This Week–
The highlight of the economic week will be Tuesday’s speech from Fed Chair Powell, which could give further clues on inflation and the Fed’s future rate policy. On Friday PCE Index figures, the Fed’s preferred measure of inflation, will be posted. President Trump is set to address the UN General Assembly on September 23rd in a session expected to be dominated by discussion about the Middle East and Ukraine.
Stocks –
INTEL
INTEL’s price surged 22.7% to hit its highest level in over a year after Nvidia announced it would take a stake in the company to the tune of a $5 billion investment to create a partnership aimed at developing CPUs for Nvidia’s AI data centre platforms. The vote of confidence in Intel, which had been falling behind other chip companies in recent months, may have marked a turnaround in the fortunes of INTEL. Following the news, a number of major investment banks raised their price targets on the company amid confidence that Intel will expand its manufacturing capabilities and potentially create partnerships with other firms.
NOVO NORDISK
Novo Nordisk’s stock price jumped 8.46% to an almost two-month high on investor confidence that Novo’s flagship drugs, Ozempic/Wegovy, demonstrated through trial results that they are effective in weight loss, whether the drug is taken in liquid or pill form. The European Medicines Agency also extended the usage of its Rybelsus drug to include cardiovascular benefits, enhancing the drug’s profile. Investment banks have upgraded the stock price in recent weeks, citing the dynamic new leadership of CEO Doustdar, appointed in August.
Commodities
Crude Oil
Crude oil prices inched 0.03% lower, despite a large drop in US inventories, signaling an increase in demand for oil over the previous week. However, a rising dollar and concerns about global demand offset the positivity. Additionally, increased output from OPEC will begin from October, pressuring oil prices somewhat.
Gold
Gold prices increased 1.28% in the week the Fed cut interest rates by 25 basis points and outlined that a further two cuts are expected in October and December. Investment banks such as Deutsche Bank upgraded their gold forecasts to $4000 on the news. Global tensions in the Middle East and between Russia and Ukraine remained in focus, after a number of Russian drones violated NATO countries' airspace that borders with Russia and acted as a catalyst for the safe-haven metal.
Silver
Silver prices rose sharply by 2.4% to hit a fresh 14-year high after the Fed decision, since lower (or the prospect of lower) interest rates reduce the opportunity cost of holding a non-yielding asset. A softer dollar also boosted the metal, making it more affordable for foreign currency buyers. Silver prices continue to benefit from positive economic data, which implies that industrial demand for electronics, solar panels, etc, that contain silver will remain high.
GBP/USD
The GBP/USD declined 0.60% as a cut in Fed interest rates was offset by resilient US retail sales, which saw the dollar rise towards the end of the week. In the UK Bank of England meeting minutes suggested that rate cuts could be on hold in the short term, despite a slowing economy. Ongoing worries about UK fiscal credibility and political difficulties for the UK government are also pressuring Sterling.
Recap –
Last week, the S&P 500 climbed 1.2%, the Nasdaq jumped 2.2% and the Dow Jones increased 1%.
US stock indices posted another week of gains as the S&P 500 closed at a record peak on Friday. The Fed rate cut was a major catalyst alongside expectations of a further two rate cuts before the end of the year. The US and China moved towards a deal on the transfer of Chinese TikTok to US ownership following a call between Presidents Trump and Xi on Friday, and confirmed the two would meet in person at the APEC meeting (Oct 31 – Nov 1). The US urged NATO countries to cease purchasing Russian energy. Crude oil prices inched lower while Natural Gas prices declined 2% to a three-week low. Gold prices posted a fresh all-time high on Wednesday, and silver prices soared to another 14-year high on Friday on projected rate cuts beginning next month. Platinum prices climbed slightly to a seven-day high, while Palladium retreated to an almost ten-day low.