Meta's Muse assistant powers Nasdaq to record high

Summary

Strong demand for Meta's newly launched Muse AI assistant lifted chipmakers and pushed the Nasdaq to a record high, with Asian stocks and European futures following higher. Brent crude held above $100 a barrel after four straight sessions of declines, as Trump signalled openness to meeting Iran's president. French assets stayed under pressure, with default insurance costs at their highest since March 2020 and OATs the worst-performing major-economy bonds this year. Investors now await a Trump–Xi meeting.

Equities

The FTSE 100 closed 0.75% higher at 10,739.01 points on Monday, recovering after falling almost 1.5% in the previous session. The FTSE 250 gained 1.18%, reaching its highest level in nearly two weeks.

Banks rose strongly on Monday, with Barclays up 1.9%, Standard Chartered gaining 1.7% and HSBC climbing 1.4%. Rolls-Royce added 3.8% as the aerospace and defence sector rose 2.8%, while BAE Systems finished 1.2% higher.

Mining shares also advanced as copper prices extended their gains, with Antofagasta jumping around 3.2% and Anglo American rising 2.9% on Monday. Lower oil prices weighed on energy companies, however, with BP falling 2.8% and Shell losing 1.4%, while British Airways owner IAG gained 2.9%.

Syncona jumped 5.2% on Monday after portfolio company Beacon Therapeutics said its Phase II/III VISTA trial met the US FDA-endorsed primary endpoint for its laru-zova gene therapy. Craneware was the sharpest UK faller, plunging 25.8% after the healthcare financial software company cut its full-year revenue outlook.

In the US, the S&P 500 closed 1.49% higher at 7,764.70 points on Monday, while the Nasdaq jumped 2.26% to a record 27,122.09. The Dow Jones Industrial Average gained 0.71% to 52,048.83.

Semiconductor shares recorded some of Monday’s largest gains. Intel surged 12.2%, Arm Holdings climbed 17% and AMD rose around 10%, taking its market value to $1 trillion for the first time, while the Philadelphia semiconductor index gained 4.3%.

Meta jumped 11.4% on Monday after Wells Fargo raised its price target following the recent launch of the company’s Muse AI assistant. Coinbase and Strategy also rose as bitcoin climbed more than 6% to a seven-month high, while Paramount Skydance fell almost 3% after reaching a settlement with California and 11 other states seeking to block its $110 billion merger with Warner Bros Discovery.

Forex & Commodities

The US dollar fell slightly early on Tuesday after strengthening against a basket of major currencies on Monday and gaining more than 1% last week following the Federal Reserve’s latest rate rise. Sterling edged up to $1.338 early on Tuesday, while the euro rose to $1.148.

The Japanese yen weakened to 157.5 per dollar in Asian trading on Tuesday, with Japan closed for a holiday. Moves were limited after Japan reportedly checked dollar-yen rates on Friday, a step that can precede intervention.

The yen has remained under pressure since the Bank of Japan raised interest rates on Friday, with two policymakers dissenting in favour of a more dovish position. Markets currently price around a 30% chance of another BOJ increase to 1.5% in October, while the probability of a 25-basis-point Federal Reserve rise to 4.00%-4.25% is around 55%.

The Australian dollar traded at $0.7120 early on Tuesday after Reserve Bank of Australia Governor Michele Bullock said persistent high energy prices could be increasing inflation risks. The New Zealand dollar rose to $0.5736 after Reserve Bank of New Zealand Governor Anna Breman said sustained higher oil prices could push inflation above previous forecasts.

Spot gold fell 0.6% to $4,350 an ounce on Monday, having dropped to $4,322 earlier in the session. The decline followed the Fed’s rate increase last week, while traders were pricing an 88% chance of another US rate rise in December; Minneapolis Fed President Neel Kashkari also said inflation remained too high across the US economy.

Oil rose early on Tuesday for the first time in five sessions as investors awaited possible US-Iran talks during this week’s UN General Assembly. November Brent climbed 1.1% to $101.5 a barrel, while October WTI rose 0.9% to $96.65 and the more actively traded November WTI contract gained 0.9% to $93.22.

Saudi oil shipments through the Strait of Hormuz increased over the weekend, while separate supply disruption emerged in Libya. Production at the Sharara oilfield fell by around 200,000 barrels per day after an armed group closed a valve on the pipeline to Zawiya port.