Market Report.
📜 A U.S. appeals court recently ruled that most of Trump’s tariffs are illegal, but the court allowed the tariffs to remain in place through October 14 to give the administration time to appeal to the Supreme Court.
💰 U.S. Treasury Secretary Scott Bessent expressed confidence that the Supreme Court will uphold President Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on most trading partners.
📄 Bessent said the administration has a backup plan if the Supreme Court does not uphold the IEEPA, which could involve using Section 338 of the Smoot-Hawley Tariff Act to impose tariffs of up to 50% for five months. He is also preparing a legal brief for the U.S. solicitor general that will underscore the urgency of addressing decades of trade imbalances and stopping the flow of deadly fentanyl into the U.S.
💼 European Central Bank (ECB) policymakers were divided on whether inflation was more likely to come in higher or lower than expected when they met in July. The ECB left its key interest rate at 2% in July and will likely do so again in September, before discussions about further cuts likely resume in the autumn, especially if the economy weakens under U.S. tariffs.
📉 We indicated here some time ago that the US trade war with China could bring deflation to Europe if China, in the absence of an agreement with the US, ended up diverting its product surpluses to European markets. This idea is now part of the ECB’s considerations.
😂 Want to hear a funny thought? In the US, we have a Fed that does not want to lower interest rates because it does not need to, with Wall Street close to historic highs and solid growth and employment data. They claim that tariffs could lead to inflation.
🇪🇺 In Europe, we have an ECB that has urgently lowered rates at every meeting in recent months because it needs to, with the German and French economies in trouble. They claim that tariffs do not necessarily lead to inflation.
🤔 The Fed and the ECB are presenting conflicting narratives on the same issue. Who should we believe? Neither! Let us follow the markets.
📊 In any case, Friday’s employment report will be crucial to understanding the Fed’s next moves.
📈 Meanwhile, German inflation accelerated more than expected in August, rising to 2.1% from 1.8% in the previous month. This may bring an end to the recent disinflationary trend. The German data suggests that inflation in the euro zone has stopped falling. Germany’s core inflation rate, which excludes volatile food and energy prices, remained unchanged at 2.7% in August, stubbornly above the ECB’s target. If there is an inflationary spike in Europe, real interest rates will turn negative and the ECB may be forced to reverse course and consider raising rates.
🪙 Gold is benefiting from its status as a safe-haven asset amid political and economic turmoil, as well as the prospect of lower interest rates from the Federal Reserve. Investors are seeking safety in gold due to concerns over market turmoil fueled by the U.S. trade war, as well as growing concerns over the Fed’s independence and its ability to maintain confidence in the U.S. economy.
💊 The new trial data suggests Novo Nordisk’s weight loss drug Wegovy has a 57% greater reduction in the risk of heart attack, stroke or death compared to Eli Lilly’s rival drug tirzepatide. This is good news for Novo Nordisk as it battles challenges in the key U.S. market. The huge growth of weight loss drug usage has attracted significant investor interest, with trial data on various drugs’ impacts being closely watched.
🌍 Geopolitics:
✈️ Media reports indicate GPS interference affected Ursula von der Leyen’s flight to Plovdiv, Bulgaria, potentially causing a one-hour holding pattern.
🇮🇱 President Trump says during an interview: Israel is amazing… Israel was the strongest lobby I’ve ever seen. They had total control over Congress, and now they don’t. Netanyahu said that the patriotic MAGA movement cannot be MAGA if it is anti-Israel.
🪖 Germany’s highest-ranking general, Carsten Breuer, said the NATO military exercise “Quadriga 2025” involving 8,000 German troops will likely overlap with a planned Russian military drill called “Zapad” in Belarus and Russia. The German general emphasized that the goal is to deter, not escalate, and that the overlapping exercises are “inevitable.”
⚔️ Recent events in Europe, such as Ursula Von der Leyen’s strange press conference at the militarised border of Belarus, or the comments by Finland’s foreign minister calling Russia ‘a cancer that needs to be cured’, suggest that while the Trump administration is trying to reach an agreement between Russia and Ukraine, Europe is rushing to create war tensions.
💰 As we explained in previous reports, Europe’s military budgets will only go ahead if the war in Ukraine continues; if there is a peace agreement, the deal will be off.
📈 Yesterday, the european Stoxx Aerospace and Defense index rose 2.2% after the UK announced a £10 billion ($13.5 billion) warship export deal with Norway, supporting 4,000 jobs. Shares of defense companies like BAE Systems and Babcock International gained 1.9% and 2.1% respectively on the news.
⛽ European Union countries are looking for ways to close any remaining loopholes that could allow Russian gas to be mixed into the bloc’s supplies once a ban takes effect by the end of 2027. Denmark, which holds the EU’s rotating Presidency, has proposed changes that would require importers to provide evidence that the gas they are bringing in has not been produced in Russia.
🇫🇷 Meanwhile, France has set records for purchasing Russian LNG, becoming the largest importer of Russian liquefied natural gas in the EU in early 2025. France paid around 600 million euros for Russian LNG during this period, despite loudly criticizing Russia and supporting Ukraine.
⚰️ Four candidates from the AfD (Alternative for Germany) party have died unexpectedly in North Rhine-Westphalia just a few weeks before the local elections in the state. According to the police, there is no evidence of any outside culpability – the deaths appear to be from natural causes. As a result of the candidate deaths, postal voting documents that have already been sent out in the affected constituencies are now invalid and need to be reissued.
📊 Market View.
🇺🇸 Following a public holiday in the United States, and with operators awaiting employment data from the world’s largest economy, the indices appear static. The Mini S&P 500 futures have barely moved since yesterday, currently standing at 6,470 points. The Nasdaq 100 futures find themselves in a similar situation, trading at 23,440 points at this moment.
💵 The US dollar index approached 97.50 points yesterday, rebounding upwards to the current 97.80, but failing to recover the 98 points mark. This indicates weakness in the dollar, as it awaits a potential interest rate cut by the Fed. Pairs like EUR/USD have managed to take advantage of this perception, trading above 1.17 yesterday and reaching 1.1735, from where they have since fallen back to the current 1.17.
📉 Meanwhile, the European market appears confused. Yesterday was a good day for European stocks, particularly in the defence and healthcare sectors, yet the indices display suspicious bearish patterns. The DAX 40 futures are attempting to stay above 24,000 points, while the Euro Stoxx 50 futures are trying to maintain the 5,350 points level, currently trading at 5,370.
🛢️ Crude oil has, for the first time since the first week of August, managed to rise above $68.50, with Brent crude currently at $68.70.
📈 The upward movement of gold has been spectacular, with futures reaching $3,578 per ounce yesterday and now trading at $3,555.
💰 Bitcoin has rebounded sharply after falling below $108,000, currently positioning itself at $110,380.
