London Quick Take – 7 Oct – AMD surging on OpenAI deal, Tesla teases new model and Shell posts strong trading

London Quick Take – 7 Oct – AMD surging on OpenAI deal, Tesla teases new model and Shell posts strong trading

Key Points

• AMD surges on OpenAI investment, Nvidia slips as Wall Street notches more record highs
• French stocks under pressure again as President Macron gives outgoing PM two days to fix things
• Shell lifts FTSE 100 into positive territory after a strong Q3 for its gas trading business
• Gold inches nearer to $4,000/oz as Bitcoin rests near a record high

Grinding up: Wall Street rose again with the S&P 500, Nasdaq and Russell 2k all hitting fresh record highs yesterday. Futures are a tad lower this morning with Europe looking pretty lacklustre as French stocks slide for a second day after its latest PM resigned.

AMD leapt on OpenAI looking at taking a 10% stake in the chipmaker. OpenAI will deploy 6 gigawatts of AMD’s Instinct graphics processing units – AMD rose over 23% on Monday. Seems a bit like a pass-the-parcel of equity and investment dollars – what happens when it all breaks? Every company seems to have a stake in the next and is a customer of the other. Nvidia shares fell over 1%. Elsewhere, Tesla shares rallied over 5% Monday after it posted a teaser video on X, potentially leading to a new car model. Archer Aviation surged on speculation it’s involved with Tesla.

Plus ça change: France is in the mire politically and fiscally. The problem is the parliamentary arithmetic doesn’t stack up and no government wants to fall on its sword to get the kind of reforms required to sort out the budget deficit. So, we end in a circular mess of failed governments and resigning prime ministers. President Macron has given the latest in this sorry line, Sebastien Lecornu, who resigned yesterday, two days to try sort something out. Macron looks cornered.

Pressure on French bonds and the widening in the Franco-German spread to highest since January put pressure on the euro but EURUSD failed to break at the September lows at 1.1645, with 1.1650 marking yesterday’s lows as the 50-day simple moving average is holding the support for now.

On an otherwise flat session for European stocks, French equities were hit hard yesterday but closed off the lows of the day. This morning, European shares got off to another tepid start with the FTSE 100, CAC and DAX pretty well flat before Paris started to draw the pack lower. Japan’s Nikkei 225 hit a record high for a second straight session following the election of Sane Takaichi as prime minister.

Giving a boost to the FTSE, Shell shares rose after it provided a positive trading update, signalling a rebound in oil and gas trading in the third quarter that will boost earnings. The company said it expects trading in its Integrated Gas and Marketing division to be “significantly higher” than in Q2. The update gives a positive skew to the full third quarter results due on 30 October.

Elsewhere, Rentokil jumped on an upgrade from Bernstein and Imperial Brands rose after announcing a new £1.45bn share buyback scheme as profits look in line due to double-digit next-generation product sales growth and strong combustible pricing. B&M European Value Retail tumbled 12% after a sharp decline in Q2 sales leave profits down 28% for the year….still early days of the turnaround though, but maybe the scale of the problem is a little worse than thought? New CEO Tjeerd Jegen, who took over in June, admits that execution has been “weak”, but management is taking “decisive actions” to turn it around.

Finally, gold is relentless – up again to a fresh high overnight with spot prices at $3,977. People are now talking about FOMO…never thought you’d hear that with gold. Meanwhile Bitcoin was near a record high a day before retail investors in the UK are able to access regulated crypto ETNs.