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 – 2 Oct - Stocks are shrugging off the US govt shutdown as gold looks ripe for pullback
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Key Points
- FTSE 100 slips back from record high above 9,400
- S&P 500 closes above 6,700 for first time as Wall Street shrugs off US government shutdown
- Gold hits record high as oil stumbles
Bad news is good news for stocks: Equity markets have shrugged off the US government shutdown as they usually tend to do, whilst the drop in bond yields reflected some weakness in the labour market data yesterday. Wall Street eked gains with the S&P 500 closing above 6,700 for the first time. OpenAI is said to be worth $500bn after wrapping a $6.6bn share sale....a massive bubble, but supports the AI/chip narrative once more.
Does the shutdown matter? Fitch Ratings said the US government shutdown likely won't impact its sovereign rating soon, while S&P Global Ratings says shutdowns have minor economic effects. Could it be different this time? You look at this happening at exactly the same as the administration gathers a bunch of generals and tells them to prepare to tackle the enemy “within”, pledging more military support for law enforcement in US cities. Things are happening. And we should be mindful that a data blackout could lead to greater volatility over the coming days. So far investors are flying blind but don't seem to care.
Data was soft - ADP said US private payrolls fell by 32,000 in September, against expectations for a roughly 45k gain. This is important potentially ahead of the NFP report, which I assume will be released at some point...but apparently not on Friday. Treasury yields fell sharply on the ADP report, with the 10yr down about 5bps to 4.10%, further boosting risk appetite for stocks. We were due weekly unemployment claims figures today, forecast at +225k, but the BLS website just says it is not being updated due to the shutdown. There is a risk now for market participants of a rolling data blackout that could see increased volatility.
The FTSE 100 hit and closed at a record high on a surge for pharmaceuticals stocks as Pfizer struck a deal with the US government, easing tonnes of fears around tariffs for the sector. In London early Thursday the blue chips were giving back a little - down about 0.2% with oil prices a bit of a drag, but Tesco has lifted the retailers a bit with a positive update. Experian dipped sharply after applying to list 50k new shares, while British American Tobacco fell after going ex-dividend, along with Weir Group, Smith & Nephew and F&C Investment Trust (5.56pts in total off the FTSE 100 as a result). Specialist financial groups 3i, Icg and Pershing Square were among the top gainers. European stock markets extended their gains from Wednesday with a little more gusto - the CAC up 1% and DAX up 0.8% in the first hour of trade.
Sterling has had a good run against the broadly weaker dollar but GBPUSD has just come up short at the 1.350 round number resistance with the 50-DMA at 1.3460 offering the near-term support...really need to see a clear daily breach of the 20-DMA, which is just a whisker above at 1.3510.
Brent crude is trying to stabilise around $65.50 after a three-day tumble off its 200-day SMA, which proved too much resistance for bulls. US crude inventories are rising amid mounting expectations OPEC+ could accelerate output hikes next month.
Real assets are all that counts in this world. So, gold hit a fresh record yesterday before a bit of trimming. Gold’s ascent reflects geopolitics and fragmentation of the global financial system, particularly as it seems trust in the almighty greenback and Treasuries is being fundamentally questioned. Monthly RSI above 90 for I think the first time since 1980...ripe for a pullback and possibly a big one...particularly as TIPS (real yields) have jumped, showing up as a breakdown in the usual negative correlation between real yields and gold prices.
Does the shutdown matter? Fitch Ratings said the US government shutdown likely won't impact its sovereign rating soon, while S&P Global Ratings says shutdowns have minor economic effects. Could it be different this time? You look at this happening at exactly the same as the administration gathers a bunch of generals and tells them to prepare to tackle the enemy “within”, pledging more military support for law enforcement in US cities. Things are happening. And we should be mindful that a data blackout could lead to greater volatility over the coming days. So far investors are flying blind but don't seem to care.
Data was soft - ADP said US private payrolls fell by 32,000 in September, against expectations for a roughly 45k gain. This is important potentially ahead of the NFP report, which I assume will be released at some point...but apparently not on Friday. Treasury yields fell sharply on the ADP report, with the 10yr down about 5bps to 4.10%, further boosting risk appetite for stocks. We were due weekly unemployment claims figures today, forecast at +225k, but the BLS website just says it is not being updated due to the shutdown. There is a risk now for market participants of a rolling data blackout that could see increased volatility.
The FTSE 100 hit and closed at a record high on a surge for pharmaceuticals stocks as Pfizer struck a deal with the US government, easing tonnes of fears around tariffs for the sector. In London early Thursday the blue chips were giving back a little - down about 0.2% with oil prices a bit of a drag, but Tesco has lifted the retailers a bit with a positive update. Experian dipped sharply after applying to list 50k new shares, while British American Tobacco fell after going ex-dividend, along with Weir Group, Smith & Nephew and F&C Investment Trust (5.56pts in total off the FTSE 100 as a result). Specialist financial groups 3i, Icg and Pershing Square were among the top gainers. European stock markets extended their gains from Wednesday with a little more gusto - the CAC up 1% and DAX up 0.8% in the first hour of trade.
Sterling has had a good run against the broadly weaker dollar but GBPUSD has just come up short at the 1.350 round number resistance with the 50-DMA at 1.3460 offering the near-term support...really need to see a clear daily breach of the 20-DMA, which is just a whisker above at 1.3510.
Brent crude is trying to stabilise around $65.50 after a three-day tumble off its 200-day SMA, which proved too much resistance for bulls. US crude inventories are rising amid mounting expectations OPEC+ could accelerate output hikes next month.
Real assets are all that counts in this world. So, gold hit a fresh record yesterday before a bit of trimming. Gold’s ascent reflects geopolitics and fragmentation of the global financial system, particularly as it seems trust in the almighty greenback and Treasuries is being fundamentally questioned. Monthly RSI above 90 for I think the first time since 1980...ripe for a pullback and possibly a big one...particularly as TIPS (real yields) have jumped, showing up as a breakdown in the usual negative correlation between real yields and gold prices.
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