Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take – 11 September - FTSE up, ECB due up, Wall St ekes out new records ahead of key inflation report
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Wall Street posts fresh records as Oracle shares soar on AI demand
- Apple shares slump 3% after product launch event, Nvidia and Broadcom rally
- Key US inflation data ahead after producer price data was softer than expected
- ECB meeting likely to see rates and outlook unchanged
The FTSE 100 opened up nearly half a percent to 9,272, closing in all-time highs. 2025 stock market favourites Fresnillo and BAE Systems rose to the top of the index, while Shell and BP did some of the heavy lifting and ABF and IAG bounced a bit after both were sold yesterday. Elsewhere in London, Trainline raised guidance for the year and THG posted a 35% drop in earnings in the first half. Gold's rally has paused, while oil is trading a little lower after three days of gains.
US markets were mixed. The S&P 500 rallied 0.3% to a record high, while the Nasdaq was flat, eking out a tiny gain to hit a fresh record, and Dow Jones fell 0.5%. Oracle jumped 36% and Broadcom rose 10% as it closes in on Nvidia, which rose almost 4% – those selling the means to AI glory rose, while the big spenders like Amazon and Meta declined. Apple fell over 3% after its product launch event – shares often fall after these and usually it’s just a speedbump. The massive gain for Oracle sent its co-founder, Larry Ellison, to overtake Elon Musk as the world’s richest person, on paper at least.
US producer price inflation was lower than expected, declining 0.1% MoM, the first decline in four months and contrasting with the +0.7% rise in July. Spread that out over the two and it’s still quite hot. The real test is today’s consumer inflation reading. The CPI is expected to rise from 2.7% in July to 2.9% in August, which would be the highest reading since January. The core is expected to hit 3.1%. These numbers are getting further away from the Fed’s target, but the labour market is looking precarious, which is why the market is so convinced the Fed will cut interest rates next week.
The European Central Bank meets today – no change is expected. The ECB is in wait-and-see mode for now. Its July accounts showed it wants to remain deliberately uninformative. June’s forecastse on inflation and growth probably won’t change, or only fractionally. Forecasts for one more rate cut can be left – even if this cutting cycle is over (which it might not be) the ECB doesn’t need to fine tune things that much. Widening of Franco-German bond spreads is not dire enough to warrant action. Yields would need to move a lot further before the ECB does anything. At the moment EURUSD sits at 1.17 or just a fraction under.
Meanwhile...
CoreWeave – a stock I looked at recently – is doing rather well, rallying 17% yesterday. It looks to be riding some AI waves here – first the 50% jump in Nebius followed by yesterday’s surge in Oracle.
TSMC also looking good – a 34% jump in August sales lifted shares another 5% higher. The world’s largest contract chipmaker is enjoying demand from AI hyperscalers. Selling picks works.
GameStop – the original meme stock – was up after better-than-expected earnings and revenue...its bitcoin treasury strategy is in the crosshairs though as the wind comes out of that approach. Strategy is down about 25% from its July peak. Metaplanet, the Japanese-listed bitcoin hoarder, are down about two-thirds since a June peak but jumped 17% yesterday as it expanded its share offering to buy more bitcoins.
Klarna opened higher than the $40 IPO price, trading as high as $57 before closing 15% higher at $45.82. It was a less frothy explosion onto the market than some recent examples, but this could be a positive sign.
US markets were mixed. The S&P 500 rallied 0.3% to a record high, while the Nasdaq was flat, eking out a tiny gain to hit a fresh record, and Dow Jones fell 0.5%. Oracle jumped 36% and Broadcom rose 10% as it closes in on Nvidia, which rose almost 4% – those selling the means to AI glory rose, while the big spenders like Amazon and Meta declined. Apple fell over 3% after its product launch event – shares often fall after these and usually it’s just a speedbump. The massive gain for Oracle sent its co-founder, Larry Ellison, to overtake Elon Musk as the world’s richest person, on paper at least.
US producer price inflation was lower than expected, declining 0.1% MoM, the first decline in four months and contrasting with the +0.7% rise in July. Spread that out over the two and it’s still quite hot. The real test is today’s consumer inflation reading. The CPI is expected to rise from 2.7% in July to 2.9% in August, which would be the highest reading since January. The core is expected to hit 3.1%. These numbers are getting further away from the Fed’s target, but the labour market is looking precarious, which is why the market is so convinced the Fed will cut interest rates next week.
The European Central Bank meets today – no change is expected. The ECB is in wait-and-see mode for now. Its July accounts showed it wants to remain deliberately uninformative. June’s forecastse on inflation and growth probably won’t change, or only fractionally. Forecasts for one more rate cut can be left – even if this cutting cycle is over (which it might not be) the ECB doesn’t need to fine tune things that much. Widening of Franco-German bond spreads is not dire enough to warrant action. Yields would need to move a lot further before the ECB does anything. At the moment EURUSD sits at 1.17 or just a fraction under.
Meanwhile...
CoreWeave – a stock I looked at recently – is doing rather well, rallying 17% yesterday. It looks to be riding some AI waves here – first the 50% jump in Nebius followed by yesterday’s surge in Oracle.
TSMC also looking good – a 34% jump in August sales lifted shares another 5% higher. The world’s largest contract chipmaker is enjoying demand from AI hyperscalers. Selling picks works.
GameStop – the original meme stock – was up after better-than-expected earnings and revenue...its bitcoin treasury strategy is in the crosshairs though as the wind comes out of that approach. Strategy is down about 25% from its July peak. Metaplanet, the Japanese-listed bitcoin hoarder, are down about two-thirds since a June peak but jumped 17% yesterday as it expanded its share offering to buy more bitcoins.
Klarna opened higher than the $40 IPO price, trading as high as $57 before closing 15% higher at $45.82. It was a less frothy explosion onto the market than some recent examples, but this could be a positive sign.
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