Samuel Leach Updates!

Alphabet has slipped into a correction.

The Google parent is now more than 20% below its May high, and most of this year's gains have gone. It's been caught up in the wider tech sell-off after Meta's spending plans spooked investors this week.

The core business looks fine to me. Search and YouTube are still making serious money, and nobody has stopped Googling things.

The worry is the bill for AI. Investors want proof that all those data centres are earning their keep, and they're losing patience with companies that just keep spending more.

Results land after the US close on Wednesday. If cloud growth is strong and spending looks under control, this dip could look cheap by the end of the month. If not, there's room to fall further.

I'll be watching that one closely. Have a good weekend.

Funny old week for gold.

It has slipped back to around $4,000 an ounce, roughly 15% off its August peak, and most of that looks like forced selling. When tech stocks fall hard, people sell what they can rather than what they want to, and gold is easy to sell.

Central banks are doing the opposite. Goldman reckons they bought around 79 tonnes in August alone, more than four times the pace before 2022. France and the Netherlands have also been moving gold out of New York and into European vaults.

That says a lot about how they see the world right now. They want reserves they can get their hands on quickly, and they aren't fussed about this month's price.

I'd rather follow the patient buyer than the panicked seller. If $4,000 gives way, I'd see it as an opportunity rather than a warning.

Enjoy your evening.

If your portfolio feels nothing like the stock market headlines, you're not imagining it.

The S&P 500 is sitting just shy of its record high, yet nearly 60% of the companies inside it are in bear markets, meaning down 20% or more from their peaks. Most of the rest are at least 10% off too.

What's happening is that a handful of giants are carrying the whole index. When they do well, the headline number looks lovely, and everything underneath can quietly be having a rotten year.

I don't think that's a reason to panic. But an index held up by a few names is a fragile thing, and this week has shown how quickly those names can wobble when AI spending gets questioned.

The flip side is that plenty of decent businesses are already sitting well off their highs. If the giants ever hand the baton on, that's where the opportunity is.

Have a good weekend.

Apple has nipped past Nvidia as the world's most valuable company again.

The timing makes sense. Apple's first foldable, the iPhone Duo, went on sale today, while AI stocks have had a properly nervy week after Wednesday's Nasdaq sell-off. One side got a bit of good news, the other has been shedding air.

I wouldn't make too much of the crown itself. These two have swapped places several times and they're close enough that a decent afternoon can flip it back.

What I'd pay more attention to is the direction of the money. When investors get twitchy about how AI spending gets paid for, they tend to drift towards the cash-rich names with products people actually queue for. Apple fits that rather nicely.

Not a call that AI is finished. Just a reminder that the market likes a boring balance sheet when the exciting stuff wobbles.

America's economy is running hot, and that's exactly the problem.

S&P Global's flash business surveys out this afternoon show US firms winning new orders at the fastest rate in over four and a half years, with hiring strong. Their economist reckons it points to growth of around 5% annualised. Not bad for an economy everyone was fretting about on Black Thursday.

The catch is prices. Firms are raising what they charge at the sharpest rate since August 2022, as the oil surge works its way through. Order backlogs are building too, which makes it easier to pass those costs on.

That's awkward for the Fed going into next week's meeting. Strong growth and rising prices don't argue for a gentler tone, and with the US 10-year hovering near 5%, bonds have noticed.

I wouldn't expect much comfort from the Fed next week. Good economy, awkward inflation, and markets will have to live with both.

France now pays more to borrow than America, and that still sounds wrong however many times I say it.

French ten-year yields went above 5% this week for the first time since 2002, and the gap over German bonds hit its widest since the 2011 euro crisis. Debt well over 100% of GDP, a parliament stuck in gridlock, and riots on the streets is not a combination bond investors enjoy.

It's calmed down a little today, with the gap over Germany narrowing. But the real test comes tonight, when Moody's reviews France's credit rating after the European close.

A downgrade wouldn't be a shock, which is why I don't think it sparks a panic. What it could do is keep French banks and the CAC on the back foot into next week. I wouldn't want to be holding them over the weekend just to find out.

Whatever's spooking markets this week, America's better-off shoppers don't seem to have noticed.

American Express beat profit expectations today and raised its full-year forecast. Cardholders kept spending on travel and dining, new customers kept signing up, and fewer people fell behind on repayments.

Revenue came in a touch light, so it isn't perfect, but it's a useful counterweight to the gloom. We've had a rotten week for tech, oil above $110 and UK shoppers in a sulk, yet the people with money in the US are still out spending it.

That matters because the US consumer is the engine of the whole economy over there. I wouldn't write it off into the US open on the back of one bad week for tech.

Everyone seems to be betting on the same thing at the moment, and that always makes me a bit nervous.

Goldman Sachs data shows hedge funds have piled into bets against shares this month, selling short roughly five times as much as they've been buying. Their short positions are now the biggest in nearly five years.

You can see why. Tech has had a rough week, AI spending is under the microscope after Meta, and oil above $110 isn't helping anyone's mood.

The catch is that a crowded trade can turn very quickly. If US results or the data give people even a small reason to cheer, those funds have to buy back what they've sold, and that buying can push prices up fast.

So I'm not rushing to sell this market lower into the US open. Being bearish is fine. Being bearish alongside everyone else is where it gets uncomfortable.

Gucci has gone from the jewel in Kering's crown to the thing dragging it down.

Kering shares fell about 11 per cent this morning after third-quarter sales at Gucci dropped again. The war in the Middle East and Beijing's crackdown on the very wealthy are both weighing on the people who buy this stuff.

It's not just Kering. Luxury is already the worst-performing part of the European market this year, and the sector slipped again today.

The odd thing is that European earnings overall are coming in strong, mostly thanks to energy companies cashing in on dear oil. So the pain is very specific. These firms need confident customers who travel and spend freely, and right now there aren't enough of them.

I'd leave luxury alone until Gucci shows its sales have stopped falling. A cheap-looking share price is no use if the brand keeps losing its shine.

Shoppers have gone from cheerful to fed up in the space of a month.

GfK's consumer confidence index fell 11 points to minus 24 in October. Leaving aside the Covid shock, that's the biggest monthly drop since the Brexit vote in 2016. Every measure fell, and the ones that slid hardest were people's view of the economy over the next year and their appetite for big purchases.

GfK couldn't point to one cause. It's the steady squeeze of higher prices, with inflation at 3.5 per cent and the conflict in the Middle East pushing fuel up.

Earlier I said I wouldn't read September's dip in retail sales as the consumer giving up. I still wouldn't call it surrender, but this is a proper warning shot before Christmas.

It also lands at an awkward moment for John Healey, with his Budget on Wednesday. If you hold UK retailers or housebuilders, I'd want to see what's in it before adding.

Germany is getting by on tanks and tarmac.

This morning's flash business surveys showed the German private sector still growing in October, just more slowly than in September. Factories actually picked up, helped by defence and infrastructure spending, while services cooled off.

The rest of the picture is less cheerful. New business grew at the slowest pace in three months, and France slipped into contraction.

I'd say Europe's recovery is real but thin. With Brent sitting near $110 and service firms already fretting about costs, it wouldn't take much to knock it over.

If you're trading the euro or the DAX, I'd want to see services turn back up before getting excited.

The AI listing party has been postponed.

SK Hynix said today it has dropped plans for a US stock market listing of its US flash memory and SSD business, along with the pre-IPO funding round. It pointed to tough market conditions and its own share price.

Shareholders weren't keen either. Many worried a separate listing would dilute their stake in one of the most valuable parts of the group. SK Hynix shares fell as much as 3 per cent early on before closing higher.

To me this matters more than one deal. When a company right in the middle of AI demand decides now isn't the time to sell shares, it shows how quickly the mood has turned since Meta's results.

I'll take the IPO window opening again as a better sign of a bottom than any one-day bounce in the Nasdaq.

Only in Britain would a sunny September be bad news for the shops.

UK retail sales volumes fell 0.4 per cent in September, according to the ONS this morning. Online clothing sellers said the warm weather put people off buying autumn and winter ranges, and supermarket sales dipped after a strong summer.

Step back and it looks better. August was revised up, and sales over the three months to September rose 0.7 per cent on the quarter before.

So I wouldn't read the monthly dip as the consumer giving up. The real question is what happens once the heating goes on, with oil above $110 and the Budget landing on Wednesday.

For the pound and UK retailers, that's the hurdle that matters, not one warm month.

If you want to see what expensive oil does to a market, have a look at India this morning.

Indian smaller companies were sold hard again at the open, with the small and mid-cap indices both down more than 2 per cent. They're now over 10 per cent off their highs, which puts them in correction territory after about six weeks of pain.

The reason isn't complicated. India imports the vast majority of its oil, and Brent is sitting above $110. That feeds straight into fuel costs, inflation and company margins, and smaller firms feel it first because they have less room to absorb it.

The bigger Indian shares have held up far better, which suggests this is about who can cope with higher costs rather than a vote against India as a whole.

I like the long-term India story, but I wouldn't rush to buy this dip. I'd want to see oil cool off first.

Black Thursday sent everyone running for one lifeboat, and it wasn't gold.

Tech got hammered. The Nasdaq had its worst day since June, with Meta, Nvidia and Amazon all taking a proper beating. Gold dropped nearly 3 per cent to just above $4,000 and bitcoin slipped too. The only thing people wanted was government bonds, which pulled the US 10-year yield back under 5 per cent even with Brent sitting above $113.

That's an odd mix. Expensive oil is normally bad news for bonds. The market has decided slower growth is the bigger worry, and it's selling whatever has done well to cover losses elsewhere.

Even good results are getting sold. Western Digital and Bloom Energy both beat and raised last night and still fell, because the spending bill keeps getting bigger.

This morning is calmer. Futures are flat, Hong Kong is a touch higher and Tokyo is lower after Japanese inflation went back above the Bank of Japan's target.

I'm watching UK retail sales at 7, the business surveys this morning and whether the US 10-year stays under 5 per cent. The real test is next week, with the Fed, Microsoft, Alphabet, Amazon and the Budget all landing within a couple of days.

Full brief here:
https://www.samuelandcotrading.com/morning-market-brief-23-october-2026-black-thursday-bonds-last-safe-seat/

Newmont has just reported, and gold picked a funny day for it.

Gold fell about 2.6% today and Newmont shares closed down 2.7% with it. Then, after the US close, the world's biggest gold miner reported its best third quarter for profit on record: adjusted profit of $2.3 billion, or $2.20 a share, comfortably ahead of forecasts.

The reason is simple. It costs Newmont about $1,454 to produce an ounce, all in, and gold is still trading around $4,040 even after today's fall. That gap is where the money comes from, and it turned into $1.9 billion of free cash in the quarter.

It's handing a good chunk of that back. Newmont has returned $1.9 billion to shareholders through dividends and buybacks since its last update, and it has cut its share count by about 10% since February 2024.

The shares barely moved after hours, so nobody is getting carried away. For me that's the point with miners right now: at these prices, a bad day for gold is a dent, not a disaster. The thing to watch is costs, and Newmont has just lowered its full-year cost forecast rather than raised it. Not bad for a business most people forget about until gold makes the news.

Blackstone has had a far better day than most of Wall Street.

The world's biggest manager of private investments saw profits fall 13% in the third quarter, to $1.32 a share, because it has been selling fewer of the businesses and properties it holds. Deals and stock market listings have been slow this year, and proceeds from those sales dropped by about a third. Even so, profits came in ahead of forecasts.

The shares still jumped around 6%, while the Nasdaq slid.

The reason is fresh money. Clients handed Blackstone more than $63 billion last quarter, and that grows the fees it earns whatever the deal market is doing. Management also expects sales to pick up significantly in the final quarter, and expects fee growth to pick up again in 2027.

The shares have had a rough year, so expectations were low. It's the flip side of Moderna earlier: when nobody expects much, a decent update goes a long way. The real test is whether those sales actually come through, because steady fees are lovely, but the big money comes from selling well.

Moderna has just learned that good news can still hurt.

Results from its melanoma vaccine trial with Merck appear to have leaked online a couple of days early. On those figures, adding the jab to Merck's Keytruda cut the risk of the cancer returning, or death, by 42%. After two years, 82% of patients were still alive and cancer-free, against 70% on Keytruda alone.

By most measures that's a genuinely good result. The shares still fell by more than 20%, and Merck slipped about 3%.

The problem isn't the medicine, it's the price. Moderna had a strong run this year on hopes for this vaccine, so investors were paying for something spectacular. Very good doesn't cut it when you've priced in a miracle.

The full data is due at a big cancer conference in Madrid on Saturday. If the detail holds up, I suspect some of today's selling will look hasty. Either way, it's a neat reminder that a share can fall on good news when expectations have run too far ahead.

Black Thursday has everyone running for cover, and the professionals got there first.

Goldman Sachs says hedge funds are betting against shares more heavily than at any point in the last five years. For every share they've bought this month, they've sold about five short, with tech the main target.

That makes sense after the AI selloff. But when the whole room is leaning the same way, it doesn't take much to knock them over.

If some good news turns up, perhaps a calmer word on Iran or a big chip name beating forecasts, all those bets have to be bought back at once. That's how a short squeeze starts, and prices can jump far faster than the news deserves.

I'm not calling the bottom. I'd just be wary of selling in a panic now, because the crowd may already have done it for you.

Meta has just shown everyone what the AI race really costs.

Its adverts business is flying. Revenue rose 26% last quarter, helped by people seeing more ads and advertisers paying more for each one.

But it spent nearly $35 billion on data centres and servers in three months, and for the first time since it floated in 2012, more cash went out than came in.

Nobody thinks Meta is in trouble. It still has more than $80 billion of cash. The shares are down about 6% today because investors want proof that all this spending pays, and they want it sooner rather than later.

I'd keep a close eye on this one. If the richest advertising business going can burn cash building AI, the smaller players doing the same with borrowed money deserve a harder look.

Wall Street has started keeping London hours, and I'm in two minds about it.

From today, options on the big US names, including Nvidia, Apple, Microsoft, Tesla and the main S&P 500 fund, can trade from 7:30am New York time. That's lunchtime here, two hours before the US open, with a short extra session after the close too.

It doesn't stop there. The NYSE plans to run share trading 23 hours a day, five days a week, from 6 December.

For UK traders that's genuinely handy. You can react to news at a sensible hour rather than waiting for New York to wake up.

But more hours doesn't mean more opportunity. Early trading is thin, the gap between buying and selling prices is wider, and one big order can move things more than it should. I'd use those early sessions to manage risk, not to go hunting.

Netflix sat out today's tech bounce, slipping about 1% while the Nasdaq climbed, and I'm not surprised.

Its problem was never AI. It's attention. Jefferies reckons the average member now watches around 49 hours a month, down from 66 in 2023, and YouTube is taking a big slice of the evening.

The shares are down about a quarter this year, and the company has just cut roughly 1,000 jobs and shaken up its content leadership. That's a lot of change for a business that was meant to have it all worked out.

Results land this time tomorrow. Price rises can carry the numbers for a while, but what I want to see is proof people are still tuning in. If viewing looks steady, the shares have fallen far enough to bounce. If it doesn't, cheap can get cheaper.

The market has stopped treating every big AI spender the same.

Amazon is up nearly 5% today after Morgan Stanley named it a top pick and lifted its price target to $350. The bank reckons investors are underrating how fast Amazon's cloud business can grow from here.

Meta, which is also pouring enormous sums into AI, is drifting lower and sits back around $700 ahead of its results on Wednesday.

That's the split I'd keep an eye on this week. Big AI budgets get forgiven when investors can see where the money comes back, and Amazon's cloud arm gives them that. Meta has until Wednesday night to show its working.

The cheap oil that paid for this morning's bounce has quietly left the building.

Brent was down around 2% first thing, helped by Trump pausing new Russia sanctions. It has since wiped all of that out and is back above $110, up on the day. Iran's attacks on shipping in the Strait of Hormuz haven't stopped, with at least 15 container ships hit in the past ten days, and the latest words from Tehran on Hormuz were more combative, not less.

The odd part is that US tech hasn't flinched. The Nasdaq is still up more than 1%, as if the oil relief never mattered.

I think it did. Cheaper energy was the main reason futures turned higher overnight. If crude holds above $110 into Netflix tomorrow and Tesla on Wednesday, I'd expect this rally to find the going a lot harder.

Tech stocks are bouncing hard today. Bitcoin has barely noticed.

It's sat around $82,000 for most of the day while the Nasdaq has climbed well over 1%. Money has been leaving the US spot Bitcoin and Ethereum funds for three weeks running, and October withdrawals are close to $1 billion.

There's a calendar quirk doing the rounds too. Bitcoin rose in 10 of the last 13 Octobers, but it's down for the month so far and could post back-to-back red Octobers for the first time since 2011 and 2012.

