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 – 20 Oct - Japan jumps, banks recover, trade fears ease again
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Japanese equities surge as LDP strikes coalition agreement
- European bank stocks bounce after Friday's sell-off
- Trade war fears ease a bit
- Earnings season on Wall Street and inflation data ahead
Japanese stocks surged on news the ruling LDP and Ishin parties are to sign a coalition agreement today, setting up ‘fiscal dove’ Sanae Takaichi to become the country’s first female prime minister. The Nikkei 225 rallied almost 3.5% in Tokyo overnight to a record high above 49,000. We can probably say this is a government that wants to boost supply-side investment and is therefore good for equities, yields higher, yen weaker.
US stocks ended a volatile week on a positive note with the three major indices all rallying about 0.5% on Friday as investors seemed to set aside fears about bad loans popping up in the regional banking sector. The SPDR S&P Regional Banking ETF (KRE) rallied after Thursday’s sharp sell-off as for the time being no one seems to think this is systemic. But small caps couldn't catch the breaks and the Russell 2k fell again.
Trade fears have eased a bit. The old playbook can be relied upon: President Trump said threatened additional tariffs on China were ‘not sustainable’. China removed its top trade negotiator from post at the WTO and UN, which looks like a bit of an olive branch. Meanwhile Chinese data was mixed overnight - Q3 GDP up 4.8% YoY in line with expectations while property investment continued its decline, down 13.9%.
European stock markets have these tailwinds behind them this morning; a sprightlier mood on trade, a bit more of a sanguine approach around US regional banks and a big lift in Japan overnight. The FTSE 100 climbed around 0.4% in early trading to take a look at the 9,400 level, while the CAC rose similarly and the DAX jumped 1%. Banking stocks rallied after Friday’s silly season, while defence names are lining up among the advancers as Trump reportedly told Zelensky to bow to Putin's demands or be destroyed by Russia. Fresnillo led the decliners on the FTSE 100 as gold prices pulled back sharply on Friday.
S&P downgraded France one notch in an unscheduled update as the country grapples once more with a budget that MPs cannot agree on. Second-time-around PM Lecornu survived a confidence vote – just – last week and now hopes to get a fiscal bill through by dropping Macron’s vaunted pension reforms. The budget will be debated in the National Assembly starting on Friday, with a decision required by December 23rd.
Economic data from the US is quite sparse this week as the government remains shuttered. However, we will get a delayed September CPI inflation report, which has been specially put together despite the shutdown in order to provide the Federal Reserve with data ahead of its 28-29 October meeting. UK inflation on Wednesday could shot a 4% print. Read the full week ahead here.
Companies
US earnings season hits full pace this week as market giants Tesla and Netflix report Q3 updates. They headline a busy week on Wall Street as investors grapple with earnings against a backdrop of worries about bad loans at regional banks in the US as well as sky-high valuations and trade war grumblings. Also reporting are Intel, Coca-Cola and 3M.
In London we hear Q3 numbers from Barclays, Natwest and Lloyds after Friday’s US regional bank-inspired sell-off. Bank stocks – Lloyds, Natwest, Standard Chartered, HSBC - are firmer this morning following the sell-off on Friday amid those US regional bank fears.
B&M slumped 15% after admitting an accounting error which has seen it cut its profit outlook.
Apple – iPhone 17 sales are reportedly 14% higher in the US and China compared to the previous model.
Oracle tumbled 7% as analysts voiced some concerns about its huge AI capex plans.
AST SpaceMobile fell 6.5% as Barclays cut the stock to underweight, noting that valuation had run ahead of fundamentals.
US stocks ended a volatile week on a positive note with the three major indices all rallying about 0.5% on Friday as investors seemed to set aside fears about bad loans popping up in the regional banking sector. The SPDR S&P Regional Banking ETF (KRE) rallied after Thursday’s sharp sell-off as for the time being no one seems to think this is systemic. But small caps couldn't catch the breaks and the Russell 2k fell again.
Trade fears have eased a bit. The old playbook can be relied upon: President Trump said threatened additional tariffs on China were ‘not sustainable’. China removed its top trade negotiator from post at the WTO and UN, which looks like a bit of an olive branch. Meanwhile Chinese data was mixed overnight - Q3 GDP up 4.8% YoY in line with expectations while property investment continued its decline, down 13.9%.
European stock markets have these tailwinds behind them this morning; a sprightlier mood on trade, a bit more of a sanguine approach around US regional banks and a big lift in Japan overnight. The FTSE 100 climbed around 0.4% in early trading to take a look at the 9,400 level, while the CAC rose similarly and the DAX jumped 1%. Banking stocks rallied after Friday’s silly season, while defence names are lining up among the advancers as Trump reportedly told Zelensky to bow to Putin's demands or be destroyed by Russia. Fresnillo led the decliners on the FTSE 100 as gold prices pulled back sharply on Friday.
S&P downgraded France one notch in an unscheduled update as the country grapples once more with a budget that MPs cannot agree on. Second-time-around PM Lecornu survived a confidence vote – just – last week and now hopes to get a fiscal bill through by dropping Macron’s vaunted pension reforms. The budget will be debated in the National Assembly starting on Friday, with a decision required by December 23rd.
Economic data from the US is quite sparse this week as the government remains shuttered. However, we will get a delayed September CPI inflation report, which has been specially put together despite the shutdown in order to provide the Federal Reserve with data ahead of its 28-29 October meeting. UK inflation on Wednesday could shot a 4% print. Read the full week ahead here.
Companies
US earnings season hits full pace this week as market giants Tesla and Netflix report Q3 updates. They headline a busy week on Wall Street as investors grapple with earnings against a backdrop of worries about bad loans at regional banks in the US as well as sky-high valuations and trade war grumblings. Also reporting are Intel, Coca-Cola and 3M.
In London we hear Q3 numbers from Barclays, Natwest and Lloyds after Friday’s US regional bank-inspired sell-off. Bank stocks – Lloyds, Natwest, Standard Chartered, HSBC - are firmer this morning following the sell-off on Friday amid those US regional bank fears.
B&M slumped 15% after admitting an accounting error which has seen it cut its profit outlook.
Apple – iPhone 17 sales are reportedly 14% higher in the US and China compared to the previous model.
Oracle tumbled 7% as analysts voiced some concerns about its huge AI capex plans.
AST SpaceMobile fell 6.5% as Barclays cut the stock to underweight, noting that valuation had run ahead of fundamentals.
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