Weekly house view | Markets are a-Mused
The week in review
In a new application of artificial intelligence (AI), Meta launched a personal agent, called Muse, which can connect to tools including email, calendars and exercise apps. The agent promises to be “stickier” for consumers once it is trained to do everything from grocery shopping to planning social activities and holidays.
Walmart joined a line-up of major retailers cutting deals with Meta to integrate Muse, which Amazon blocked. Shares in Meta rose more than 10% on the week. The S&P 5001 rose 1.2%. Shares fell in travel and insurance companies whose consumer inertia risks being disrupted.
In another AI development, an OpenAI agent hacked the Australian national healthcare database. A key question for the future is who will be liable for such incidents, the manufacturer or the user.
In Washington, Chinese President Xi Jinping made his first state visit to the US since 2015. Xi and US President Donald Trump agreed to extend their trade truce by two months to 10 January, to reduce tariffs on USD 30 bn of goods and launch a dialogue on AI.
In markets, US Treasury yields continued to move higher, and the 10-year Treasury yield rose above 5.20%.
With Trump’s approval ratings sinking to the lowest in his presidency, traders have raised the implied probability the Democrats taking control of both the House of Representatives and the Senate in the November midterms to 64%.
Quote of the week
“Will a deal be made with Iran that lets them rebuild and create a far greater country than it ever was before?” Trump asked in an address to the United Nations. “Or do I annihilate the Islamic Republic and do it quickly, never giving them a chance to kill and destroy people and countries again?”
Trump later rejected an Iranian proposal to open the Strait of Hormuz on condition that the US lifted sanctions on Iran’s oil exports. The UK agreed to support Saudi Arabia to help it repel attacks by the Iran-backed Houthis.
Key data
In Europe, the S&P Global eurozone Purchasing Managers’ Index (PMI), where readings above 50.0 signal an expansion in activity, rose to 53.1 in September from 52.0 in August. The rise signalled the fastest expansion in more than three years, despite the war-driven energy shock. Price pressures increased.
The US PMI reading came in at 58.4 for September, beating expectations.
