The European and US indices rebounded on Monday, though the rebound was probably not based on high conviction, but looked more like the correction of last week’s decent selloff.
The European Stoxx 600 rebounded to flirt with the 50-DMA resistance, but the investor confidence index unexpectedly worsened in September, the British FTSE 100 recorded the best performance among the major European indices on Monday, but the energy and mining heavy FTSE 100 investors don’t sleep on their both ears given the selling pressure in energy and commodities that is backed by slowing China, and slowing global growth worries beyond China. Iron ore prices for example have now hit the lowest levels in almost two years, copper futures remain comfortably in the negative trend building since May peak, US crude has slipped below the $70pb last week on ample end-of summer driving season supply and growing demand worries (yes, yes also due to China) and Brent crude could soon join its US peer below the $70pb mark.
Consequently, Rio Tinto and Glencore in the FTSE 100 are among the worse performers of the index so far this year, while BP sank to the lowest levels in almost two years. So, yes, the FTSE 100’s ytd performance isn’t bad thanks to aerospace and defense companies. But the global growth concerns and gloomy outlook will likely limit the FTSE 100’s upside potential.
FTSE futures are in the negative at the time of writing.
In the US, the 2-year yield consolidated below the 3.70% level, but the US dollar index rebounded ahead of Wednesday’s CPI data – that will certainly not change the expectation of a 25bp cut from the Federal Reserve (Fed) at next week’s policy meeting, but that could – if significantly different than expectations – revive or temper the dovish Fed expectations for the rest of the year. The EURUSD extended losses to 1.1040 on rising dovish bets into Thursday’s European Central Bank (ECB) meeting, while the USDJPY rebounded from August lows.
Meh…
Apple closed nearly flat after revealing its new products yesterday. Apple Intelligence failed to impress. Many investors think that the AI capabilities remain relatively weak and can’t trigger a massive surge in new product sales, even less so as these features will be gradually updated and won’t even be available at the products’ launch date. As a result, Apple plunged as much as 1.5% during the event and closed the session slightly in the positive.
Trump vs Harris
Market’s attention will shift to politics as Donald Trump and Kamala Harris will face off in a debate today. We already mentioned that a Trump win would benefit Big Oil companies, small domestic businesses and cryptocurrencies. If we do the same exercise for Kamala Harris, a Harris win would support the ESG and green focused companies, healthcare, infrastructure and technology as she puts a particular emphasis on sustainable and inclusive growth.
