Global Markets in Turmoil Amid Uncertainty

The price of gold has surged past $4,000 an ounce, reaching a record high, as investors seek safe-haven assets amid economic and political uncertainty worldwide. The rally is attributed to concerns over the US government shutdown, trade tensions triggered by US President Donald Trump's tariffs, and a weakening US dollar. Analysts expect gold to continue its upward trend, driven by retail investors and investments in gold-backed financial products. However, they also warn that gold prices could fall if the shutdown ends quickly or if interest rates rise.

French President Emmanuel Macron is facing increasing pressure to step down as his country's political crisis deepens. After eight years in office, Macron's third prime minister in a year, Sébastien Lecornu, resigned after just 26 days, citing the unmovable stance of parties. Opinion polls suggest almost three-quarters of voters think Macron should step down. Macron is likely to dissolve parliament rather than resign, potentially leading to snap elections that could benefit the far-right National Rally. The crisis is driven by France's crippling national debt and ideological divisions between centrist parties. Macron's presidency is set to end in 18 months, but he faces calls to step down early.

Asia-Pacific markets traded mixed on Wednesday, with some indices rising while others fell. The Hang Seng index slid 1.01%, while Japan's Nikkei 225 was little changed. The World Bank's upgraded growth forecast for the region helped to boost some markets. Spot gold prices hit a record $4,000 as investors sought safe-haven assets amid uncertainty surrounding the US government shutdown and global economic policy. The Reserve Bank of New Zealand cut its benchmark interest rate by 50 basis points to 2.5%, citing weak economic activity. The Bank of Thailand is set to release its policy decisions later in the day.

The article discusses the recent surge in gold prices, which have crossed the $4,000 mark for the first time, as investors seek a safe haven from economic uncertainty, geopolitical volatility, and inflation. Bridgewater Associates founder Ray Dalio recommends allocating up to 15% of portfolios to gold, citing similarities to the early 1970s. The article also touches on other market news, including Softbank's acquisition of ABB's robotics unit and the recent slowdown in the S&P 500. Additionally, it explores the debate around the existence of an AI bubble in the market.

The article discusses the recent surge in gold prices, which have crossed the $4,000 mark, driven by investors seeking safety from economic and geopolitical uncertainty. Bridgewater Associates founder Ray Dalio recommends allocating up to 15% of portfolios to gold, citing similarities to the early 1970s. Meanwhile, Nvidia's partnership with OpenAI is highlighted, with CEO Jensen Huang stating it's a 'direct partnership.' The article also touches on Oracle's thin margins from Nvidia sales and the S&P 500 ending its winning streak due to concerns about AI profitability. Experts debate whether there's an AI bubble in the market.

The U.K.'s labor market is complex and difficult to decipher due to questionable data quality from the Office for National Statistics (ONS). The Labour Force Survey (LFS), used to calculate the unemployment rate, has been delayed due to a sharp drop in responses. Economists are eagerly awaiting an update from recruitment firm Hays on Friday for clues on the state of the job market. The U.K. is facing issues with economic inactivity, with 21.1% of working-age individuals being economically inactive, primarily due to ill-health. The government is struggling to address this issue, and the tightening of the visa regime may exacerbate skills shortages.

European stocks are expected to remain flat on Wednesday as markets lack direction following a tumultuous week. The shock resignation of French Prime Minister Sebastien Lecornu and the EU's announcement to reduce tariff-free quotas on imported steel and hike tariffs have been key factors influencing market sentiment. The U.K.'s steel industry is bracing for potential negative impacts from the EU's measures, while Asia-Pacific markets traded flat overnight, diverging from Wall Street's losses on Tuesday.

France is heading into another political crisis with the resignation of Prime Minister Sébastien Lecornu after just 27 days in office, leaving the country's fiscal consolidation in doubt. The euro zone's second-largest economy has repeatedly broken European Commission rules on budget deficits and debt limits. Economists say significant progress in reducing France's deficit or debt pile is unlikely, with a growth slowdown also expected. The European Commission is under pressure to act, but officials are unlikely to want to appear to be interfering in domestic political affairs. The crisis has already led to a ratings downgrade by Fitch and is expected to be followed by another downgrade by Moodys.

The Reserve Bank of New Zealand (RBNZ) cut its benchmark interest rate by 50 basis points to 2.5%, exceeding economists' expectations of a 25 basis point cut. The decision brings the policy rate to its lowest level since July 2022, as the bank aims to boost growth amid weak economic activity. The RBNZ cited slow growth in disposable incomes and house prices as factors weighing on economic activity, but noted that lower interest rates are supporting a recovery in consumption. New Zealand's GDP contracted more than expected in the second quarter, declining 1.1% year on year. The RBNZ expects inflation to return to its 2% target by the first half of next year and noted that domestic inflationary pressures have moderated. The bank also discussed the impact of trade restrictions and tariffs, and noted that global trade volumes and economic activity have proven resilient so far. Growth forecasts for 2025 have improved for New Zealand's trading partners, particularly for China, Taiwan, and some other Asian economies.

