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London Quick Take – 6 Oct - Japanese stocks like their new PM, French stocks downed by latest PM's resignation
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- Japanese equities surge on new prime minister
- French stocks dumped as prime minister Lecornu resigns
- Oil rises as Opec+ opts for modest output hike
- Gold approaches $4,000/oz
Japanese equities soared to fresh record highs after Sanae Takichi’s weekend election victory – markets bet that it will mean more spending and fiscal stimulus. The yen weakened while the Nikkei 225 jumped 5% to a new all-time high. USDJPY hit 150 but we might see some of these moves fade shortly because they’re going to need a stronger currency to get inflation down. But for now the trade is more stimulus, looser monetary policy, weak yen = risk on for stocks. Bets for a rate hike this month are being taken off the table. The new PM, the country's first female leader, is seen as strategically close to the US in thinking and likely to boost defence spending, as well as providing a boost to areas like cybersecurity and nuclear energy.
Japan didn’t provide much steer for European markets, with the FTSE 100 and DAX ticking down about 0.25% each. The CAC in Paris dropped 2%, while French bond yields rose and the spread with bunds widened after prime minister Lecornu resigned just hours after appointing his cabinet. Fresh doubts surfaced about the viability of the new government after Macron loyalist Roland Lescure was named finance minister in a cabinet full of people from the last, ousted, government. It lasted just hours before Lecornu resigned this morning...is France ungovernable? Free and fair elections are required to get a government with an actual mandate to govern, which Macron does not possess.
Wall Street eked out fresh records on Friday to secure decent weekly gains. The Nasdaq fell as tech weighed a bit but the S&P 500 was barely higher - up 0.01% - but small caps rallied 0.72% to make a new record high for the Russell 2k. The S&P 500 healthcare and utilities stocks jumped, while tech and consumer discretionary fell. Futures this morning are pointing higher for Wall Street.
OPEC+ will raise crude output from November by 137,000 barrels per day, opting for the same monthly increase as in October. It comes amid persistent worries over a looming supply glut into 2026, which led to a sharp correction in crude prices last week. The relatively modest increase in output has lifted crude prices this morning off a 4-month low, reversing a bit of last week’s 7% decline.
Gold keeps setting new record highs as it approaches $4,000 – consolidation didn’t last long...momentum is strong with this one. The US government shutdown is partly a factor as shows up the horrible debt dynamics (4D trade – debt debasement & dollar devaluation). Silver is approaching $50 for the third time in history – in 1980 is fell 90% after failing to break the level and in 2011 it tumbled 71% before bottoming. Third time’s a charm? Hard assets are what’s needed - Bitcoin surged to a record high over the weekend, briefly rising above $125k on Sunday before easing back a touch.
The ongoing US government shutdown could start to chip away at confidence and spur further gold bugging...data is delayed but we do have a few things to look out for this week, including the New York Fed's September Survey of Consumer Expectations, FOMC meeting minutes for a steer on the thinking that went into the September rate cut, and the University of Michigan consumer sentiment and inflation expectations surveys. We should also hear from leading central bankers with Fed chair Jay Powell ECB president Christine Lagarde and Bank of England governor Andrew Bailey all due to speak.
There is no clear off-ramp to end the shutdown as both sides knuckle down. White House National Economic Council Director Kevin Hassett said layoffs for federal employees will begin if President Trump decides that congressional negotiations to end the government shutdown “are absolutely going nowhere.” Trump has said that the shutdown afforded him an “unprecedented opportunity” to slash the size of government a la DOGE.
Companies
Aston Martin shares fell after the carmaker issued a profits warning, citing global economic headwinds and Trump’s trade policies. Wholesale volumes are now seen falling by a “mid-high single-digit percentage” versus last year’s 6,030 units.
US carmakers rallied Friday on hopes of tariff relief. “The signal to the car companies around the world is, look, you have final assembly in the US, we’re going to reward you,” Ohio Republican Senator Bernie Moreno told Reuters. “For Ford, for Toyota, for Honda, for Tesla, for GM, those are the almost in order the top five domestic content vehicle producers — they’ll be immune to tariffs.”
Plug Power jumped a thumping 34% after HC Wainwright raised its price target to $7 from $3 on the stock, a Street high. Apple rose a touch despite Jefferies warning of “excessive expectations” for the iPhone 17 sales cycle. Shopify leapt over 6% as Rothschild Redburn hiked its price target to $200.
