- US Fed Chairman boosts rate cut hopes.
- Markets in Asia rally strongly as dollar weakens.
- LVMH reports a return to Luxury growth.
- ASML reports strong AI demand.
- Oil’s swoon continues, Sterling steadies and gold reaches new highs.
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“Jay Powell, Chair of the US Federal Reserve, boosted expectations that lower interest rates are on their way in the US in a speech last night. He talked of emerging signs of distress in the US jobs market, while also saying that long-term expectations for inflation were ‘aligned with our 2% goal’. Expectations of a rate cut when the Fed next meets to set rates later this month were already high. Powell’s comments have led to markets now pricing in an October quarter point cut as pretty much a certainty. That allowed the US market to recover, with the S&P 500 index closing just a fraction lower after initially declining by almost 1.5% yesterday. Asian markets picked up the baton, rising by 2%, whilst futures markets were suggesting a strong start to trading in Europe and the UK this morning.
So far, though, caution has proven the watchword in the UK, with the FTSE100 little changed so far today. European stocks are around 0.6% better, led by Luxury Goods producers and Dutch chip-making supplier ASML.
Luxury goods demand has been in something of a tailspin of late, but LVMH, the world’s largest stable of top-end brands, has reported signs of easing pressures, sending its shares rocketing 12% higher in early trading. Third quarter sales have unexpectedly returned to growth, the company has reported, led by its fashion & leather goods division that hosts brands from Louis Vuitton to Christian Dior. The news has sparked relief across other European luxury brand houses, with shares in Hermes and Richemont joining in the rally.
Dutch technology giant ASML produces the machinery needed to make the most advanced semiconductors, so sits at the heart of the boom in AI spending. They have flagged strong order growth as chip makers struggle to keep up with demand, even as the company sees Chinese sales getting caught up in the ongoing trade disputes that are throttling ASML’s ability to supply customers in China. Sales in the third quarter came in at €5.4 billion, about 10% ahead of analyst’s expectations, lifting ASML shares by over 3%.
If you’ve found that the cost of taking your pet to the vets has become infeasibly expensive, the Competition & Markets Authority thinks it knows why. A review of veterinary regulation has concluded that the UK’s current system is not fit for purpose, with big price disparities, especially between vet practices and online veterinary pharmacies. Prescription price caps and a new regulatory regime are on the cards, and the CMA has highlighted the growing influence of big companies snapping up veterinary practices, with six chains now owning roughly a third of the market. So far, the market thinks that the CMA’s intervention will have little impact, with shares in Pets at Home and CVS group both rising on the news this morning.
The prospect of lower rates is weighing on the dollar, which is weak across a broad basket of major currencies this morning. By contrast, emerging market currencies are enjoying something of a rally, led by the Chinese yuan. Crude Oil has been swooning in recent trading sessions after the ceasefire between Israel and Hamas was announced. Today Brent crude futures are languishing around $62.1, their lowest level since late spring.
Precious metals however are becoming ever more precious. Gold is ratcheting higher, again, with the price pushing back over $4,200 this morning. But the real focus is on Silver, long known in markets as Gold’s evil twin, on behalf of the metal’s greater price volatility. Silver’s rally this year has far eclipsed that of gold and shows no sign of stopping, with the price surging 2% to $52.6 per ounce this morning. That takes the year-to-date rally to over 85%.”
