Politics in focus on stock exchanges and markets, SAP report and other corporate news
Stock market news
• Europe’s largest software maker SAP reports third-quarter earnings today. The giant will set the tone for German and broader stock markets, as it makes up 15% of the Deutsche Boerse DAX index with a market value of €261 billion ($284 billion). SAP’s cloud and business planning software businesses have been strong this year, driving the share price up 53%. That’s key context given how stock markets were hit last week by a series of earnings reports from big US banks and chipmakers such as ASML.
• The dollar is also rising on views that Trump's proposed tariff and tax policies could keep U.S. interest rates high and undermine the currencies of its trading partners. Analysts say rising real rates in the U.S. are pushing the dollar higher. But more importantly, interest rates elsewhere are falling rapidly, giving the dollar a yield advantage. The euro has fallen more than 3% in three weeks and broken its 200-day moving average. It is now parked near a 2-1/2-month low.
• The gap between US and German 10-year bond yields widened to about 189 basis points (bps) as US yields rose in recent weeks and German yields fell.
• Users are complaining en masse about the iPhone 16 Pro and Max - the models freeze and reboot 20 times a day, - MacRumors. Before that, the display simply stops responding. There are no such problems with the regular iPhone 16.
• Bank of America: U.S. government spending was $4.5 trillion in 2019, up from $6.9 trillion today. U.S. national debt was $23.2 trillion in 2019, up from $35.4 trillion today. Neither presidential candidate is committed to balancing the budget, putting pressure on U.S. government bonds.
• Boeing sells small defense surveillance unit. Boeing said Digital Receiver Technology, which makes wireless equipment used by intelligence agencies, will be sold to Thales Defense & Security, a unit of Europe's largest defense electronics firm Thales SA.
• Investment in generative AI startups surpassed $3.9 billion in Q3 2024 (That doesn’t include OpenAI’s $6.6 billion round). Of that, $2.9 billion went to U.S. companies across 127 deals. Among the biggest winners in Q3 was coding assistant Magic ($320 million in August). Not everyone is convinced that generative AI will return investment. But many investors are, according to the latest funding tracker PitchBook.
• Beijing's bourse plans to help small tech companies get listed It will help small and medium-sized tech companies with training and access to funding so they can get listed on the exchange, it said on Sunday, as part of government plans to boost innovation.
• Midjourney plans to release an updated web tool that will allow users to edit any image they download from the web using Midjourney's generative AI.
The updated tool, which will be released "early next week," will also allow users to retext objects in images to "recolor" their colors and details to match their captions.
• Investors are enjoying a particularly strong start to earnings season, with big tech giants like Apple (AAPL) and Amazon (AMZN) yet to report. Seventy-nine percent of S&P 500 companies delivered a positive surprise in the third quarter, above the overall five-year average of 77%, according to FactSet senior analyst John Butters.
• "Hurricanes Helen and Milton, as well as the Boeing strike, are beginning to distort economic data. Helen made landfall on September 26 and Milton on October 10, with the most significant impact on the data yet to come," Oxford Economics wrote in a note on Friday.
• The interest burden on U.S. debt rose to its highest level since the 1990s in the fiscal year just ended, raising the risk that fiscal problems will limit the political options for the next administration in Washington.
• Bank of America Global Research: 10-year real rates have historically been the most important driver of gold prices. However, the correlation between the two has weakened: lower rates are still bullish, but higher rates do not necessarily put pressure on gold.
• Fiscal policy in both the US and other countries may be unsustainable. US government debt is forecast to reach a new record high in 3 years, leading to higher debt servicing costs.
This makes gold an attractive asset, so we reiterate our $3,000/oz target for 2025.
• Tesla has introduced wireless charging for its robotaxi. It allows the battery to be charged from 35% to 100% in less than an hour.
• OpenAI has begun testing the ChatGPT app for Windows.
• Experts say there is growing confidence that Nvidia will become the first major tech company to reach a $4 trillion valuation.