Palantir fell 7% on a report that the US Army’s next-gen battlefield communications system has security problems. Palantir, which disputes the suggestion the system is a risk, makes it with Anduril Industries and others.
Tesla extended its decline following the deliveries report. While numbers were good, JPMorgan warned that it’s too early to say the company has returned to growth in its core business.
Roblox was dumped on a report that its bookings growth has decelerated sharply from around 50% to 30%. GameStop was another faller on signs it might be soon raising cash through share or debt issuance. Hims & Hers fell sharply after Novo Nordisk said it will offer its weight-loss pill via its existing telehealth partners – Hims had a deal with Novo this year, which went sour quickly.
Q3 is behind and it’s almost the start of earnings season on Wall Street. Delta Air Lines and PepsiCo are now the unofficial start of earnings on Thursday, with BlackRock to follow on Friday before the real action starts from the following week.
OPEC+ will raise crude output from November by 137,000 barrels per day, opting for the same monthly increase as in October. It comes amid persistent worries over a looming supply glut into 2026, which led to a sharp correction in crude prices last week. The relatively modest increase in output has lifted crude prices this morning off a 4-month low, reversing a bit of last week’s 7% decline.
Gold keeps setting new record highs as it approaches $4,000 – consolidation didn’t last long...momentum is strong with this one. The US government shutdown is partly a factor as shows up the horrible debt dynamics (4D trade – debt debasement & dollar devaluation). Silver is approaching $50 for the third time in history – in 1980 is fell 90% after failing to break the level and in 2011 it tumbled 71% before bottoming. Third time’s a charm? Hard assets are what’s needed - Bitcoin surged to a record high over the weekend, briefly rising above $125k on Sunday before easing back a touch.
The ongoing US government shutdown could start to chip away at confidence and spur further gold bugging...data is delayed but we do have a few things to look out for this week, including the New York Fed's September Survey of Consumer Expectations, FOMC meeting minutes for a steer on the thinking that went into the September rate cut, and the University of Michigan consumer sentiment and inflation expectations surveys. We should also hear from leading central bankers with Fed chair Jay Powell ECB president Christine Lagarde and Bank of England governor Andrew Bailey all due to speak.
There is no clear off-ramp to end the shutdown as both sides knuckle down. White House National Economic Council Director Kevin Hassett said layoffs for federal employees will begin if President Trump decides that congressional negotiations to end the government shutdown “are absolutely going nowhere.” Trump has said that the shutdown afforded him an “unprecedented opportunity” to slash the size of government a la DOGE.
Companies
Aston Martin shares fell after the carmaker issued a profits warning, citing global economic headwinds and Trump’s trade policies. Wholesale volumes are now seen falling by a “mid-high single-digit percentage” versus last year’s 6,030 units.
US carmakers rallied Friday on hopes of tariff relief. “The signal to the car companies around the world is, look, you have final assembly in the US, we’re going to reward you,” Ohio Republican Senator Bernie Moreno told Reuters. “For Ford, for Toyota, for Honda, for Tesla, for GM, those are the almost in order the top five domestic content vehicle producers — they’ll be immune to tariffs.”
Plug Power jumped a thumping 34% after HC Wainwright raised its price target to $7 from $3 on the stock, a Street high. Apple rose a touch despite Jefferies warning of “excessive expectations” for the iPhone 17 sales cycle. Shopify leapt over 6% as Rothschild Redburn hiked its price target to $200.
Palantir fell 7% on a report that the US Army’s next-gen battlefield communications system has security problems. Palantir, which disputes the suggestion the system is a risk, makes it with Anduril Industries and others.
Tesla extended its decline following the deliveries report. While numbers were good, JPMorgan warned that it’s too early to say the company has returned to growth in its core business.
Roblox was dumped on a report that its bookings growth has decelerated sharply from around 50% to 30%. GameStop was another faller on signs it might be soon raising cash through share or debt issuance. Hims & Hers fell sharply after Novo Nordisk said it will offer its weight-loss pill via its existing telehealth partners – Hims had a deal with Novo this year, which went sour quickly.
Q3 is behind and it’s almost the start of earnings season on Wall Street. Delta Air Lines and PepsiCo are now the unofficial start of earnings on Thursday, with BlackRock to follow on Friday before the real action starts from the following week.