Market Report: September stillness descends ahead of Wall Street’s return from vacation
Derren Nathan, head of equity research, Hargreaves Lansdown: “The quiet start to September continues with the FTSE 100 down a touch this morning after Monday’s tepid session.
Trading on the continent has also been uneventful, but Swiss food giant Nestle could see its shares under pressure today after CEO Laurent Frexie’s shock dismissal over a romantic association with a junior colleague. The Gold Blend maker has acted decisively, but investors will want to see that his indiscretion doesn’t undermine the strategic overhaul he put into place following last year’s appointment. The immediate replacement with the internal hire of Philip Navratil, should go some way to limit the fallout from the scandal.
US stock futures are trading flat ahead of Wall Street’s return from the Labour Day holiday. Strong earnings and growing hopes for further interest rate cuts helped tech stocks in particular to sizzle over the summer. Now investors have returned to wait-and-see mode in what is typically one of the poorest months of the year for stock market returns. Continuing uncertainty over US trade policy and Donald Trump’s attempts to undermine the independence of the Federal Reserve Bank is driving renewed interest in safe haven assets, with gold briefly reaching a new high of over $3,500 per ounce.
That said the AI trade that has underpinned the recent outperformance of growth stocks isn’t going away, with corporate investment on AI Infrastructure forecast to hit $375bn this year and likely to exceed half a trillion dollars in 2026. What’s more, Fed Fund Futures are pricing in an 88.9% chance of a rate cut on 17 September. It’s not a done deal, but if Friday’s non-farm payroll data co-operates with forecasters and shows job creation of around 75,000, it should provide support for more doveish rate setters.
Brent crude oil prices have recovered to around $68.5 per barrel, as concerns grow that the three-year old conflict between Russia and The Ukraine could further disrupt oil supplies, after recent Ukrainian drones were reported to have taken out a significant chunk of Russia’s processing capabilities.”