HL LIVE
HL commentary as it happens
Friday 12th September
Brent Crude steady after tough session
Brent Crude oil prices have steadied at just under $66 per barrel after falling around 2% yesterday. News of a surprise inventory build of 3.9 million barrels in the US last week is compounding mounting concerns around oversupply as OPEC+ members and other nations plan to boost production.
The International Energy Association expects global oil supply to rise by 2.7 million barrels per day (bpd), more than four times the projected increase in demand, with another 2.1 million bpd supply addition expected next year.
US markets at fresh highs ahead of rate decision
Wall Street closed at yet another record high. Accelerating US inflation, and initial jobless claims jumping to a near four-year high hardly sound like reasons to be cheerful. But core CPI, the preferred measure of the Federal Reserve Bank, was steady at 3.1% and bang in line with expectations. Taken together with the growing signs of deterioration in the jobs market, investors are choosing to focus on the outlook for US base rates where markets are now pricing in a fall of 0.7 percentage points by the end of 2025, with at least a quarter point cut expected next week.
FTSE opens above 9,300. New records in sight
The FTSE 100 opened back above 9,300 and could reach a new high-water mark today. That’s despite UK GDP growth coming in a little slower than expected in the second quarter.
The economy expanded 0.2% in the three months to June, while forecasts had expected growth of 0.3% in line with the previous period. On a rolling basis, quarterly growth has slowed in each of the last three months, with monthly growth stalling completely in July. This provides further challenge to Chancellor Rachel Reeves to plug the UK’s funding gap without stalling the economy in the forthcoming Budget.
There was a marked difference between services and the production of physical goods. Production output fell by 1.4% mainly driven by a fall in manufacturing activity. Services grew by 0.4% with scientific research and development leading the way at 3.4% underlying the importance of supporting UK innovation.
Thursday 11th September
S&P 500 reaches fresh all-time high
The S&P 500 notched yet another closing all-time high, buoyed by optimism after softer producer price data reinforced hopes that inflation is cooling - but the rally wasn’t at full steam. Stocks faded through the session on heavy volume as investors questioned whether valuations have run too far ahead of this afternoon’s CPI print, underscoring a market still balancing optimism with caution.
UK stocks get back on the front foot
UK stocks are back on the front foot after a small stumble yesterday. The FTSE 100 has opened 0.4% higher this morning, tracking the positive sentiment felt across global markets after US producer prices rose at a slower pace than expected.
Wednesday 10th September
Oil prices rise on geopolitical tensions
Oil prices are on the move upwards again amid heightened geopolitical risk. Israel’s bombing of targets in Qatar has drawn fresh international criticism and marks an escalation of its campaign in the region.
President Trump is also reportedly putting pressure on the European Union to impose 100% tariffs on China and India, big buyers of Russian oil, to force Putin back to the negotiating table and strike a ceasefire deal over Ukraine. But although there’s a pile-on of supply concerns, a lid is being kept on prices given ongoing concerns about global demand, and only modest increases planned from OPEC+ member countries.
US inflation numbers are in focus
Sentiment could turn sour if today’s inflation snapshot comes in higher than expected. The headline rate is expected to come in at 2.9% but the real number to watch will be core CPI, which strips out volatile food and fuel prices.
Its broadly expected to be stable, coming in at 3.1% on an annual basis, but if it ticks higher month to month, it could put the cat among the pigeons. A sign that elevated inflation isn’t just stubborn but heading higher, could dent hopes for a succession of cuts to come. It’s unlikely to push the Fed off course this month, but the ‘dot plot’ path of cuts ahead may look shakier.
Nonetheless, President Trump is expected to keep up the pressure on the Fed to go further and faster with rate cuts. He’s just been dealt a setback after a federal judge temporarily blocked his removal of Federal Reserve Governor Lisa Cook. The saga is being closely monitored amid concerns that the administration is attempting to direct policy at the the central bank. This is causing unease given that central bank’s independence is seen as crucial for sound monetary policy making.
FTSE 100 opens higher, taking a cue from Wall Street
The Footsie is edging higher in early trade, taking a cue from an upbeat Wall Street and a positive session for indices in Asia. Geopolitical tensions are pushing up oil prices amid spreading supply concerns. Despite weakening global growth prospects, optimism is still swirling given that an interest rate cut from the US Federal Reserve looks firmly on the cards this month.
