Rivian surges after VW invests, Yen hits 1986 Lows

Volkswagen announced a $5 billion investment in a new joint venture with EV maker Rivian, boosting the RIVN shares by 23%. The Japanese yen plunged to its weakest point since 1986 against the US dollar. Upcoming US PCE data and the presidential debate are key events that markets are closely watching.

Equities

On Wednesday, the FTSE 100 and the mid-cap FTSE 250 both saw a decline of 0.3%. Future Plc saw its shares climb 8.3% following an upgrade from Jefferies from "underperform" to "buy", with an increased price target.

Aston Martin witnessed a 2.6% drop in its shares after announcing the launch of a new limited edition sports car, Valiant. The announcement did not seem to bolster investor confidence, possibly due to the niche appeal of the high-end vehicle which might limit its impact on broader company revenues.

US stock markets ended the day with modest gains. The Dow Jones Industrial Average inched up by 0.04%, while the S&P 500 and Nasdaq Composite saw increases of 0.16% and 0.49%, respectively. These gains occurred despite a choppy trading session, with investors cautious ahead of a presidential debate and upcoming inflation data expected to influence Federal Reserve policy decisions.

Rivian's stock soared 23.24% after the announcement of a substantial investment from Volkswagen, which plans to inject up to $5 billion into the electric vehicle maker.

Volkswagen has announced its plan to collaborate with Rivian in developing "next generation software-defined vehicle (SDV) architectures" for their upcoming electric vehicles (EVs). This joint effort will utilise Rivian's "zonal hardware design" and platform as the base for future vehicles. Additionally, Rivian will licence its current intellectual property rights to the joint venture.

FedEx enjoyed a notable rise of 15.53% after the delivery giant projected a fiscal 2025 profit above market expectations, boosting sentiment in the transport sector. Whirlpool's stock surged 17.1% following reports of a potential bid from German engineering group Robert Bosch.

Tech giant Amazon saw its shares increase by 3.90%, pushing its market valuation above the $2 trillion mark.

Forex & Commodities

On Wednesday, the yen hit a near 38-year low against the US dollar, dropping to 160.82, its weakest since December 1986, largely due to the significant interest rate differential between Japan and the United States. The euro also reached a 32-year high against the yen at 171.79. Despite Japan's slight interest rate increases this year to between zero and 0.1%, the US's higher rates of 5.25% to 5.5% have made dollar assets more appealing, prompting extensive carry trade activity.

The US dollar index, measuring the currency against six peers, rose by 0.4% to 106.05. Conversely, the British pound declined by 0.5% against the dollar, trading at $1.2627.

Economic data released showed US new home sales at a six-month low, declining 11.3% to a seasonally adjusted annual rate of 619,000 units last month.

Gold prices remained steady at $2,298.76 per ounce after a recent drop to a two-week low, influenced by a strong US dollar and firm US bond yields.

In the oil markets, Brent crude edged up by 0.3% to $85.25 per barrel, while US West Texas Intermediate crude was slightly higher at $80.90 a barrel.