The European Union has announced plans to hike steel tariffs from 25% to 50% on excess imports and reduce tariff-free quotas by 47%, sparking widespread concern in the UK's steel industry. The UK's steel sector is already struggling with closures, job losses, and US tariffs. Industry leaders warn of the 'biggest crisis' ever and urge the government to secure country quotas with the EU. The EU's move follows similar actions by the US and Canada to protect their domestic steel industries. However, the EU's announcement has been met with backlash from the European Automobile Manufacturers' Association, citing potential inflationary impacts and administrative burdens on the car industry.

The US stock market experienced a mixed session on Tuesday, with the S&P 500 ending a seven-day win streak due to a drop in Oracle's shares. Oracle's weaker-than-expected margins from its cloud business raised concerns about the sustainability of the artificial intelligence trade and the potential for an AI bubble. Despite this, some market observers believe there could be further upside before the AI rally exhausts itself. The government shutdown, now in its second week, also weighed on traders. The Federal Reserve minutes are due to be released on Wednesday, which could provide insight into the Fed's makeup following a divisive September meeting.

The global mergers and acquisitions (M&A) market is experiencing a significant surge, driven by megadeals and expectations of interest rate cuts. Despite initial caution due to geopolitical concerns and recession fears, executives are now more optimistic, leading to a sharp increase in M&A activity. The third quarter saw a collective deal value of $1.29 trillion, with 49 megadeals valued at $10 billion or more announced this year, the highest on record for nine months. Key drivers include rate-cut expectations, elevated private-equity 'dry powder,' and a growing appetite for strategic repositioning. Notable deals include Union Pacific's $85 billion acquisition of Norfolk Southern and Electronic Arts' $55 billion take-private deal. Experts expect continued momentum, with 48% of CEOs surveyed planning more deals.

China's stock market rally, engineered by the government last year on September 24th (referred to as 9/24), has been significant. The central bank cut interest rates and reserve requirements, and allowed companies to buy back shares and institutional investors to leverage their balance sheets. While a rally might seem positive, the article suggests it may have negative consequences for the economy, potentially due to the 'wealth effect' and other factors. The article discusses the implications of this rally and its potential impact on China's economy.

The article argues against implementing a wealth tax in France, despite the country's significant fiscal deficit. Proponents of a wealth tax, such as Gabriel Zucman, suggest an annual levy on fortunes larger than €100m. However, the article contends that such arguments are flawed and that a wealth tax is not a viable solution to France's fiscal issues. The article critiques the reasoning behind wealth tax proposals and suggests that alternative solutions should be explored.

The outgoing French Prime Minister, Sébastien Lecornu, is set to give an address on Wednesday morning regarding the country's deepening political crisis. Lecornu will later meet with socialists, greens, and communists in an attempt to find a way out of the deadlock. The crisis was triggered by Lecornu's unexpected resignation on Monday, and President Emmanuel Macron has given him until Wednesday evening to form a sustainable coalition government. The finance minister, Roland Lescure, stated that modifying the pension reform would be costly for France, while Élisabeth Borne, the current caretaker education minister, expressed openness to suspending the pension overhaul.

Bitcoin's price has reached record highs, surging beyond £93,000, with some experts arguing it's sustainable due to its limited supply and increasing demand, while others criticize it as a potentially volatile and manipulated market. The cryptocurrency has doubled in value over the past 12 months, driven by factors such as Donald Trump's return to the White House and the US government shutdown. Enthusiasts like Samson Mow believe Bitcoin will continue to rise, while skeptics like David Gerard warn of its risks. The article discusses the current state of Bitcoin, its potential future, and the debates surrounding it.

China's central bank has extended its gold buying streak to 11 months, contributing to gold's record-setting run. The price of gold has surpassed $4,000 per ounce amid uncertainty over the US dollar and growing demand for safe-haven assets. Investors are seeking reliable sources of return in an unpredictable global economy, with assets backed by the US dollar losing appeal due to the ongoing US government shutdown. Goldman Sachs has lifted its gold price forecast to $4,900 per ounce, citing inflows from Western exchange-traded funds and likely further central bank purchases. Billionaire investor Ray Dalio has also praised gold as a better safe haven than the US dollar, recommending a 15% allocation to gold in investment portfolios.