Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take – 14 Oct - Equity rally stalls as new front opens in US-China trade war
Neil Wilson
Investor Content Strategist
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If both sides keep a hard stance like this then we can see increased volatility for the rest of the month. Scott Bessent, the US Treasury secretary, upped the rhetorical tit-for-tat by saying China was trying to damage the global economy with its curbs on rare earth exports, adding that the US had “substantial levers on our side we can pull”. China FWIW said that the door is open for talks but “will fight to the end”. Not the kind of noises that’s going to underpin a strong risk-on session you would feel.
After regaining some ground in Monday’s recovery session, European stock markets opened lower on Tuesday, dragged down by the general trade war noise and a weak session in Tokyo that saw the Nikkei post its worst one-day drop since April. The FTSE 100 was about half a percent lower on the day, before trimming losses a bit, while the DAX and CAC both declined around one percent.
Crypto assets are being taking for a bit of a ride on this volatile setup. Interesting to see the bitcoin treasury companies being hit quite hard – for instance Metaplanet’s enterprise value has fallen below the value of its bitcoin holding. Bitcoin itself is below $112k, down around 10% from its recent peak. I don't see the Bitcoin as debasement trade argument really...moves too much with risk assets.
Some of the highest beta stocks provided some of the biggest gains yesterday – Rigetti +28%, D-Wave +24%, Oklo +18%...lots of meme names doing really well on the snapback. But in a higher volatile and more uncertain market, will investors start to favour income-generating stocks instead?
Gold, needless to say, has spat higher once more with spot prices jumping to $4,179 overnight, a fresh all-time high, though we a very sharp reversal around 06:30 this morning to push price back to around $4,110. Prices now around 20% above the 200-day moving average indicate we could be seeing the long-awaited consolidation. Silver made a new all-time high above $52 before also pulling back amid a short squeeze in the London spot market due to a lack of supply.
Sterling fell to its weakest since early August after weak wage data from the UK suggested a deepening problem for the UK labour market. GBPUSD, which has dipped to 1.3250 this morning, is getting hit by the twin forces of the torrid UK economic picture and a resurgent US dollar. Unemployment of 4.8%, the highest since May 2021, is hardly the ideal backdrop for the Budget next month...but combined with cooler wage growth it could nudge the Bank of England to go deeper with cuts. Silver linings I suppose.
Read the full week ahead here.
Key Points
- Stocks stutter as trade war opens new front
- Gold and silver spike to fresh highs
- Broadcom jumps 10% as it joins OpenAI party
- US earnings season gets into full swing this week
It’s all got a very spring-summer 2025 feel to it. Wall Street rebounded on Monday, with the S&P 500 clawing back about half of Friday’s rout as it registered its best day since May. Chip stocks led the tech-fuelled gains with Broadcom up 10% as it joined the OpenAI bandwagon, falling in behind Nvidia and AMD.
But we haven’t closed the gap and there’s fresh trade war friction this morning weighing on US futures after China sanctioned five US subsidiaries of South Korean shipbuilder Hanwha Ocean. Shares of the company plunged 8% in Seoul but the main concern here is that this is a signal of re-escalation that’s likely to keep a bid under volatility. This comes as from today both the US and China roll out additional port fees. A new maritime front in this trade war should keep things interesting.
But we haven’t closed the gap and there’s fresh trade war friction this morning weighing on US futures after China sanctioned five US subsidiaries of South Korean shipbuilder Hanwha Ocean. Shares of the company plunged 8% in Seoul but the main concern here is that this is a signal of re-escalation that’s likely to keep a bid under volatility. This comes as from today both the US and China roll out additional port fees. A new maritime front in this trade war should keep things interesting.
If both sides keep a hard stance like this then we can see increased volatility for the rest of the month. Scott Bessent, the US Treasury secretary, upped the rhetorical tit-for-tat by saying China was trying to damage the global economy with its curbs on rare earth exports, adding that the US had “substantial levers on our side we can pull”. China FWIW said that the door is open for talks but “will fight to the end”. Not the kind of noises that’s going to underpin a strong risk-on session you would feel.
After regaining some ground in Monday’s recovery session, European stock markets opened lower on Tuesday, dragged down by the general trade war noise and a weak session in Tokyo that saw the Nikkei post its worst one-day drop since April. The FTSE 100 was about half a percent lower on the day, before trimming losses a bit, while the DAX and CAC both declined around one percent.
Crypto assets are being taking for a bit of a ride on this volatile setup. Interesting to see the bitcoin treasury companies being hit quite hard – for instance Metaplanet’s enterprise value has fallen below the value of its bitcoin holding. Bitcoin itself is below $112k, down around 10% from its recent peak. I don't see the Bitcoin as debasement trade argument really...moves too much with risk assets.
Some of the highest beta stocks provided some of the biggest gains yesterday – Rigetti +28%, D-Wave +24%, Oklo +18%...lots of meme names doing really well on the snapback. But in a higher volatile and more uncertain market, will investors start to favour income-generating stocks instead?
Gold, needless to say, has spat higher once more with spot prices jumping to $4,179 overnight, a fresh all-time high, though we a very sharp reversal around 06:30 this morning to push price back to around $4,110. Prices now around 20% above the 200-day moving average indicate we could be seeing the long-awaited consolidation. Silver made a new all-time high above $52 before also pulling back amid a short squeeze in the London spot market due to a lack of supply.
Sterling fell to its weakest since early August after weak wage data from the UK suggested a deepening problem for the UK labour market. GBPUSD, which has dipped to 1.3250 this morning, is getting hit by the twin forces of the torrid UK economic picture and a resurgent US dollar. Unemployment of 4.8%, the highest since May 2021, is hardly the ideal backdrop for the Budget next month...but combined with cooler wage growth it could nudge the Bank of England to go deeper with cuts. Silver linings I suppose.
Read the full week ahead here.
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