The infoshot to help kick-start your week
US and China reach an agreement over rare earths
During Trump’s tour of Asia, Trump and Xi Jinping agreed to suspend China’s rare earth export controls in return for the US cutting the “fentanyl tariff” from 20% to 10%. China have also committed to buying a “massive” amount of American farm products including soybeans.
Trump rated the talks as a “12 on a scale of 1 to 10” but nothing has been signed yet and according to Chinese state media, Xi is expecting more talks to take place before a deal is done.
Interest rate decisions go as expected
The Fed continued to prioritise concerns about the US job market over inflation fears by cutting interest rates by 0.25% for the second month in a row. The key rate now sits between 3.75% to 4%. Fed Chair, Jerome Powell said US labour was, “less dynamic and somewhat softer” than earlier in the year, in part because of lower immigration.
The government shutdown, now on day 34, postponed the release of the latest official jobs figures forcing the Fed committee members to rely on private sector data from firms like ADP. The latest ADP report showed the US lost more than 32,000 jobs in September. By the time the Fed get back together in December the committee might have three new official job reports to digest if the shutdown ends. If it doesn’t, Powell hinted rate cuts could stop, saying “What do you do if you’re driving in the fog? You slow down.”
The European Central Bank (ECB) interest rate decision also went as expected on Thursday. For the third month in a row, the ECB kept the rate at 2%.
Nvidia becomes world’s first $5tn company
Growing concerns about the AI investment bubble couldn’t stop Nvidia becoming the first company in the world to reach a $5tn valuation on Wednesday. Nvidia’s share price did tail off a little by the end of the week, but today’s market cap is still higher than the GDP of Japan and only just below that of the world’s third largest economy, Germany.
Conversely on the same day, Meta shares tumbled 12% after they released their Q3 earnings report. Investors were spooked by their mushrooming AI spending plans and the news that the one-time tax charge caused by Trump’s “One Big Beautiful Bill” will cost the firm $15.93bn.
OBR downgrade likely to cause budget recalculation
Rachel Reeves’ plans for her upcoming budget took a blow after reports suggested the Office for Budget Responsibility (OBR) intends to downgrade its UK productivity growth prediction by 0.3%. The downgrade would force Reeves to redo her calculations and increase the likelihood of income tax rises in her budget.
Coming Up:
- S&P Global Manufacturing PMI, Monday 3 November at 14:45
- BoE interest rate decision, Thursday 6 November at 12:00
- US initial jobless claims, Thursday 6 November at 13:30
Notice:
For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
