment across the board. The blue chip index had rallied yesterday to hit 9,800 for the first time, as a broad risk-on tone took hold over following the Senate vote on Sunday, while there are some FTSE-specific factors at work too. Vodafone is taking the lead this morning after a strong set of interims contained a promise to return to a progressive dividend policy as it returned to service revenue growth in Germany, while housebuilders rose on rate cut bets and similarly utilities were up as gilt yields came down on softening UK labour market indicators.
Back at the start of October I looked at several reasons why I thought the FTSE 100 could hit 10,000 by Christmas. Those reasons hold true today as we approach the level.
Some soft UK employment data pushed sterling lower to give the blue chips another leg of support. Unemployment rose by more than expected to 5%, while payrolls continue to shrink and wage growth cooled. It's a sign that employers are suffering some pre-Budget worries about both employment costs and output demand. The Budget - particularly the delay to its announcement and the rampant speculation about what it will contain - is already having a chilling effect on the economy.
The Bank of England should be cutting rates now – December looking increasingly certain, especially since the Budget will deliver a major contractionary impulse to the economy. The employment data confirms me in my view that the Bank of England should have cut already and, given the Budget about to be, we should see it go much deeper than the market has priced – 3% by next summer is the top of my expectations...2.5% could be a reality if the economy is tipped into a serious recession by the Budget.
Just one last thing on the employment figs, private wage growth was 4.2% vs 6.6% for the public sector at a time when the Labour government is facing a major fiscal black hole and needs to raise taxes...it shouldn’t be this hard.
Will the bounce last?
AI and tech stocks led a recovery on Wall Street after last week’s wobble. Nvidia rallied almost 6% and Palantir jumped almost 9% while chipmakers notched gains across the board. The Nasdaq composite climbed over 2.2% and the S&P 500 rose more than 1.5%. Remember we do get down days in bull markets - progress is non-linear, and the roughly 4% corrective move last week was for many market commentators a healthy thing. The deterioration in some of the market internals and technicals however does need to be watched.
The (likely) reopening of the government could be a boon to liquidity at a seasonally auspicious time as we had seen some stress creeping into money markets, it can clear away some near-term overhangs about growth and GDP, and it means we can start to see some data to support a Fed rate cut. A vote is due on Wednesday to confirm what the market has now largely assumed. Nvidia earnings are coming down the pipe, too.
AI bubble: One of the big retail faves, CoreWeave, which rents out Nvidia GPUs to leading cloud businesses like Google and Microsoft, reported better-than-expected revenue growth in the third quarter but disappointing guidance for the coming quarter sent the shares lower after-hours. Revenues rose 134% from a year before but full-year 2025 guidance was short of consensus. It’s announced a slate of deals with the likes of OpenAI and Meta in the last couple of months, helping send shares up 164% since its IPO earlier this year, though they’re down almost 50% from their record high. Rigetti shares were down a modest 3% after missing Q3 earnings estimates. Nebius reports today.
Earnings generally are very strong as we enter the end of Q3 reporting season - with 90% of S&P 500 companies having reported, 82% have beaten EPS expectations. Aggregate year-over-year earnings growth is near 12%. Nvidia reports on November 19th, which is going to be a major risk event for the broad market – not just its almost 8% weighting in the index but as the bellwether for the entire AI trade that has powered stocks higher this year.
Click here for the week aheadBack at the start of October I looked at several reasons why I thought the FTSE 100 could hit 10,000 by Christmas. Those reasons hold true today as we approach the level.
Some soft UK employment data pushed sterling lower to give the blue chips another leg of support. Unemployment rose by more than expected to 5%, while payrolls continue to shrink and wage growth cooled. It's a sign that employers are suffering some pre-Budget worries about both employment costs and output demand. The Budget - particularly the delay to its announcement and the rampant speculation about what it will contain - is already having a chilling effect on the economy.
The Bank of England should be cutting rates now – December looking increasingly certain, especially since the Budget will deliver a major contractionary impulse to the economy. The employment data confirms me in my view that the Bank of England should have cut already and, given the Budget about to be, we should see it go much deeper than the market has priced – 3% by next summer is the top of my expectations...2.5% could be a reality if the economy is tipped into a serious recession by the Budget.
Just one last thing on the employment figs, private wage growth was 4.2% vs 6.6% for the public sector at a time when the Labour government is facing a major fiscal black hole and needs to raise taxes...it shouldn’t be this hard.
Will the bounce last?
AI and tech stocks led a recovery on Wall Street after last week’s wobble. Nvidia rallied almost 6% and Palantir jumped almost 9% while chipmakers notched gains across the board. The Nasdaq composite climbed over 2.2% and the S&P 500 rose more than 1.5%. Remember we do get down days in bull markets - progress is non-linear, and the roughly 4% corrective move last week was for many market commentators a healthy thing. The deterioration in some of the market internals and technicals however does need to be watched.
The (likely) reopening of the government could be a boon to liquidity at a seasonally auspicious time as we had seen some stress creeping into money markets, it can clear away some near-term overhangs about growth and GDP, and it means we can start to see some data to support a Fed rate cut. A vote is due on Wednesday to confirm what the market has now largely assumed. Nvidia earnings are coming down the pipe, too.
AI bubble: One of the big retail faves, CoreWeave, which rents out Nvidia GPUs to leading cloud businesses like Google and Microsoft, reported better-than-expected revenue growth in the third quarter but disappointing guidance for the coming quarter sent the shares lower after-hours. Revenues rose 134% from a year before but full-year 2025 guidance was short of consensus. It’s announced a slate of deals with the likes of OpenAI and Meta in the last couple of months, helping send shares up 164% since its IPO earlier this year, though they’re down almost 50% from their record high. Rigetti shares were down a modest 3% after missing Q3 earnings estimates. Nebius reports today.
Earnings generally are very strong as we enter the end of Q3 reporting season - with 90% of S&P 500 companies having reported, 82% have beaten EPS expectations. Aggregate year-over-year earnings growth is near 12%. Nvidia reports on November 19th, which is going to be a major risk event for the broad market – not just its almost 8% weighting in the index but as the bellwether for the entire AI trade that has powered stocks higher this year.
For more Budget coverage check our first podcast episode with BlondeMoney's Helen Thomas
US500 chart: After the 50-day SMA (not shown on 4hr chart) and trend support held the bounce has taken price action to retest support at the 23.6% retracement level of the rally post 10 October around 6,820.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Q4 Outlook for Traders: The Fed is back in easing mode. Is this time different?
John J. Hardy
Global Head of Macro Strategy
The Fed launched a new easing cycle in late Q3. Will this cycle now play out like 2000 or 2007? -
Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity
John J. Hardy
Global Head of Macro Strategy
After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting... -
Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist