Market snapshot: stocks take it slow and steady

For the moment US markets appear to have settled into a rhythm of steady but unspectacular gains, with inspiration limited in the absence of any fresh catalysts.

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There were no surprises from the Personal Consumption Expenditures index on Friday, the Federal Reserve’s preferred measure of inflation, and in any event the numbers were somewhat outdated as they related to September as a result of the government shutdown. For the record, core inflation came in at an annualised 2.8%, marginally shy of the 2.9% estimate, while the 0.2% monthly rise was in line with expectations.

At the same time, the University of Michigan’s latest survey revealed that consumers are expecting inflation of 4.1% next year, lower than the previous month’s forecast of 4.5% but still higher than the Fed would ideally like to see. That being said, taken together the releases did nothing to alter expectations for a 0.25% interest rate cut this week. Of rather more interest will be the Fed’s revised outlook for next year, where several further reductions are currently being pencilled in by investors.

On an otherwise fairly featureless day, Netflix Inc (NASDAQ:NFLX) and Warner Bros. Discovery Inc Ordinary Shares - Class A (NASDAQ:WBD) grabbed the corporate headlines. Netflix has agreed to buy the film and streaming assets of WBD for $72 billion, in a deal which could take up to 18 months to complete given the complexity of the assets which may need to be separated to allow the deal to go through. Netflix shares were almost 3% lower after earlier falling rather more heavily, while WBD rose by more than 6% in anticipation. However, a cloud remains on the deal after reports that the White House was initially viewing the acquisition with “heavy scepticism”.

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The main indices currently remain on track to deliver a solid performance with less than three weeks to go, with the Dow Jones, S&P500 and Nasdaq ahead by 12.7%, 16.8% and 22% respectively so far this year.

Asian markets were mixed overnight, as was the news. Geopolitical tensions were rekindled with a report that Chinese military aircraft had locked radar into Japanese fighter jets, although the Japanese authorities were swift in advising calm.

Elsewhere, a report revealed a 2.3% contraction in the Japanese economy, as the tariff effects lingered. More positively for investors, China reported export numbers and a trade surplus which have clearly seen the benefit of the previously announced tariff truce between itself and the US, especially given its focus on higher value exports such as rare earth materials, electric vehicles and robotics.

Unilever (LSE:ULVR) shares dipped ahead of a share consolidation following the completion of the demerger of its ice cream business, with the newly formed Magnum Ice Cream Company beginning to trade under its own steam today. Vodafone Group (LSE:VOD) ticked higher after a broker upgrade, lifting its gains in the year to date to 39%, although the rise comes from a very low base which has seen the shares slump by more than 60% over the last decade as competition and corporate overreach took effect.

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Small gains in two of the star-preforming sectors this year helped the FTSE100 to remain marginally ahead, with upside for the likes of Babcock International Group (LSE:BAB) in defence and for Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES) yet again given a small spike in the gold price.

The blue-chip index is also now set for a transformative year with a gain of 18.2%, let alone the additional boost of an average dividend yield of 3.1%, although the more junior FTSE250 has seen its rise limited to 7%, with the GDP release due later this week unlikely to lift the domestic mood.