GameStop Soars on new Roaring Kitty Position

Equities

The FTSE 100 experienced a slight decline on Monday, closing down 0.2%. This dip in the blue-chip index was primarily driven by losses in the pharmaceutical and energy sectors. The day was particularly tough for GlaxoSmithKline (GSK.L), which saw its shares plummet by 9.5% after a Delaware court decision allowed more than 70,000 lawsuits to proceed regarding its discontinued heartburn medication Zantac. This made GSK the worst performer in the FTSE 100 for the day.

Energy stocks also contributed to the downturn, with the sector losing 1.2% in value alongside a drop in oil prices, which fell over $2 per barrel. Despite these challenges, the broader market losses were somewhat mitigated by optimism ahead of the European Central Bank's (ECB) anticipated interest rate cut later in the week.

The S&P 500 ended the day slightly higher, up 0.11%, while the Nasdaq Composite rose by 0.56%, finishing at 16,828.67. However, the Dow Jones Industrial Average moved in the opposite direction, falling by 0.30% to 38,571.03.

Nvidia (NVDA.O) stood out with a significant rise of 4.9%. This increase came after CEO Jensen Huang announced that the company's next-generation AI chip platform would be launched in 2026, fuelling investor enthusiasm.

Similarly, GameStop (GME.N) soared by 21% - easing back from early gains of 100% on the day - following a Reddit post by Keith Gill, also known as "Roaring Kitty", which revealed a $116 million investment in the gaming retailer.

Forex & Commodities

The US dollar reached its lowest level since March against the euro and sterling due to increasing expectations of Federal Reserve interest rate cuts. This comes after consecutive months of slowing manufacturing activity and a surprising drop in construction spending. These economic indicators have heightened the probability of a rate cut in September to around 59.1%, up from 55% previously. This shift has weakened the dollar, particularly against the Swiss franc, hitting a two-and-a-half-month low.

Gold prices also responded positively, climbing 0.9% to $2,347.12 per ounce by late afternoon trading. This increase is attributed to the weaker dollar and the anticipation of reduced US interest rates, which decrease the opportunity cost of holding non-yielding assets like gold. The European Central Bank is nearly certain to reduce rates this week, despite recent inflation data potentially complicating their decision.

In contrast, Brent crude futures dropped by 3.4% to settle at $78.36 a barrel, dipping below $80 for the first time since February.  West Texas Intermediate crude followed suit, closing at a near four-month low of $74.22 a barrel. These declines were influenced by OPEC+'s decision to extend most oil output cuts into 2025, but with allowances for certain voluntary cuts to be phased out from October. This has led to a bearish outlook for oil prices amid rising output from non-OPEC producers and high global oil stocks.