Market update: Getting to the top is easier than staying there

AI was leading the news again last week, but this time none of the Magnificent Seven companies were responsible.

Oracle, a tech company which has reinvented itself multiple times, reported earnings which showed massive growth in its cloud revenue – driven primarily by AI-related demand. Part of this surge in business was a $300 billion contract with OpenAI which will see Oracle provide the ChatGPT creator with computing power over the next five years. The company’s share price jumped more than 36% on Wednesday, before retreating and finishing the week with a 25% gain.

Markets had a muted reaction on Monday to geopolitical developments during the preceding weekend. In Japan, Prime Minister Shigeru Ishiba announced his resignation less than 12 months after taking office, reigniting political turmoil in the nation.

Meanwhile, the French government collapsed after PM François Bayrou lost a confidence vote. He was replaced by Sébastien Lecornu on Wednesday, who became France’s fifth prime minister in less than two years. In economic news, for the second consecutive time the ECB voted to maintain current interest rates last week in a decision which was widely anticipated.

GDP data showed the UK economy stalled in July, recording 0% growth following a 0.4% expansion in June. The headline US CPI inflation rose to 2.9% in August from 2.7% in June and July, marking its highest level since January. Meanwhile, producer prices unexpectedly fell -0.1% MoM in August.

The University of Michigan’s Consumer Sentiment Index fell 2.8 points to 55.4 in September, a four-month low. A New York Fed survey of consumer expectations also found that worker confidence in finding a new job after losing one hit a record low at 44.9%, a 5.8% drop from last month. The data indicates a sombre economic backdrop in the US ahead of the Fed’s rate decision this week.

Equities

Global stocks finished up 1.6% in euro terms and up 1.5% in local terms last week. Year-to-date global markets are up by 2.3% in euro terms and up by 15.9% in local terms. The US market, the largest in the world, finished up at 1.7% in euro terms and up 1.6% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.1% last week. The German equivalent finished at 2.7%. The Irish 10-year bond yield finished at 2.9%. The Euro/US Dollar exchange rate finished at 1.17, whilst Euro/GBP finished at 0.87.

Commodities

Oil finished the week at $63 per barrel and is down -22.9% year to-date in euro terms. Gold finished the week at $3,643 per troy ounce and is up 22.5% year-to-date in euro terms. Copper finished the week at $9,994 per tonne and is up 1.9% year-to-date in euro terms.

The week ahead

Wednesday 17^th September

Federal Reserve rate decision announced.

Thursday 18^th September

Bank of England rate decision announced.

Friday 19^th September

Bank of Japan rate decision announced.