New York: Global markets opened the week on a positive note as weaker-than-expected U.S. jobs data bolstered investor hopes of a Federal Reserve rate cut later this month. Traders are now factoring in the possibility of a 25–50 basis point reduction, with Treasury yields slipping to five-month lows. The easing rate outlook pushed Wall Street indices higher and lifted global sentiment.
Gold continued its strong run, hovering near record levels of around USD 3,588 per ounce, while oil prices inched higher after OPEC+ signalled slower production increases from October amid softer demand projections.
Political shifts shake Japan
Tokyo: Japanese markets reacted sharply to the sudden resignation of Prime Minister Shigeru Ishiba, a move that injected uncertainty into the country’s policy outlook. The yen weakened significantly, slipping to around 148 per dollar, as investors weighed the prospect of looser fiscal and monetary policies under his possible successor.
Despite the political instability, the Nikkei index gained ground, nearing its recent record high as investors bet on continued stimulus measures. Analysts caution that leadership choices, particularly if a candidate supportive of ultra-loose policies emerges, could spark further market volatility.
Europe’s political unease weighs on bonds
Paris: European markets remained under pressure amid ongoing political instability in France. Prime Minister François Bayrou faces a no-confidence vote this week, which, if successful, could make him the country’s fifth leader in three years. Investors are increasingly concerned about France’s fiscal outlook, with long-term bond yields climbing to levels not seen since 2009.
The uncertainty has also revived worries of a sovereign rating downgrade, with fresh rounds of reviews expected soon. Market participants warn that political instability combined with high debt levels may lead to greater volatility in European bond markets.
Wider global market trends
London: Beyond immediate political and economic concerns, analysts are pointing to three key trends shaping global markets as the year progresses. First, equity rallies are broadening beyond U.S. benchmarks, with indices across Europe, Asia and emerging markets also reaching new highs.
Second, the so-called “Magnificent Seven” U.S. tech giants, which powered much of the earlier bull run, could now face margin pressures as AI-related investment becomes more capital-intensive. This shift may limit their role as growth leaders.
Finally, China’s 10-year bond yield, now around 1.8%, is being closely watched as a gauge of domestic demand and Beijing’s ability to combat deflation. A sustained rise in yields would indicate stronger economic recovery and potentially lift Chinese equities further.