Market Report.
🇺🇸 U.S. President Donald Trump announced he will impose a 25% tariff on imported heavy trucks from October 1st, as part of his broader push to boost domestic manufacturing. Trump also announced new tariffs on other imported goods, including 100% duties on branded drugs, 50% on kitchen cabinets, and 30% on upholstered furniture.
🚛 Mexico was the largest exporter of medium- and heavy-duty trucks to the U.S. last year, followed by Canada, Japan, Germany, and Turkey. Domestic heavy-truck manufacturers may see limited benefit if the materials needed for manufacturing still face high tariffs.
📱 President Donald Trump signed an executive order approving a proposal to keep TikTok alive in the U.S. through a $14 billion transaction. The deal involves a new joint-venture company that will oversee TikTok’s U.S. business, with ByteDance retaining less than a 20% stake. The main investors in the new TikTok U.S. entity will be Oracle, Silver Lake, and the Abu Dhabi-based MGX investment fund, controlling around 45% of the stake. ByteDance investors and new holders will own 35%.
🔒 Oracle will oversee TikTok’s security operations and continue providing cloud computing services for the new U.S. firm. The CEO, Larry Ellison, is one of the strongest pro-Israel figures in America. In 2017 it was the largest donor to the IDF foundation, with more than 16 billion dollars.
⏳ The president extended ByteDance’s deadline to divest TikTok’s U.S. operations until December 16, preventing the Department of Justice from enforcing the national security law that would penalize app stores and internet service providers for providing services to TikTok.
📈 The U.S. economy grew faster than previously estimated in the second quarter, with GDP increasing at an upwardly revised 3.8% annualized rate – the fastest pace since Q3 2023. The strong growth was driven by robust consumer spending and business investment, though momentum appears to be slowing as the effects of tariffs and policy uncertainty start to filter through.
📉 Initial jobless claims dropped in the latest week, suggesting companies are still reluctant to lay off workers, though a compression of profit margins could pressure the labor market going forward. While the data suggests further interest rate cuts from the Federal Reserve may be unwarranted, there were notable downward revisions to profit estimates, indicating businesses were not fully passing on tariffs to consumers.
🏦 The Federal Reserve’s newest policymaker, Stephen Miran, who is a person very close to Trump, is pressing for sharp U.S. interest rate cuts to prevent a labor market collapse, arguing that his fellow central bankers are overly concerned about tariffs driving up inflation. However, Miran faces an uphill battle, as other Fed officials, including Chicago Fed President Austan Goolsbee, San Francisco Fed President Mary Daly, and Kansas City Fed President Jeffrey Schmid, have expressed more caution and a desire to move gradually.
🗣️ Goolsbee challenged Miran’s view that a drop in immigration will bring down inflation, arguing that a substantial decline in immigration could actually have an inflationary component, especially in services.
🇯🇵 Core inflation in Japan’s capital, Tokyo, held steady at 2.5% in September, staying well above the Bank of Japan’s 2% target. The slower-than-expected inflation was largely due to steps taken by the Tokyo government to cushion the impact of rising living costs, such as cuts to childcare fees and water charges.
📅 The BOJ could raise interest rates in the near future, with a majority predicting another 25-basis-point hike by the end of the year, though the timing is split between October and January. The BOJ will scrutinize this inflation data at its upcoming policy meeting on October 29-30, when it will produce fresh quarterly growth and price forecasts that will factor into its rate decision.
💬 Two BOJ members dissented at the last meeting, proposing unsuccessfully to hike rates to 0.75%, signaling growing awareness within the board about mounting price pressure. The USDJPY pair reacted strongly to the inflation data, with a weakening of the yen, as it shuns the chances of imminent rate hikes.
📉 Nigel Farage and Richard Tice of the Reform UK party have escalated their calls for the Bank of England to halt its bond-selling program, known as quantitative tightening. They argue the process is saddling taxpayers with billions in losses and pushing up government debt costs, and they want MPs to take a more active role in debating the policy.
🤝 Farage and Tice met with Bank of England Governor Andrew Bailey, urging him to relax the central bank’s approach to cryptocurrencies, which they say is holding back innovation. Reform UK has pledged to make the UK a “premier hub” for cryptocurrency if it wins power, with plans for a two-year pilot scheme to exempt some institutions from crypto rules.
💰 The party also wants to slash capital gains tax rates on cryptocurrencies and allow people to pay taxes in Bitcoin and other approved crypto. BoE recently announced it would be slowing the rate at which it is selling off its stock of UK bonds, from £100bn to £70bn a year.
📉 The cryptocurrency market is currently facing strong headwinds, with a sharp correction resulting in a $170 billion decrease in total market capitalization within the last 24 hours.
🌍 Geopolitics:
💡 Turkey and the American firm Mercuria have finalized a substantial 20-year liquefied natural gas (LNG) contract valued at $43 billion, which involves the supply of 70 billion cubic meters (bcm) of gas. This agreement comes in response to President Trump’s instruction to Turkish President Erdogan to cease reliance on Russian energy sources.
😳 During a meeting in the Oval Office, Donald Trump publicly embarrassed Turkish President Recep Tayyip Erdogan by stating, “Rigged election,” while pointing at Erdogan and adding, “He knows about rigged elections better than anybody.”
📞 Microsoft has suspended access to its Azure cloud services for Israel’s Unit 8200 following the discovery that the unit was storing millions of intercepted phone calls from Palestinians, which breaches Microsoft’s service agreements.
🚫 In a firm declaration, Donald Trump asserted that he would not permit Israel to proceed with the annexation of the West Bank, emphasizing, “I will not allow it. It’s not going to happen.” He further stated, “There’s been enough. It’s time to stop now,” signaling a clear stance on the issue.
✈️ Netanyahu’s plane avoided French airspace heading for New York by the ICC arrest warrant, flying only through Greek and Italian airspace and avoiding other European countries.
🗨️ Finnish President Stubb expressed strong views on the United Nations, stating that no single state should possess veto power. He proposed that if a member of the Security Council violates the U.N. Charter, its voting rights should be suspended.
⚠️ European diplomats have reportedly issued private warnings to Russia in Moscow, indicating that NATO is ready to take action by shooting down Russian aircraft if violations of airspace persist, according to Bloomberg. Russian ambassador to France warns World War III will start if NATO shoots down Russian planes invading their airspace.
🌍 As a part of his UN’s speech, Donald Trump described climate change as “the biggest scam ever committed in the world,” arguing that the predictions made by the United Nations are wrong and motivated by questionable interests. He pointed out that these projections come from individuals who have benefited economically at the expense of their own countries.
📉 Market View:
📉 Futures in the United States appear to be weakening further. S&P 500 futures fell yesterday to 6,625 points, from where they rebounded to the current 6,670 points. Meanwhile, Nasdaq futures dropped to around 24,435 points and have since bounced back to 24,650 points. The charts indicate bearish patterns that could lead to further corrections in the coming sessions.
💵 The dollar has continued to strengthen, surprising many, with its DXY index approaching 98.60 points during yesterday’s session before currently retracing to 98.40. This has resulted in sharp declines in other currencies against the dollar. EUR/USD has lost the 1.17 level and is currently trading at 1.1675. USD/JPY broke out of the range it was in for nearly two months, surpassing 149 and currently trading at 149.75.
🇪🇺 In Europe, yesterday’s session started with declines, which later attempted a partial recovery. DAX 40 futures are currently trading at 23,735 points. Eurostoxx 50 futures are still trying to conquer the 5,500 points level, currently trading at 5,475 points.
🛢️ Crude prices are returning to highs close to those seen at the beginning of September, with Brent crude nearly reaching $69 in the last hours.
💰 Gold futures have barely moved in the past two sessions and continue to hover around $3,775, very close to their historical highs.
📉 Bitcoin continued its sharp decline during yesterday’s session, losing the $112,000 level and falling to $109,000, from where it appears to have stabilized in recent hours, currently trading at $109,428.