• Nebius to Resume Nasdaq Trading After Severing Ties with Russia and Yandex Nebius. The company formerly known as Yandex, which now focuses on cloud infrastructure for using artificial intelligence (also known as “AI compute”), will begin trading on public markets again – more than two years after Nasdaq halted trading due to economic sanctions.
• Berkshire Hathaway increases stake in Sirius XM radio after Malone deal.
• On Friday, Chinese company DJI filed a lawsuit against the US Department of Defense for adding the drone maker to a list of companies that allegedly cooperate with Beijing's military.
• Three major tobacco companies have reached a tentative multibillion-dollar deal with Canada. They will pay nearly $24 billion to settle a long-running legal dispute in Canada.
• The US Securities and Exchange Commission has given the green light for the listing of spot bitcoin ETF options on the NYSE.
• Former OpenAI CTO Mira Murati is raising capital for a new artificial intelligence startup. Hedge funds are buying tech stocks at the fastest pace in five months.
Global hedge funds have been buying up U.S. technology stocks such as semiconductors and hardware this week.
Key events that could impact markets on Monday:
- Data: German producer price inflation, UK house prices
- Speakers/events: Fed's Laurie Logan, Neel Kashkari, Jeffrey Schmid and Mary Daly; ECB's Gediminas Simkus; global financial leaders gather for annual IMF and World Bank meetings
- Earnings: SAP SE, Unipol Gruppo, Bollore SE, Sandvik AB, Nucor Corp.
Fundamental news
• Moldova: Maia Sandu leads in presidential elections (38%), but does not win in the first round. The pro-Russian candidate came in second (29%). Moldovans voted against the country's accession to the EU (54%). Only 45% voted for it.
• Elon Musk is launching a daily $1 million giveaway for Trump petition signatories. Buying votes will cost $17 million.
• The presidential battle for Pennsylvania is heating up. Trump even worked at a local McDonald's. It looks like this state will decide the race.
• The US is investigating a leak of top-secret US intelligence about Israel's plans to retaliate against Iran, CNN reported, according to three people familiar with the matter. One of the people confirmed the authenticity of the documents.
• US Defense Secretary Lloyd Austin cannot yet confirm the report that North Korea is sending troops to Russia to participate in the war against Ukraine. At the same time, Austin noted that if this is true, then such a step is “worrisome.”
• Lawmakers demand Biden administration tighten sanctions on Russian oilfield services industry - FT
In a letter to the White House, lawmakers say current rules allow major US company SLB to fuel the war machine. They also demanded the Treasury and State Departments explain whether they sanctioned deals in which SLB, better known by its former name Schlumberger, imported $17.5 million worth of equipment into the HA between August and December last year.
• Xi Jinping told Kim Jong-un that China is ready to work with the DPRK to “defend peace in the region and the world.”
• Brazilian President Lula da Silva has been hospitalized and will allegedly "not be able" to attend the BRICS summit in Kazan, Russia, - CNN Brasil. Brazil's rapprochement with China and Russia is undermining trust in the country.
• Britain and Germany are set to sign a "historic" military agreement in the near future, - Times. The agreement will allegedly allow British and German forces to conduct joint military exercises on NATO's eastern border with Russia.
• Israel plans strikes on Iran to topple current regime - The Times. According to the newspaper, Netanyahu hopes that future Israeli airstrikes will help weaken Iran's Islamic Revolutionary Guard Corps (IRGC) and the Basij paramilitary force - two pillars of the Islamic regime that have played an important role in suppressing mass protests against it.
• Chinese leader Xi Jinping urged the military to prepare for war - state broadcaster CCTV. Xi visited the People's Liberation Army's missile force days after completing exercises near Taiwan.
• The Guyana authorities will pay $2,000 to each family. This is how the country decided to celebrate a new oil field.
• Germany faces a "real threat" of deindustrialization, the head of the German Association of Industrialists has warned. Overregulation of business, bureaucracy, high production costs and political inaction are the main reasons why industry is leaving Germany. This was stated by the chairman of the Association of German Mechanical Engineering and Industrial Equipment Manufacturers (VDMA) Bertram Kavlat in an interview with the publication Welt am Sonntag.