Update Equities: US government back in business
With the ending of the longest shutdown in the history of the US government in sight, equity markets started the week with an upbeat tone. Later in the week, President Donald Trump signed legislation to officially re-open the government.
This will now not only lead to federal workers getting paid again and air travel companies returning to full capacity; but as economic data comes back online again, this will also give Federal Reserve Chair Jerome Powell more insights into the current state of the economy. It’s a tightrope that the Fed currently needs to walk, with the jobs market weakening and consumer confidence at relatively low levels on the one hand; and, on the other hand, economic dynamics within the US remaining well oriented with an important part of the consumer segment still benefiting from a wealth effect. The question for investors over the next couple of weeks is whether the Fed will again decrease its policy rate at its December meeting.
While the earnings season is now past its peak, there are still a lot of important publications coming up. Next week bellwether names such as chipmaker Nvidia, home improvement retailers Home Depot and Lowe’s, and cybersecurity company Palo Alto will announce their latest results. For sure, this could lead to some volatility on equity markets. Going forward, it will be interesting to see whether the US tech sector and the European banking sector remain dominant or if new market leadership will emerge going into 2026.
In company news this week, US semiconductor company AMD set ambitious growth targets during its analyst day, which was well received by investors. Digital payment company Adyen also reassured the market at its capital market day. Adyen indicated that it expects to grow net annual revenue by approximately 20% in the next couple of years. The European chip sector was boosted by the financial results of Infineon Technologies. The company is benefiting from the artificial intelligence (AI) trend, while also noting that the momentum in automotives and industrial chip demand remains weak. Finally, IT company Cisco Systems boosted its growth forecast for next year. Investors reacted positively to Cisco appearing able to reap the benefits of the surge in AI capital expenditures.