Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
Access both platforms from your single Saxo account.
London Quick Take – 30 September – Stocks falter as US heads for government shutdown
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Gold rose to a new all-time high, before slipping back this morning while the dollar handed back some of last week’s gains, with Treasury yields a bit lower. US stocks ignored the noise to move higher as Wall Street looks to close out an unusually strong September and a fifth month of gains. In Europe, the FTSE 100 trades a little lighter this morning after threatening its all-time high yesterday. The blue chips are on course for the best quarter since 2022.
Data today shows the UK economy grew a little extra than thought in the last year, but still revealed a sharp slowdown in the rate of growth in the second quarter of this year to +0.3%. And although very marginally better than first thought, GDP per capita remains utterly stagnant. Shop price inflation rose at its fastest pace in 18 months. Bank of England deputy governor Dave Ramsden warned that Britain’s jobs market had weakened, wage growth was normalising, and that this should support inflation coming down to target. Cable has pushed up a bit this morning but seems to be largely a dollar move. Gilts are in ok shape post-Reeves as she stuck to the prudent fiscal rules schtick.
Elsewhere, China’s manufacturing PMI rose to 49.8 in September from 49.4 but remained in contraction for a sixth month, the longest since 2019; non-manufacturing slipped to 50.0 from 50.3.
The Reserve Bank of Australia left its cash rate at 3.60% as expected, unanimous. Policymakers said the decline in underlying inflation has slowed.
Carnival shares fell 4% despite raising its annual profit forecast, citing robust demand for its cruises, higher prices and strong spending by passengers on board. Shares remain +17% YTD.
Key Points
- FTSE 100 slips as European equities turn lower into the last trading day of the quarter
- US government seems headed for a shutdown
- UK economy slowdown confirmed but 2024 was better than thought
The US seems to be heading for a government shutdown this week after a meeting between President Trump and senior Congressional leaders ended yesterday with no agreement. “I think we’re headed to a shutdown because the Democrats won’t do the right thing,” Vice President JD Vance said afterwards.
Markets tend to look through shutdowns, but it could be harder this time to ignore the consequences of tribalism. First of all, it would delay the release of this Friday’s nonfarm payrolls report. It would certainly therefore make the Fed’s job harder, and increase near-term uncertainty. It could also shave a few percentage points off GDP. And if it drags on for long eventually the stock market and bond market will notice. The threat of mass firings is a concern as it would mean longer-term damage to the economy. Stock markets tend to ignore shutdowns as they don't last long and have virtually no impact on corporate earnings, but I looked at how it could be different this time on Friday.
Markets tend to look through shutdowns, but it could be harder this time to ignore the consequences of tribalism. First of all, it would delay the release of this Friday’s nonfarm payrolls report. It would certainly therefore make the Fed’s job harder, and increase near-term uncertainty. It could also shave a few percentage points off GDP. And if it drags on for long eventually the stock market and bond market will notice. The threat of mass firings is a concern as it would mean longer-term damage to the economy. Stock markets tend to ignore shutdowns as they don't last long and have virtually no impact on corporate earnings, but I looked at how it could be different this time on Friday.
Gold rose to a new all-time high, before slipping back this morning while the dollar handed back some of last week’s gains, with Treasury yields a bit lower. US stocks ignored the noise to move higher as Wall Street looks to close out an unusually strong September and a fifth month of gains. In Europe, the FTSE 100 trades a little lighter this morning after threatening its all-time high yesterday. The blue chips are on course for the best quarter since 2022.
Data today shows the UK economy grew a little extra than thought in the last year, but still revealed a sharp slowdown in the rate of growth in the second quarter of this year to +0.3%. And although very marginally better than first thought, GDP per capita remains utterly stagnant. Shop price inflation rose at its fastest pace in 18 months. Bank of England deputy governor Dave Ramsden warned that Britain’s jobs market had weakened, wage growth was normalising, and that this should support inflation coming down to target. Cable has pushed up a bit this morning but seems to be largely a dollar move. Gilts are in ok shape post-Reeves as she stuck to the prudent fiscal rules schtick.
Elsewhere, China’s manufacturing PMI rose to 49.8 in September from 49.4 but remained in contraction for a sixth month, the longest since 2019; non-manufacturing slipped to 50.0 from 50.3.
The Reserve Bank of Australia left its cash rate at 3.60% as expected, unanimous. Policymakers said the decline in underlying inflation has slowed.
Carnival shares fell 4% despite raising its annual profit forecast, citing robust demand for its cruises, higher prices and strong spending by passengers on board. Shares remain +17% YTD.
Latest Market Insights
Quarterly Outlook
-
-
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
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy