Monday’s mood was one of anxious anticipation ahead of the crunch autumn Budget and a packed agenda of delayed US data.
The pound traded in a narrow range against the euro and the US dollar. No significant news arrived that might have shifted the dial, but that could change fast as we get deeper into the week and closer to the chancellor’s massive fiscal set piece.
The business environment worsened in Germany this month as companies showed little indication they expected a shift recovery. Conditions slipped from 88.4 to 88.1, according to the Ifo business climate survey, well below the expected 88.5. Manufacturers and retailers were particularly glum, although tourism gave the services section a much-needed boost.
Japan’s government is reportedly mulling an intervention to protect the yen and to beat back soaring yields on its debt. Worryingly, the talk in Tokyo is of Japan’s “Truss moment”, with the promise of a significant fiscal stimulus putting pressure on its currency, stock market, and bonds.
American tech stocks – for some time flagged as the canary in the AI valuations coalmine – extended Friday’s rally. Market expectations that the Federal Reserve will cut rates once again next month have been creeping up and sat at around 60% as of last night, another tailwind in the AI sails.
Geopolitics has come screeching back into frame this week thanks to frantic negotiations between Ukraine and Russia (conducted via intermediary United States, of course). Ukraine has made significant changes to a deal first proposed by Washington, although it appears unlikely Russia will accept the offer ahead of Donald Trump’s Thursday deadline.
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