Tuesday 9th September
Oil prices extend yesterday’s gains
Brent crude oil climbed above $66 a barrel this morning, still buoyed by news that OPEC+ opted for a modest 137,000 bpd output hike, far smaller than recent increases. Geopolitical risk added support, with Trump threatening tougher sanctions on Russia after its heaviest strikes on Ukraine since the war began. Gains were capped, however, as Saudi Arabia cut prices for Asian buyers, underscoring demand concerns.
US markets gear up for data heavy week
A quiet Monday masks a big week ahead for US markets, with the Nasdaq hitting an all-time high as tech and retail led a modest rebound. The S&P 500 added 0.5%, while the Russell 2000 lagged after its recent run. Treasury yields continued their descent, with the 10-year near 4%, its lowest in five months, and the 2-year hovering around 3.5%, levels last seen in 2022.
Markets are fully priced for a 25bps cut this month, and expect more to come. With PPI, CPI, and a key labour revision on deck, plus long-term inflation expectations holding steady, the Fed has room to manoeuvre. But the data will dictate how far and fast easing goes.
UK retail sales offer hope ahead of key trading period
UK retail sales surprised in August, with like-for-like growth of 2.9%, the strongest in four months and well ahead of July’s 1.8%. Warmer weather and back-to-school demand lifted food and home-related categories, while non-food also managed a modest gain despite the gloomy macro backdrop. It’s another sign that discretionary spending is holding up better than feared, which could offer some relief for UK retailers as they move into the crucial autumn/winter periods.
Monday 8th September
Wall Street set to rise amid optimism over a rate cut
Wall Street looks set for a higher open despite the sense of unease which spread after Friday’s monthly jobs report was released. Recession fears have risen after the numbers were released, which showed just 22,000 new hirings in August and unemployment rising to 4.3%. Optimism though remains high partly because expectations of a super-size interest rate cut this month has risen.
Current market enthusiasm and the weight of tech stocks on indices means bad news on the economy is still seen as good news. It’s partly because of expectations of lower borrowing costs helping consumers and companies they buy from, but also because a lower rate environment boosts the current value of potential earnings which are baked into valuations.
Keir Starmer focuses on defence strategy
UK Prime Minister Keir Starmer will be hoping the large cabinet reshuffle will quell concerns about his authority and close a highly difficult political chapter. Gilt yields eased back after the big moves were made, with some relief that Chancellor Rachel Reeves’ position appears secure. The government is attempting to move the narrative back to policy delivery and a longer-term boost to growth. The focus today is on launching the Defence Industrial Strategy to provide the skills which the forces and military contractors will need to meet the UK’s commitments.
Yen falls and stocks rise after Japan’s Prime Minister’s resignation
The resignation of Japan’s Prime Minister has caused ructions, with the yen diving on the news, stocks making sharp gains and government bond yields rising again. Investors are speculating about what a change at the top would bring for government policy. There’s an expectation that front runners, in particular Takaichi Sanae would be more pro spending and de-regulation, aimed at supporting the economy amid the pressure on exports from US tariffs. The economy is holding up better than expected, with higher consumer spending providing a boost but there is still concern about the path ahead.
France’s confidence vote in focus
Political turmoil in France is drawing attention today, with the Prime Minister, Francois Bayrou largely expected to lose a confidence vote. He called the snap poll given the supreme difficulties he’s faced pushing through spending cuts. France is grappling with a highly disillusioned electorate, resistant to austerity moves, which makes reducing the country’s large deficit highly tricky.
His ejection will mean President Macron will be forced to name the fifth prime minister in the France in less than two years. France is being seen as the most ’troublesome child’ in Europe when it comes to fiscal position. But it’s the Prime Ministers who keep being expelled for being unable to tame unruly lawmakers and impose spending restraint.
FTSE 100 opens higher
Political uncertainty is making waves on markets at the start of the week, but sentiment remains largely upbeat as investors take on a glass half full attitude. The Footsie has started the week on the front foot, boosted by gains for energy giants. Brent Crude has headed higher after the oil cartel, OPEC+ agreed to output hikes in the Autumn but only at a modest pace, and smaller than summer production increases.