I wouldn't buy or sell anything because of the month on the calendar. What I would notice is crypto sitting out a risk-on day. If it can't keep up when the mood is good, it's fair to ask who the next buyer is.

Wall Street is cheering the tech bounce. America's housebuilders aren't joining in.

The builders' confidence index fell to 29 this month, its lowest since June 2012 and worse than economists expected. Anything under 50 means more builders think conditions are poor than good, and we're a long way under.

The problem is borrowing costs. The US 10-year yield has crept back up today after last week's big fall, and mortgage rates tend to follow it. Buyers can't stretch any further, so builders either cut prices or wait.

Chip stocks can bounce in an afternoon. Houses don't get built that quickly. Housing shows how high rates are really landing on ordinary households, and right now they're landing heavily. Worth keeping an eye on while everyone else watches Nvidia.

Wall Street has found its feet. Europe simply hasn't followed.

The Nasdaq is up more than 1% and the S&P is green, yet the FTSE, DAX and CAC are all heading for a red close. The Stoxx 600 is on course for its worst day in more than a week, with Paris and Milan leading the way down.

The worry over here has moved on from AI. It's about government debt and angry streets. France's riots took the weekend headlines, and now there have been clashes in Milan too. Bonds and the euro are being sold again, and the banks are taking the brunt, from BNP and SocGen to Deutsche and Lloyds.

A bounce in American chip stocks doesn't fix any of that. I'd want to see European bonds calm down before I trusted a recovery on this side of the Atlantic. Until then, Europe is carrying its own baggage, and the close at half four is unlikely to be pretty.

This rebound still looks one-legged to me.

Nasdaq futures are up hard into the US cash open while Dow futures are still red on the day. Same split we saw all morning. The chips bounced. Broader America hasn't really bought the story yet.

Fear has come down a long way from Friday, and that always tempts people to call the all-clear early. I wouldn't. A bounce led by a handful of names after a rough tech week is relief, not a regime change.

Netflix tomorrow night is the first real check. Meta and Tesla on Wednesday are the ones that decide whether those AI spend nerves actually calm down. Until the Dow joins in, I'm treating this as a bounce to respect, not one to trust.

Not the attention any bank wants from Threadneedle Street.

The Financial Times reported this morning that the Bank of England's regulator, the PRA, is looking at whether Barclays traders treated illiquid private credit loans as if they were easy to sell. That matters because assets a bank can sell quickly need less capital held against them than loans it's stuck with. It follows a complaint from an insider earlier this year, and Barclays says it takes its regulatory obligations seriously but doesn't comment on dealings with regulators.

The shares are down about 3.5%, one of the weaker names in a FTSE that's already having a poor day.

For me, the size of any fine isn't the point. Private credit is a roughly $2 trillion market that grew up fast and quietly, and regulators are now poking at how banks finance it. Last week's AI selloff was partly about how much debt is paying for all those data centres, so investors are already twitchy about borrowing they can't see. A story like this gives them another reason.

Nothing has been proven and this could come to very little. But I'd keep an eye on the other big lenders to private credit funds, and on whether this stays one bank's accounting question or turns into a wider one for the sector.

Last week everyone wanted out of chips. This morning they want back in, but the companies buying all those chips aren't joining the party.

Nvidia is up nearly 2% before the open, and Micron, AMD and Intel are up between about 3.5% and 5%. CoreWeave and Nebius are bouncing too, after a report that Nvidia is helping the stronger AI cloud firms with credit and leases. After CoreWeave lost about a quarter of its value last week, that's a welcome bit of support.

Meta, on the other hand, is a touch lower, and Tesla and Netflix are flat. That's the bit I'd pay attention to. The chipmakers only do well if these companies keep writing big cheques, and we won't find out until Meta reports on Wednesday evening.

Nasdaq futures are up about 1.2% and the VIX has eased back to about 18.5, so the mood is better. Europe hasn't got the memo, mind, with the DAX and CAC both down more than 1%.

Today I'm watching whether the chip gains survive the first hour of proper trading in New York. If they fade, last week isn't over. If they hold and the big spenders start to follow, it looks a lot more like a genuine recovery.

Full US Open brief here:
https://www.samuelandcotrading.com/us-open-market-brief-19-october-2026-the-chipmakers-bounced-their-customers-didnt/