Top CFD Movers Last Quarter

The shifting global outlook over the last quarter has left some assets significantly outperforming others, raising the question of whether they will continue to rise or face a correction.

The Big Movers of the Last Quarter

• Silver +27.6%
• Platinum +17.2%
• Nikkei 225 +15.2%
• Gold +15.1%
• Bitcoin +9.5%

Key Themes for the Movers

• The dovish shift in the Fed, coupled with higher tariffs expected to generate inflation, has given stores of value a performance edge.
• The prospect of a more dovish BOJ, combined with increased government spending supported by the new Prime Minister, has Japanese stocks outperforming gold.
• Markets are struggling to find value even as traders rotate towards a more defensive position, which leads assets like silver and platinum to outperform gold.

The Silver Lining to High Valuations

September is typically a weak month for stocks, but last month was the exception, as US equities experienced their best September in 15 years. After the major indices reached several new record highs amid a dearth of financial reports, the PE ratio of the benchmark S&P 500 has surpassed 30, nearly doubling the long-term average. Traders seeking to diversify and hedge against risk have naturally been turning to precious metals, which have supported gold's breakneck rise. However, other precious metals have performed even better, with silver leading the way. That's because it has the advantages of a precious metal and serves as a store of value, while also being in high demand as an industrial metal crucial for solar panel production. With China's insatiable demand to build out solar farms, silver and platinum have managed to outperform the more conservative gold.

While safe havens top the list of performing assets, investors aren't heading for the exits. Instead, it's stores of value that are outperforming as investors fret that the Fed's pivot towards dovishness could allow inflation to escape once again. Traders appear to be still willing to take risks, as evidenced by Bitcoin's strong performance over the last quarter. Investors are selling the dollar and looking for assets that are undervalued and might still have a chance to outperform, which explains in part why Japanese equities are (marginally) outperforming gold. Stocks pay dividends, unlike metals.

Japan's New Prime Minister and the BOJ

On Saturday, the leading Japanese party, the LDP, elected hard-line ultra-conservative Sanae Takaichi to become the next Prime Minister, replacing Shigeru Ishiba. She's the former Minister for Economic Security and is known to have a particularly dovish stance on monetary policy. Markets are expecting that her premiership will put a rate hike by the BOJ this year into doubt, and she campaigned on promises to increase government spending. The increased spending, along with lower interest rates, is widely expected to prop up the stock market, explaining the recent surge in the benchmark Nikkei 225 and the underperformance of the yen. It will be a few days until she's formally installed in the office and makes her government priorities known.

Nikkei Eyes 50k amid Range Breakout?

Nikkei broke outside of a consolidation pattern near 45900 to begin the month of October on a positive footing. The measured move projection pointed to 47600, but this has already been achieved after a surge past the peak of 46150, setting the stage for 49k and even 50k. However, the RSI remains in overbought territory. The index could face a short-term pullback to the (now) measured-move support, followed by lower levels towards 44300 if bearish bets accelerate below 45k.