Market Report.
🏦 This week sees the U.S. Federal Reserve, the Bank of England, the Bank of Japan decide on interest rates.
🇫🇷 Last Friday, Fitch downgraded the credit rating of France to A+ from AA-. This has cast a pall over newly installed Prime Minister Sebastien Lecornu as he begins talks to draft the 2026 budget. The downgrade, citing political instability and rising debt, comes at a difficult time as Lecornu faces an October 7 (or possible October 13) deadline to present the first draft of the budget.
🎭 Lecornu faces a nearly impossible task of making the spending cuts demanded by investors, while also winning over three ideologically distinct parliamentary blocs with differing views on budget cuts.
📉 Today, new data came from China. China’s factory output and retail sales reported their weakest growth since 2024 in August, keeping pressure on Beijing to roll out more stimulus to support the slowing economy.
🏭 Industrial output grew 5.2% year-on-year, the lowest reading since August 2024 and weaker than expected. Retail sales expanded 3.4%, the slowest pace since November 2024. Fixed-asset investment also grew at a slower-than-expected 0.5% pace in the first eight months, marking its worst performance outside the pandemic.
📊 However, the likelihood of further policy easing, including monetary easing and fiscal expansion, is rising towards the end of the year to ensure the growth target is met.
🤝 U.S. and Chinese officials have begun talks in Madrid, Spain to discuss their strained trade ties, the TikTok divestiture deadline, and Washington’s demands that allies place tariffs on China over its purchases of Russian oil. The talks mark the fourth time in four months the delegations have met in European cities to try to keep the fractured U.S.-China trade relationship from collapsing under President Trump’s tariffs.
🌍 The talks will also cover U.S. demands that allies impose “meaningful tariffs” on imports from China and India to pressure them to stop buying Russian oil and cut off funding for Russia’s war in Ukraine. Spain is hosting the talks, which it sees as an opportunity to consolidate its role as a venue for high-level strategic negotiations, despite tensions with the Trump administration over its relationship with China.
🤝 The U.S. and UK will announce agreements on technology and civil nuclear energy during President Trump’s second state visit to the UK this week. Prime Minister Keir Starmer will host Trump at his Chequers country residence on Thursday to discuss working more closely together, particularly on issues like Ukraine, and with the aim of finalizing promised lower tariffs for steel and aluminum.
⚛️ The collaboration US-UK aims to speed up new nuclear projects and investments, including plans for US company X-Energy and UK’s Centrica to build up to 12 advanced modular reactors in northeast England. An £11 billion project is also expected to be announced by US company Holtec International, France’s EDF, and real estate partner Tritax to develop advanced data centers powered by small modular reactors (SMRs) in central England. Prime Minister Starmer said these “major commitments” will help drive down household energy bills in the long run by ushering in a “golden age of nuclear” power. Rolls-Royce entering the US regulatory process for its SMR technology.
💼 Before Trump’s arrival, the UK announced over £1.25 billion in U.S. investments from companies like PayPal and Bank of America, while more deals are expected as part of the technology agreement. However, Starmer’s decision to fire his ambassador to the U.S., Peter Mandelson, over his ties to convicted sex offender Jeffrey Epstein, has created an embarrassing complication ahead of the visit.
📈 The US Technology sector, which had been behind recently, has finally managed to catch up and NASDAQ closed at new highs on Friday. OpenAI’s massive cloud computing commitments with companies like Oracle, Broadcom, Microsoft, and Nvidia have been a major catalyst for the stock market rally, contributing over $4.5 trillion in combined market cap gains for those tech giants.
📰 According with NYT, the Trump administration is attempting to engineer a radical reconstruction of capitalism in the U.S., moving towards a model that resembles China’s state-controlled economy. This includes actions like the “golden share” arrangement in the Nippon Steel-U.S. Steel merger, taking equity stakes in companies like Intel, and using tariffs for political favoritism. These moves blur the line between private enterprise and state ownership, substituting political calculation for competitive discipline and market-driven innovation.
⚠️ The NYT recalls that this “crony capitalism” is dangerous, as it can lead to the hollowing out of start-ups and small businesses, just as has happened in China’s authoritarian economy. “Abandoning the American model in favor of the Chinese approach would corrode even the strongest economic systems, as China’s own stagnation demonstrates.”
💥 The bombing of Qatar by a U.S. ally, Israel, is an unprecedented and shocking move that confirms Israel’s control over U.S. foreign policy in the Middle East.
❓ Relations between the USA and Israel are increasingly in question by public opinion.
💰 Amid the controversy in the conservative sector of the US, where more and more members are talking about Israel’s influence over the US and Congress, the Trump administration is allocating $3.5 billion to replenish and upgrade missile defense systems that were used to help defend Israel.
📊 Market Review.
📈 Markets in the United States are regaining the strength that the technology sector was lacking. Nasdaq futures finally surpassed their previous highs on Friday and are now in sync with Mini S&P 500 futures. Nasdaq futures are currently trading at 24,145 points, while S&P 500 futures stand at 6,598 points, both at historic highs.
💵 The dollar index is cooling off again, dropping to support zones and currently trading at 97.65 points. The EUR/USD pair is regaining its tone, trading above 1.17, currently at 1.1725.
🇪🇺 In Europe, futures are starting the week with optimism. DAX 40 futures continue to face the main challenge of surpassing 23,900 points, currently trading at 23,780 points. Eurostoxx futures have managed to surpass 5,400 points, currently trading at 5,413 points.
⛽ Crude oil also recovered some of its losses last Friday, with Brent crude momentarily rising above $68 before falling to the current level of $67.15.
🏅 Gold Futures shows strength and is beginning to form a bullish pattern near its historic highs, currently trading at $3,675 per ounce.
💰 Bitcoin continues its advance and has approached what seems to be its next resistance level of $117,000 at least on two occasions since Friday.
