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Good evening,
Investors largely shrugged off the government shutdown as equities traded firmer again today, led by gains in semiconductors. European and UK stocks also hit all-time highs with gains from chip companies like ASML (mcap $340bn).
Core bond yields were little changed, with the 2-year Treasury yield closing at 3.55%, its lowest level in two weeks. Currency markets saw modest moves, with the dollar index recovering slightly after four consecutive days of decline.
Crude oil fell almost 2%, with Brent trading around $64.25, marking a fourth consecutive day of decline and hitting near a four-month low. The drop is mainly due to concerns about global oversupply, with OPEC+ expected to approve an additional output increase in November, as Saudi Arabia aims to regain market share. Moreover, rising US crude and gasoline stockpiles and resumed oil exports from Iraq’s Kurdish region add to supply pressures.
Geopolitics: The US will provide Ukraine with intelligence to support long-range missile strikes on Russian energy targets, as the Trump administration considers sending advanced weapons to Kyiv.
Tariffs: The EU intends to propose doubling steel import tariffs to 50% to shield its industry from Chinese overcapacity, aligning more closely with US tariff levels and reflecting rising trade tensions.
Fed: Dallas Fed President Logan said the central bank must be “very cautious” about further rate cuts, warning against easing policy too much and risking a painful reversal to restore price stability. She added that the current monetary policy is only modestly restrictive.
Data: Switzerland’s inflation rose 0.2% YoY, steady from the previous months, while consumer prices declined 0.2% MoM. In September, the Swiss National Bank paused its series of rate cuts, keeping the key policy rate at zero, after modest Q2 GDP growth of around 0.5%, signalling cautious optimism.
The €-zone unemployment rate edged up slightly to 6.3% in August from a record low of 6.2% the previous month, breaking a steady downward trend but remaining near historic lows.
Earnings: Leading British supermarket chain Tesco (mcap £30bn) released its semi-annual results today. Group sales rose 5.1% YoY to £33bn, while underlying operating profit increased 1.6% to £1.7bn, and like-for-like sales gained 4.3%. It lifted full-year guidance reflecting strong UK performance despite cost pressures and intense competition. Shares gained 5% today, reaching a 12-year high and accumulating a 23% rally this year. (IR)
Business: Tesla surprised Wall Street with a strong Q3 sales update, delivering a record 497k vehicles globally, a 7.4% increase YoY, driven largely by a 9% jump in Model 3 and Model Y deliveries as US buyers rushed to benefit from the expiring $7,500 EV tax credit. Meanwhile, deliveries of other models declined 30%, reflecting continued challenges in those segments. Tesla will release full Q3 financials on Oct 22. Shares dropped 5% and remain 8% higher YTD. (CNBC)
Deals: Berkshire Hathaway (mcap $1tn) announced it will acquire Occidental Petroleum’s (mcap $43bn) petrochemical division, OxyChem, for $9.7bn in cash, its largest deal since 2022. Occidental plans to use $6.5bn of the proceeds to reduce debt, strengthening its financial position and enabling a resumption of share buybacks. OXY Shares dropped 7% today.
In private markets, OpenAI‘s valuation soared to approximately $500bn following a secondary share sale where investors, including SoftBank and UAE-based MGX, purchased about $6.6bn of employee-owned shares. This deal underscores the intense investor interest in artificial intelligence and highlights OpenAI’s position as the world’s most valuable private startup ahead of SpaceX and ByteDance. (ABC)
Representatives of Armani have reached out to potential buyers over a minority stake in the renowned Italian fashion group, according to media sources, launching an informal auction for a portion of one of the world’s most iconic fashion empires just weeks after the designer’s passing. (BoF)
IPOs: Regional community bank Commercial Bancgroup (CBK) raised $172mn in its upsized listing on Nasdaq, priced at $24 for a total market value of $340mn. Shares closed unchanged.
Day ahead: US non-farm payrolls (+22k exp); €-zone PPI; Italy retail sales.
See you tomorrow.
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