The stock market is doing rather well, particularly in the United States, where the turmoil surrounding Donald Trump's return to power has been erased. Wall Street's most iconic index, the S&P 500, continues to break new ground: 6,664 points on Friday evening, after a 0.5% gain. It is up 13.3% since January 1, after losing as much as 12.6%. That was on the evening of April 8, when the White House terrified the financial world by imposing punitive tariffs on dozens of countries. Since then, US stock markets have rebounded by 26%. Europe is not doing badly, but it is no longer able to keep pace: the Stoxx Europe 600 index is almost exactly at the same level as on May 20, four months ago. It is up 9.2% in 2025, but these gains were made at the beginning of the year: the momentum is clearly in Wall Street's favor at the moment.

The optimism of US investors was bolstered by the US Federal Reserve's decision last week to resume cutting interest rates. US rates are still among the highest of the major economies, but financiers believe they will fall twice more this year. This should provide further fuel for the stock market. However, it is important to note that not everyone is on board with this trend. The bond market remains cautious, as it still fears inflationary pressures arising from US tariffs and isolationism. The yield on 10-year US Treasuries has risen slightly since the Fed's rate cut, which is counterintuitive. The strength of safe investments, led by gold, points to a certain caution about interest rate developments. Allow me to take this opportunity to provide some historical context. In general, the bond market tends to be excessively cautious, owing to its inherent conservatism, structural characteristics, and underlying philosophy. As a result, the stock market is, more often than not, correct. But when it is wrong, it is really wrong, and this leads to memorable plunges. This is why investors still watch the reaction of bonds. They do not get too alarmed as long as the movements are moderate. Most of the time, the bond market is like a cat napping or a teenager slumped on the sofa: its most lively reaction is to change position by curling up. But when it really wakes up and gets up, anything can happen. In the spring, when the bond market began to shift dangerously, the Trump administration backpedaled on tariffs.

But for now, it's all about stocks. In terms of data, last week (the week of the Fed's rate cut) saw the largest influx of cash into equities since December 2024, both in the US and other markets. For Bank of America, when rates fall while markets are at their peak, it is not the indices themselves that should be pursued, but rather the laggards on the stock market. Real estate, biotech, and all the small and mid-cap stocks on the market. Meanwhile, paradoxically, the best-performing asset class of the year is gold, up more than 40% in 2025, twice as much as bitcoin and three times as much as the S&P 500.

The trading week begins with another divisive economic decision in the United States. Over the weekend, the White House announced a $100,000 annual fee on H-1B visas. This visa is a temporary U.S. work permit that allows companies to employ highly skilled foreigners, especially in the fields of technology and science. It is valid for up to six years and subject to a strict annual quota. Donald Trump believes that the system has led to abuses that have allowed multinationals to artificially lower the wages of native Americans. The news prompted a flood of internal memos within multinational companies advising their employees abroad on H-1B visas to return home immediately. But faced with the chaos that was looming, the US administration clarified last night that only new applications, and not renewals or current holders, are affected. The consequences for US companies are not yet entirely clear.

What to know to kick off the week:

  • The United Kingdom, Canada, and Australia recognize Palestine.
  • Trump plans a summit in New York with Arab leaders on the Gaza war, according to Axios. The US president spoke with his Chinese counterpart on Friday, as planned. Apart from an agreement on TikTok, little has come of it at this stage.
  • A cyberattack on a Collins Aerospace (RTX Corporation) recording system caused major air traffic problems in Brussels, Berlin, and London.
  • Fitch raised Italy's sovereign rating by one notch to “BBB+.” DBRS downgraded France's rating from AA (high) to AA.
  • This week's macro agenda includes preliminary PMI activity indicators for September for the major economies (Tuesday), durable goods orders and the final reading of US GDP for the second quarter (Thursday), and US PCE inflation for August (Friday).
  • The agenda for major companies now includes only a few names such as Micron and Hennes & Mauritz, pending the next series of third-quarter results, which will begin during the week of October 13.

In Asia-Pacific, gains are prevailing this morning. Japan's Nikkei 225 is up 1.1%, South Korea's KOSPI is up 0.6% and Australia's ASX is up 0.4%. India, after a difficult start, managed to return to near equilibrium. China is mixed, with gains on the mainland and the Hong Kong market losing considerable ground, down 0.9% for the Hang Seng. Leading indicators are slightly bearish in Europe in pre-market trading.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$3,698.21
  • Crude Oil (BRENT): US$67.06
  • United States 10 years: 4.14%
  • BITCOIN: US$112,882

In corporate news:

  • Domino's Pizza Group initiates recruitment for 5,000 new employees in the UK and Ireland for peak season.
  • The UK Government approves construction of a second runway at Gatwick Airport, increasing capacity by 100,000 flights annually.
  • Vodafone Three awards Ericsson and Nokia a £2.5 billion contract to expand its UK network, with Ericsson securing an 8-year, $1.33 billion 5G contract.
  • Roche reports positive Phase III trial results for Giredestrant in ER-positive advanced breast cancer.
  • Mediobanca under new board leadership plans future strategies amid Italy's budget deficit predictions and protests against arms shipments to Israel.
  • EQT completes sale of its remaining stake in Telus Digital to Telus Corporation.
  • Fable Media issues an exclusive dividend on the Spotlight Stock Market.
  • Stellantis detects unauthorized access to a third-party service provider's platform, affecting North American customers.
  • Berkshire Hathaway sells entire stake in BYD and acquires over 10% of voting rights in Mitsui & Co Ltd.
  • Pfizer is nearing a $7.3 billion acquisition deal for Metsera.

See more news from UK listed companies here

Analyst Recommendations:

  • Mondi Plc: Investec upgrades to buy from hold and reduces the target price from GBX 1350 to GBX 1300.
  • Hsbc Holdings Plc: Rothschild & Co Redburn maintains its neutral recommendation and raises the target price from GBX 925 to GBX 1030.
  • Standard Chartered Plc: Rothschild & Co Redburn maintains its buy recommendation and raises the target price from GBX 1400 to GBX 1700.
  • Barclays Plc: Mediobanca upgrades to neutral from underperform with a price target raised from GBX 290 to GBX 400.
  • Prudential Plc: BNP Paribas Exane maintains its outperform recommendation and raises the target price from GBX 1065 to GBX 1170.
  • Legal & General Plc: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBX 260 to GBX 265.
  • Admiral Group Plc: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from GBX 3575 to GBX 3550.
  • Anglo American Plc: HSBC maintains its hold recommendation and raises the target price from GBP 20 to GBP 24.
  • Integrafin Holdings Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 400 to GBX 410.
  • Aj Bell Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 460 to GBX 480.
  • Quilter Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 170 to GBX 200.
  • St. James's Place Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 1075 to GBX 1200.