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Europe’s Budget Worries, US Tech Earnings, and China’s Growth Signals

European stock markets fell early on Thursday, extending a decline of around 1% on Wednesday. London, Frankfurt and Paris each fell by around half a percent early doors. The FTSE 250 gave up gains from yesterday: down 0.65% this morning, having risen by 0.4% on the Budget – erasing a gain of more than 1.6% at one point. The devils in the details have investors a little concerned. A LOT of spending and borrowing for meagre growth – it's not gonna butter many parsnips. The 10yr gilt yield is just shy of 4.4%, having popped higher eventually yesterday. But the pound is steady at $1.30, so it’s less of a sell UK Budget than just bond flexing a bit on the idea of more issuance. Seriously, where is the supposed growth? It was a Budget for the NHS, not growth.

Gold has come back a touch this morning after hitting a fresh record high yesterday at $2,790. Oil also climbed on an inventory draw in the US. US stocks pulled back a touch yesterday as data showed the US economy growing a little slower than expected.

Eurozone inflation data is the big ticket item – expected to rise a bit to 1.9% from 1.7% a month ago. If it’s short of this it could up the ante on bets for a 50bps cut in December (currently around 10% priced).

China official manufacturing PMI moved above 50 for the first time in six months, beating expectations and signalling expansion.

The Bank of Japan was unchanged, and Governor Ueda said ‘We have seen some positive U.S. data recently. But there is still uncertainty on how past rate hikes by the Fed affect the economy and prices’.

Microsoft beat on earnings and predicted more spending on AI but slower growth in its cloud business. Meta beat on earnings but warned of “significant acceleration” in AI-related costs. Shares in both fell in pre-market trading, dragging on US futures this morning.

On the US election trail, DJT shares plummeted 22% yesterday, but Bitcoin held at $72k, near its all-time high from March. Two days ago, RealClearPolitics had Trump ahead in all seven battleground states, but this morning, Harris is ahead in two of them—Wisconsin and Michigan. Momentum and all that…


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