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 – 9 September - Anglo American surges on Teck merger, markets seem to shrug off political concerns
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- French PM Bayrou loses confidence vote, bond markets seem orderly
- Nasdaq Composite hits record high as tech shares rise
- Anglo American shares jump on Teck merger deal
Zeitgeist: If AI is going to take your job, better own some of those companies at least.
Let’s start in Paris: France’s PM Bayrou lost a confidence vote in parliament, as expected, which leaves President Macron searching for another PM, whom he will name “in the next few days”. Amid the deepening political crisis bond markets shrugged, Gallicly (is that a word?), with French 10yr now down to around 3.40% from near 3.60% last week, albeit it's just ticked up a touch this morning again. One question for the market is how long Macron and France can toe this very narrow line of relative fiscal rectitude, which doesn’t seem to have enough support in Parliament. New elections will be required sooner or later, one feels.
European stock markets rose yesterday and have, despite a small pullback in Frankfurt, added some further gains early doors this morning. Anglo American is leading the gainers on the FTSE 100 with a jump of 8% on its deal with Teck (see below), dragging fellow basic resources stocks higher, notably Glencore at +4%.
Meanwhile, the Nikkei 225 rose 0.9% to over 44,000, and the Topix Index gained 0.4% to 3,150, hitting record highs before closing off the highs of the day after Japan’s PM Shigeru Ishiba resigned. Technology stocks led gains amid Japan-US trade concessions lowering auto tariffs.
Is slackening jobs growth in the US a concern for the stock market? The Nasdaq Composite rallied to a record high on Monday, led by gains for Broadcom, Oracle and Amazon, while Nvidia arrested its recent decline with a modest rise. The S&P 500 and Dow Jones also rose in the wake of Friday's soft payrolls number. RobinHood and AppLovin posted big gains on news they are being added to the S&P 500. Who is next on the shortlist? That could be worth a check...overall a grind up and volatility squeezed...Fed meeting next week but before that we have the US inflation data to maybe change the complacency.
Whilst jobs growth is slowing fast, rate cut bets are increasing. We seem to be into bad news is good news. The point I’ve made lately is that reduced labour supply means you don’t need to have the same level of job creation for the Fed to meet its employment mandate...but on the other hand if AI is killing jobs, as it’s supposed to do, then you can easily see weak labour market dynamics and record stock valuations...the old Main St suffers and Wall St prospers dynamic.
Spot gold hits a fresh record on Fed rate-cut bets, rising up to 0.3% to above $3,659/oz, surpassing Monday’s peak after gaining 2.5% over the prior two sessions.
Companies
Anglo American has completed its acquisition of Teck Resources – a monster deal and sign that consolidation in the industry is afoot as copper demand explodes. This is a mega deal, dubbed a merger of equals and creating global top 5 copper producer in Anglo Teck - which will be based in Vancouver, with its primary listing in London. It comes after they’ve seen off some approaches – notably BHP kicked the tyres on a potential takeover of Anglo last year – forcing a restructure and leading to this deal with Teck -while Glencore looked at Teck in 2023. No doubt this nil premium deal will have others sniffing around and I wouldn’t be surprised to see fresh bids for either – shares +8% reflect not just pleasure at this cost-cutting deal and access to copper but also perhaps some expectations that this is not the last we hear on this deal.
Pity the poor bankers trying to price this one...Klarna IPO – seems priced at about $14bn...way down from the $45bn+ valuation from 2021 but more than double the $6.7bn down round the following year. Do you price this as a subprime lender or a payments business like Visa? If it pops on debut like some have this year expect the usual accusations that the bankers have 'money on the table'. It posted a net loss of $53 million in Q2, tripling from the year before on a 20% rise in revenues. Not that the financials will tell you much right now. My gut feeling is investors want a slice of this one. Recent IPOs - Figma, Circle - may not offer a clue as to the business model of Klarna, but froth helps.
Efficient markets: Finally, a packaging company called Eightco saw its shares rise 3,000% yesterday after announcing plans to buy Sam Altman-backed Worldcoin tokens – emulating the crypto treasury strategy of Strategy (formerly MicroStrategy). The company said it had raised $270mn selling shares to fund its Worldcoin purchase. It also now counts Tesla cheerleader Dan Ives, the Wedbush analyst, as its chairman.
European stock markets rose yesterday and have, despite a small pullback in Frankfurt, added some further gains early doors this morning. Anglo American is leading the gainers on the FTSE 100 with a jump of 8% on its deal with Teck (see below), dragging fellow basic resources stocks higher, notably Glencore at +4%.
Meanwhile, the Nikkei 225 rose 0.9% to over 44,000, and the Topix Index gained 0.4% to 3,150, hitting record highs before closing off the highs of the day after Japan’s PM Shigeru Ishiba resigned. Technology stocks led gains amid Japan-US trade concessions lowering auto tariffs.
Is slackening jobs growth in the US a concern for the stock market? The Nasdaq Composite rallied to a record high on Monday, led by gains for Broadcom, Oracle and Amazon, while Nvidia arrested its recent decline with a modest rise. The S&P 500 and Dow Jones also rose in the wake of Friday's soft payrolls number. RobinHood and AppLovin posted big gains on news they are being added to the S&P 500. Who is next on the shortlist? That could be worth a check...overall a grind up and volatility squeezed...Fed meeting next week but before that we have the US inflation data to maybe change the complacency.
Whilst jobs growth is slowing fast, rate cut bets are increasing. We seem to be into bad news is good news. The point I’ve made lately is that reduced labour supply means you don’t need to have the same level of job creation for the Fed to meet its employment mandate...but on the other hand if AI is killing jobs, as it’s supposed to do, then you can easily see weak labour market dynamics and record stock valuations...the old Main St suffers and Wall St prospers dynamic.
Spot gold hits a fresh record on Fed rate-cut bets, rising up to 0.3% to above $3,659/oz, surpassing Monday’s peak after gaining 2.5% over the prior two sessions.
Companies
Anglo American has completed its acquisition of Teck Resources – a monster deal and sign that consolidation in the industry is afoot as copper demand explodes. This is a mega deal, dubbed a merger of equals and creating global top 5 copper producer in Anglo Teck - which will be based in Vancouver, with its primary listing in London. It comes after they’ve seen off some approaches – notably BHP kicked the tyres on a potential takeover of Anglo last year – forcing a restructure and leading to this deal with Teck -while Glencore looked at Teck in 2023. No doubt this nil premium deal will have others sniffing around and I wouldn’t be surprised to see fresh bids for either – shares +8% reflect not just pleasure at this cost-cutting deal and access to copper but also perhaps some expectations that this is not the last we hear on this deal.
Pity the poor bankers trying to price this one...Klarna IPO – seems priced at about $14bn...way down from the $45bn+ valuation from 2021 but more than double the $6.7bn down round the following year. Do you price this as a subprime lender or a payments business like Visa? If it pops on debut like some have this year expect the usual accusations that the bankers have 'money on the table'. It posted a net loss of $53 million in Q2, tripling from the year before on a 20% rise in revenues. Not that the financials will tell you much right now. My gut feeling is investors want a slice of this one. Recent IPOs - Figma, Circle - may not offer a clue as to the business model of Klarna, but froth helps.
Efficient markets: Finally, a packaging company called Eightco saw its shares rise 3,000% yesterday after announcing plans to buy Sam Altman-backed Worldcoin tokens – emulating the crypto treasury strategy of Strategy (formerly MicroStrategy). The company said it had raised $270mn selling shares to fund its Worldcoin purchase. It also now counts Tesla cheerleader Dan Ives, the Wedbush analyst, as its chairman.
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