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Lloyd Adams of Team Asset Management offers this week’s market review
DESPITE a string of alarming headlines, including the threat of a looming US government shutdown, federal troop deployments and rising tariffs, stock markets have largely shrugged them off.
Corporate news offered some bright spots. Kingfisher, owner of DIY chain B&Q and Screwfix, lifted its profit and cash flow outlook after posting stronger-than-expected half-year results, sending shares up nearly 15% last Tuesday. Ahead of its earnings report, Kingfisher was one of the most heavily shorted stocks in the FTSE 100 with a number of hedge funds taking the view that retailers selling big-ticket items are most vulnerable to a slowing economy.
Shares in Intel, one of the world’s largest semiconductor companies, gained more than 20% for a second consecutive week amid reports that the Trump administration is considering a plan that will require chipmakers to manufacture the same amount of chips in the US as their customers import from overseas.
The speculation comes hot on the heels of the US government acquiring a 9.9% stake in Intel for $8.9 billion, and a $5 billion investment from Nvidia which will also partner with the company to develop custom data centres and PC products. Intel has also reportedly approached Apple and Taiwan Semiconductor Manufacturing for potential investment and partnerships.
Elsewhere, the Trump administration has opened national security investigations into imports of robotics, industrial machinery and medical devices, a move that could lead to fresh tariffs and higher costs for hospitals, manufacturers and consumers.
The “Section 232” probe will assess whether foreign supply chains threaten US security, covering items from surgical masks and syringes to hospital beds and pacemakers.
Any new levies would add to existing tariffs, with sectors such as autos particularly exposed owing to heavy reliance on imported robots and machinery from Mexico and China.
In economic news, August’s US inflation report came in broadly as expected, keeping the Federal Reserve on course to cut interest rates further later in the year. So far, companies appear to have absorbed much of the price pressures from tariffs through a mix of cost-absorbing measures and inventory accumulations before they came into force.
In energy markets, Brent crude climbed to $68 a barrel against a backdrop of heightened geopolitical risks. Drone attacks on Russian facilities have pushed Moscow to restrict fuel exports, underlining ongoing pressure on its energy sector, and in the US, crude inventories unexpectedly fell, adding further support. Looking ahead, analysts remain divided over the risk of oversupply.
While OPEC+ has pledged to raise output, many producers are struggling to hit targets because of years of underinvestment.
In metals, gold climbed above $3,800 an ounce for the first time with the prospect of a US federal government shutdown looming. Funding is due to run out at midnight unless the White House and leaders on Capitol Hill can reach an 11th-hour deal.
The standoff is drawn along political lines, with the Democrats pushing for an extension of Obamacare subsidies. Other precious metals are also surging, including silver to a 14-year high of nearly $47 an ounce.
Copper prices rose to their highest in over a year after a landslide halted production at one of the world’s largest mines in Indonesia, raising fresh concerns about supply shortages. Forecasts for 2025 and 2026 have already been cut, adding to the pressure.
In crypto, Bitcoin slipped back below the $110,000 mark last week, weighed down by heavy outflows from spot ETFs and a wave of coins moved onto exchanges for sale. The weakness has spread across the market, with Ether, Solana and XRP all retreating.
Looking ahead, investors are focused on key data releases in the coming days. Early-September inflation figures from Europe are due midweek, while the latest US employment reports will close the week on Friday, assuming that a government shutdown has been avoided. Otherwise, non-essential government departments such as the Bureau of Labor Statistics will be closed.
