- FTSE on track to recoup this week’s losses as bond markets settle
- US markets strengthen as rate cut focus moves from if to how much
- Amazon shares up on AI and satellite developments
- Broadcom rises on strong earnings and $10bn client win
- Brent Crude price drops to $66.7 ahead of OPEC+ meeting
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 has opened building slightly on yesterday’s 0.4% gain. Investors are dipping their toe back into risk-on assets as a sense of calm descended on the bond markets after long-dated gilt yields retreated from a 10-year high. The 30-year yield remains steady today at 5.58%.
US stock futures are also up following strong session on Wall Street after the ADP National Employment Report showed signs of a cooling Labour market. Markets are now all but certain of a quarter point rate cut by the Fed later in the month. If today’s non-farm payroll report undershoots forecasts of a 75,000 gain, there could be calls for a bigger drop in lending rates.
Big tech is also doing its part to boost sentiment. Amazon shares marched up over 4% on news from its satellite broadband operations Project Kuiper and investee company Anthropic. The AI startup has secured a $13 billion funding round, at nearly three times the valuation seen in March. This not only boosts the value of Amazon’s stake but also supports the outlook for revenue growth for the AWS infrastructure on which Anthropic’s Claude models are trained. Meanwhile, Project Kuiper landed its first airline customer in the form of JetBlue which will use the low Earth orbit satellite systems to enhance in-flight connectivity.
Custom chip maker Broadcom reported third-quarter results after the bell. Revenue grew by 22% to $16.0billion with underlying EBITDA jumping 30% higher to $10.7 billion. The growth was driven by a 63% uplift in AI revenue as the company continues to earn its place as one of the key winners from this titanic technological shift. There’s no let-up in the momentum either, with fourth-quarter revenue guidance of $17.4 billion ahead of market forecasts. Broadcom CEO Hock Tan also disclosed the acquisition of a new customer, which alone had placed $10 billion of orders. That’s now widely thought to be Open AI. Broadcom shares rose 4.6% in after-hours trading.
Anticipation of a decision to further boost to oil production at Sunday’s OPEC+ meeting has driven another fall in Brent Crude prices which now sit at around $66.7 per barrel. The potential for further restrictions on Russian exports could counteract some of the pressure on prices but that’s yet to materialise. For now, it’s OPEC+ that’s likely to drive the narrative. ”
