Weekly Espresso

All US markets fell sharply on Friday following Trump’s threat to impose an additional 100% tariff on China from as soon as November.

Earlier in the week, China added five new rare earth minerals (holmium, erbium, thulium, europium and ytterbium) to its control list. This takes the total number of restricted minerals to twelve. China has effectively developed a monopoly on rare earth minerals, and these additions will have a major impact on the US…

As expected, in a week where US President Trump reposted bizarre and offensive AI videos of House Minority Leader Hakeem Jeffries, promoted a “med-bed” conspiracy video, and announced plans to use “dangerous cities” as “training grounds” for the US military, he failed to stop a US government shutdown during last week’s negotiations.

It’s the first US government shutdown since the 35-day shutdown in December 2018…

On Tuesday, Fed Chair, Jerome Powell, reiterated the need for the central bank to balance the competing risks of high inflation and a declining job market when making interest rate decisions. Powell called it “a challenging situation” and said there was no “risk-free path” for the Fed to follow.

The US Federal Reserve committee voted to cut interest rates for the first time in nine months. The committee voted 11-1 in favour of the 0.25% cut, with Trump appointee, Stephen Miran, the only member calling for a larger 0.5% reduction.
Federal Reserve Chair, Jerome Powel, said after that “the balance of risks has shifted” away from inflation to concerns about the labour market. Though it remains to be seen what will happen next, with Powell stating “we’re not on a pre-set path” towards further cuts.

While waiting for the outcome of this week’s Federal Reserve meeting, US markets performed well last week.

A huge 30% boost in the price of Oracle shares drove markets up and generated some fresh AI enthusiasm. The database software maker has seen demand for its cloud services increase as AI companies seek the vast datacentres they need to power their technology. Oracle showed off some hefty growth prospects in their annual earnings reports. They actually missed their earnings and revenue estimates, but what got investors really excited was the prospect of 77% growth in cloud infrastructure revenue in 2026. On the back of this, Oracle have set new cloud infrastructure revenue targets of $32bn, $73bn, $114bn and $144bn subsequently over the next four years.

The yield on 30-year UK government bonds hit its highest rate in 27 years reaching 5.75% on Wednesday. The wider global bond sell-off has seen the rate rise steadily over the last 12 months. Yields dropped down to 5.57% later in the week following increased odds of a US rate cut. We weren’t alone in seeing borrowing costs rise, with yields on 30-year German, French and Dutch bonds rising to their highest level since 2011.