Before the Bell: Trump and Xi soon together on TikTok?

WDP and Argenx officially join the AEX and Euro Stoxx 50 this morning, while Warren Buffett adds further to his stake in Japan.

Last week was dominated by rate decisions. Investors in the U.S. finally got the rate cut they had been waiting for—the first of the year. The Fed lowered the dollar rate by 25 basis points. U.S. indices closed the week higher: the S&P 500 gained 1.2% over five days, and the Nasdaq ended the week up 2.2%. The Russell 2000 index, which tracks 2,000 American small caps, hit a new record high for the first time since November 2021—small caps finally got some attention. The biggest weekly winner on Wall Street was biotech firm 89bio (+84.2%) after Roche announced a 3.5 billion dollar deal for the liver-disease specialist focused on obesity patients. Intel (+22.8%) also stole the spotlight after Nvidia revealed a 5 billion dollar investment in the company. In Europe, the average stock rose 1.3% last week, while the Bel20 lagged, losing 1.4%. In Brussels, Syensqo (-5.2%), Solvay (-3.6%), and Lotus Bakeries (-3.6%) were the main laggards. Meanwhile, Donald Trump and Chinese President Xi Jinping met over the weekend to discuss TikTok’s future. And Italy received an upgrade from Fitch, from BBB to BBB+, just a week after the agency downgraded France. Not long ago Italy was considered one of Europe’s weakest links, but that narrative appears to be changing.

As usual, Asian indices kicked off the week with a mixed picture. In Hong Kong, the Hang Seng Index fell 1%, while Tokyo’s Topix rose 0.8%. The earnings season is drawing to a close, leaving today’s corporate newsflow relatively light. On the macro front, Belgium and Europe will publish consumer confidence data for September. 

Reshuffling Europe’s indices

Today marks a reshuffling of several European benchmarks. Nokia, Pernod Ricard, and Stellantis will exit the Euro Stoxx 50, replaced by Argenx, Deutsche Bank, and Siemens. Euronext joins France’s CAC40, replacing call-center operator Teleperformance. Porsche and lab-equipment supplier Sartorius drop out of Germany’s DAX, making way for tech firm GEA and online marketplace operator Scout24. In Amsterdam, the AEX expands from 25 to 30 companies. New entrants include CVC Capital Partners, JDE Peet’s, Just Eat Takeaway, and Belgian logistics REIT WDP.

Big in Japan

Mitsui & Co. announced this morning that Berkshire Hathaway had once again added to its holdings, pushing Buffett’s stake above 10%. The Japanese trading house confirmed the purchases on Sunday. Although Buffett is typically reluctant to invest outside the U.S., Japanese trading houses are an exception. And he’s not buying on weakness—Mitsui shares are already up 14% this year, with another 1.4% added this morning. Trading houses play a crucial role in Japan’s economy, especially in international trade. They import raw materials and manage transportation, insurance, and other logistics for exports. Mitsui also holds significant stakes in the oil and gas sector—a long-standing Buffett favorite.

Did you know…

that Berkshire Hathaway first acquired about 5% stakes in five Japanese trading houses in 2020? In addition to Mitsui, the group invested in Mitsubishi, Itochu, Sumitomo, and Marubeni, later raising its holdings to around 7–8%.

This article was translated from Dutch and was originally published on Spaarvarkens.be.