Tesla Earnings Lift Wall Street, Nikkei Falls Before Japan Election

Optimism from Tesla’s earnings has supported Wall Street gains, though the Dow dipped and the Nikkei slid 1% due to a stronger yen and uncertainty over Japan's upcoming election this Sunday. The dollar and US Treasury yields continue to rise amid mounting Trump election odds and resilient US economic data. In Europe, STOXX 600 is set to end the week with a 1.1% loss as markets await earnings from Sanofi, Natwest, and Mercedes-Benz.

Equities

The FTSE 100 rose modestly by 0.13% on Thursday, fuelled by positive corporate earnings and economic data that bolstered expectations for upcoming Bank of England rate cuts.

Unilever’s stock gained 2.9% after surpassing Q3 sales forecasts, while Barclays advanced 4.1% on an 18% jump in quarterly profit, outperforming analyst predictions. Anglo American’s shares also rose by 2.9%, as the mining giant maintained its copper and diamond production targets, lending strength to the industrial metals sector.

IT services provider Softcat surged by 10% after exceeding annual profit expectations, while Bloomsbury Publishing climbed 8.2% following an optimistic profit outlook. Fund manager Abrdn saw its shares drop by 11.2% on greater-than-expected outflows.

Across the Atlantic, the US dollar softened following its biggest monthly drop, in tandem with a slight retreat in US Treasury yields, which had approached three-month peaks. The S&P 500, reflecting a cautious market mood, reacted to high Treasury yields and ongoing Fed concerns.

Apple, Alphabet, Amazon, Meta, and Microsoft are due to release their earnings next week, keeping investors attuned to tech sector performance. Recent economic data showed a drop in US jobless claims, adding to the string of positive economic indicators. The 10-year Treasury yield, which reached a high of 4.26% midweek, dropped back to 4.17%, while the dollar index edged down to 104.03 after hitting 104.57 earlier.

Forex & Commodities

The euro and yen strengthened as the dollar took a pause from its rally, retreating from nearly three-month highs.

Sterling rose 0.39% to $1.2971, supported by UK Finance Minister Rachel Reeves’ statement on plans to adjust public debt targets for increased borrowing. Meanwhile, US jobless claims fell to 227,000 last week, below estimates, while ongoing claims rose to a three-year high, hinting at a mixed labour market that aligns with the Federal Reserve’s gradual rate-cutting path.

Gold prices eased to $2,725.73 per ounce, though the metal is set for its third consecutive weekly gain, supported by rising geopolitical risks. Palladium reached a ten-month peak earlier in the week, bolstered by supply concerns as the US seeks to sanction Russian palladium exports.

Oil prices moved slightly higher, with Brent crude at $74.56 and West Texas Intermediate at $70.34, up roughly 1% for the week amid ongoing tensions in the Middle East and renewed Gaza ceasefire talks. Both markets remain volatile as traders monitor potential supply disruptions, with analysts projecting Brent to hover between $70 and $85 per barrel.