The Week That Was

It was a solid week for equities as positive US–China trade talks, combined with more dovish projections from the Fed following its first rate cut in nine months, acted as a tailwind for investor sentiment. The S&P 500 closed up 1.2%, completing a three-week winning streak, with the Communication Services sector (+3.4%) the standout performer, supported by a 5.8% rally in Alphabet after China ended its anti-trust probe as part of ‘productive’ trade talks with the US. European equities closed broadly flat, with ASML among the best performers, climbing 16% on increased market confidence in demand for semiconductor equipment.

From an economic perspective, German investor confidence improved, whilst the Bank of England, despite keeping rates unchanged, slowed the pace of quantitative tightening. In contrast, the Fed, despite revising both inflation and growth expectations higher for the year, implemented a 25bps ‘risk management’ rate cut to account for recent labour market weakness. This move prompted a modest rise in longer-dated US bond yields and saw gold push closer to the $3,700 level for the week.

The Week Ahead

Markets had a mixed start to the week, with equities in Tokyo trending modestly higher whilst Hong Kong moved lower. The weakness in Hong Kong came as investors fretted over the potential economic impact of an approaching super typhoon, which was more than enough to offset positive trade news, including confirmation that President Trump and President Xi would meet in November. In Japan, the BOJ eased concerns regarding its asset divestment programme, while a fall in the Yen against the Dollar also supported export-orientated equities.

Economic and political developments will likely dominate market sentiment in the week ahead. Later today, investors are expected to receive confirmation that consumer confidence in the Eurozone held steady in September despite continued geopolitical uncertainty. On Tuesday, PMI data is set to show that industrial activity expanded in the Eurozone at its fastest pace since Q2 2024, while in the US it is also set to expand, albeit at a slower pace than the prior month. On Wednesday, the German IFO, a key indicator of economic activity in Europe’s largest economy, is expected to reach its highest level since Russia’s invasion of Ukraine in February 2022. On Thursday, the Fed’s preferred inflation gauge (core PCE) is forecast to moderate slightly to 0.2% MoM in August, with its trajectory in the coming months likely to be a key determinant of whether the market sees another two rate cuts before year-end. Over the course of the week, attention will also increasingly turn to negotiations on Capitol Hill as the US faces the risk of a government shutdown early next week without a budget agreement between Republicans and Democrats.

From a corporate perspective, although markets remain in the fallow period ahead of the formal start of Q3 earnings season, there are still several notable releases. In the US, Costco, Micron, and Accenture will provide quarterly updates, with the impact of new US rules surrounding H1-B visas in focus for the latter. Closer to home, Irish homebuilder Glenveagh, whose shares are trading near record highs, will release interim results, with attention likely to centre on margin progression and the strength of its forward order book. Origin Enterprises will also publish full-year numbers, with investors looking for a continuation of the solid organic growth trends evident across its Agriculture and Living Landscapes division in Q3.

Key Market-Moving Events This Week

• Macro – Europe and US forward-looking PMI data, US inflation data
• Corporate updates – Accenture, Glenveagh, Micron, and Origin Enterprises
• Political developments – Negotiations to avert a US government shutdown next week

This is an extract from the Weekly Markets Report by Cantor Fitzgerald Ireland. For more detail on individual securities or to discuss how we can support your investment needs please get in touch.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland