Macro at a glance
U.S. market rates have surged by more than 10% since early October, despite the Federal Reserve’s recent shift toward rate cuts. This rise is driven by escalating debt levels and political uncertainty. With the debt-to-GDP ratio expected to exceed 100%, and $9 trillion in debt needing refinancing next year, Treasury auction volumes are set to expand by around 30%. Political dynamics add further volatility, a Harris administration might introduce $2 trillion in new social spending, while a Trump victory could bring unpredictable, inflationary policies. Combined, these factors create considerable uncertainty for U.S. bond markets and future rate stability. (FT, CNBC)
The German economy will contract by 0.2% this year, after a 0.3% recession in 2023. This complicated economic situation is likely to persist in the future, if we look at the automotive and chemical industries, for example, which are key drivers of the German economy. Volkswagen announced on October 28 that it would close 3 plants in Germany, and BASF warned of a possible dividend cut for 2025. The ruling coalition may not survive its economic difficulties, particularly on the FDP side. (Handelsblatt, Der Spiegel)
Prime Minister Shigeru Ishiba, who took office on October 1, called early parliamentary elections in the hope of strengthening the position of his party, the Liberal Democratic Party (LDP). However, the elections held on October 27 resulted in a debacle for the LDP, which lost its majority in the lower house of parliament for the first time since 2009. This defeat could reinforce political instability in Japan, as illustrated by the 1% fall in the yen against the dollar and euro the day after the elections. (NY Times, FT)
At the BRICS summit in Kazan (October 22-24), India and China reached an agreement to put an end to territorial rivalries in the Himalayas. It was China that backed down, allowing India to announce the creation of the Union Territory of Ladakh (90,000 km²). This is a major diplomatic victory for Narendra Modi's government, and a further example of the decline of American influence in the world. This move, rare for China, seems strategic: Beijing is seeking to free up its troops and concentrate them on Taiwan. This could indicate a desire to attack the island, not with a direct war, but with a gradual blockade, to avoid triggering a direct American military response. (Les Echos, Times of India)
One Sector, One Insight
Basic Materials and Energy :
Oil prices surged by over 8% due to escalating tensions in the Middle East, particularly after Iran’s missile strikes on Israel. This raised fears of supply disruptions from key producers in the region, driving Brent crude prices higher as markets anticipated impacts on global oil supplies. Tempered by U.S. calls for restraint, the conflict keeps oil prices volatile due to ongoing threats to key infrastructure. (FT)
Consumption and General Public Services:
On October 22, U.S. health authorities linked a deadly E. coli epidemic in 10 states to McDonalds hamburgers. The company's share price fell by up to 10% in after-hours trading during the day. McDonalds (MCD) announced that it was withdrawing its burgers from sale in the states concerned. However, this health scandal had no visible impact on the quarterly results, released on October 29, which reported a 3% rise in sales to $6.9bn, but a 3% drop in net profit to $2.26bn. (FT)
Financial Services :
Category 5 Hurricane Milton hit Florida on October 9. It caused around 60 billion euros in damage, and caused major variations in the reinsurance market. Indeed, after falling at the beginning of the month in the face of fears of the hurricane, these values rose sharply from the 9th to the 15th, when the hurricane was downgraded to category 3, and the prospect of higher premiums next year, and therefore higher revenues, were taken into account by the market. (Les Echos)
Healthcare :
Sanofi (SAN) announced on October 11 that it was in talks to sell 50% of its subsidiary Opella, which produces the Group's consumer drugs. On October 21, after a competition between several private equity funds, the American CD&R was chosen, with an offer of 16 billion euros. In the face of fears that production might be relocated, BPI (Public Investment Bank) France announced that it was taking a 2% stake in Opella, as well as a seat on the Board of Directors. (Le Figaro, Barrons)
Industrials :
Tesla’s (TSLA) third-quarter profit beat expectations with 72 cents per share against the forecasted 58 cents, while revenue came in slightly below forecast at $25.18 billion. Elon Musk projected 20-30% growth in vehicle deliveries next year with new autonomous features and lower-cost models. He also highlighted advancements in Tesla's autonomous technology and future plans for the Cybertruck, which became the third-best-selling electric vehicle in the U.S. (CNBC)
Technology and Network Equipments :
ASML (AMS) presented these results on October 15, in the middle of the afternoon, although they were expected after market close, due to a technical error. The European semiconductor leader saw its shares plunge 16% after revealing net bookings (a measure of orders placed by ASML customers) of 2.6 billion euros, half what investors were expecting. ASML also cut its revenue forecast for 2025 to 30-35 billion euros, from a previous estimate of 40 billion euros, reflecting cautious customer spending and a slower recovery in sectors other than AI. These poor results led to a decline across the Semiconductor sector, with the PHLX Semiconductor Sector (SOX), for example, falling by over 5% on the day. (FT)
The stock of the month
Trump Media & Technology Group Corp (DJT) shares are up 139% this month, bringing the company's valuation to $7B. The stock is used by Wall Street as an indicator of Trump's chances of becoming president again. Indeed, Truth Social, Donald Trump's new social network, posted a second-quarter loss of $16 million on sales of less than $1 million.
Key performances
Name | As of Oct 31 | Monthly change | YTD |
S&P500 | 5705.45 | -0.06% | 20.30% |
Dow Jones | 41763.46 | -0.93% | 10.73% |
NASDAQ | 18095.15 | 1.03% | 22.55% |
FTSE100 | 8110.10 | -1.50% | 5.58% |
CAC40 | 7350.37 | -2.46% | -1.90% |
DAX | 19077.54 | -0.37% | 14.15% |
SMI20 | 11873.79 | -1.76% | 6.30% |
MSCI WORLD | 3647.14 | -1.30% | 15.04% |
VIX | 23.18 | 17.39% | 71.29% |
CHF/USD | 1.1580 | -2.53% | -3.04% |
CHF/EUR | 1.0639 | -0.65% | -1.42% |
Brent $/bbl | 73.13 | -0.58% | -3.64% |
Gold Spot $/oz | 2746.88 | 3.39% | 33.41% |
Upcoming events
Nov 01 : US Unemployment Rate
Nov 05 : US Presidential Elections
Nov 07 : Fed Interest Rate Decision
Nov 13 : US Inflation Rate
Nov 27 : Core PCE Price Index & FOMC Minutes
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Written by Hippolyte Metzger-Otthoffer, Jeremy Kündig and Pierre Siomash
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