- Equity Markets: US equities had a strong rally yesterday as AI momentum continued to lift the wider market. The S&P500 increased +0.36%, the Nasdaq rose +0.71% whilst European stocks finished the day flat. In the US seven of eleven sectors were positive with 47.5% of stocks higher on the day. Consumer Discretionary (+1.04%) and Utilities (+0.98%) were the strongest sectors. Real Estate (-0.99%) and Consumer Staples (-0.59%) were the weakest. AMD shares jumped +23.7% after OpenAI agreed a partnership with the chipmaker, with analysts estimating that the deal could add $70-$100bn in AI revenue through to 2030 for AMD. Tesla also had a strong day, climbing +5.4% after announcing it plans on releasing a cheaper version of the Model Y. In Europe four of eleven sectors were positive with 44.7% of companies higher. Energy (+1.3%) and Information Technology (+1.26%) were the strongest sectors. Consumer Discretionary (-0.90%) and Industrials (-0.54%) were the weakest. SEB, the French household appliance company had a bad day, with shares falling -21.4% after the company cut its full year sales forecast.
- Macro:In macro news yesterday, Sebastien Lecornu, the French PM resigned, blaming interagency groups in the countries divided parliament, for not supporting the government. The resignation came after PM failed to agree on a new cabinet with both parties. The CAC40 sold off -1.4% whilst the 10-year note rose 9bps to 3.6%. In the US President Trump announced a 25% tariff on medium and heavy-duty trucks that will be introduced on November 1st. In the UK, Construction PMI data for September came in stronger than expected with the index moving to 46.2 (est 46.0). Retail sales in Europe for August came in line with expectations at +0.1%. In macro news today, from a political perspective all eyes will be on France as President Macron has offered Sebastien Lecornu 48 hours to negotiate with political parties to define a platform for action and stability for the country going forward. In the US, the market will be keen to see if there is any resolution to the government shut down. US trade balance data for August is due to be published later today (if government reopens) with estimates projected to be a deficit of -$61.0bn. From central bankers today, in Europe we have the ECB’s Nagel and Lagarde. From the Fed we have Bostic, Bowman, Miran and Kashkari
- Stocks: Shell (Overweight PT:3100p, 13% Upside): Key takeaways from the company’s pre-results update released this morning. Smurfit Westrock (Overweight PT: $52.80, 31% Upside): Details on Mondi’s results and the potential impact it has on Smurfit.
- Debt: All about France yesterday in the Eurozone fixed income space. French OATs closed 4bps wider on the day to Bunds (85bps), while Italian BTPs have now fully converged with 10yr France in yield terms (c. 3.57%).
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