Finance
Morning Bid: US politics can't shut down the animal spirits
Published by Global Banking & Finance Review®
Posted on October 3, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 3, 2025
3 min readLast updated: January 21, 2026
Despite US political gridlock, market optimism persists with stocks and gold reaching new highs, driven by Federal Reserve's rate cuts and AI influence.
A look at the day ahead in European and global markets from Ankur Banerjee:
The U.S. shutdown and political gridlock in Washington show no signs of ending any time soon. That hasn't stopped stocks and gold striking fresh record highs, as investors mainly focus on the Federal Reserve sticking the rate-cut path.
While the risk of a drawn out shutdown could muddle the policy path, for now, markets are shrugging that off and taking a risk-on approach.
Traders don't have to bide their time for the U.S. jobs report on Friday due to the shutdown, although manufacturing data from across Europe may sway the markets and underscore the impact of tariffs.
But we have been saying that for a while and data so far has shown limited impact. Data earlier this week showed U.S. manufacturing activity edged up in September, though new orders and employment were subdued as factories grappled with the fallout from President Donald Trump's sweeping tariffs.
So perhaps, more of the same is in store for Europe. That may not deter the stock markets where the pan-European STOXX 600 closed at a record high on Thursday, taking its yearly gains to 12%. Futures indicate another strong open.
The surge in global stocks is led by the ever-present AI mania and the rising wagers of the Fed cutting rates again this year. With no government data, traders have turned to alternative private reports that show a sluggish labour market.
That has reinforced the view that the Fed will lower rates again, as traders almost fully price in a cut later this month.
Gold prices, as a result, have been on a tear, with the yellow metal heading for a seventh straight week in the black, bringing yearly gains to an eye-watering 47%.
Investor attention will also be on any further deals that may be unveiled after Trump announced a deal with Pfizer CEO Albert Bourla earlier this week to cut drug prices in exchange for relief from planned tariffs on imported pharmaceuticals.
The Trump administration is pursuing deals across up to 30 industries, involving dozens of companies deemed critical to national or economic security, sources told Reuters.
Key developments that could influence markets on Friday:
Economic events: September PMIs for France, Germany, UK and euro zone.
(By Ankur Banerjee; Editing by Sam Holmes)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation and stabilizing currency.
Market optimism is a positive outlook among investors regarding the future performance of financial markets, often leading to increased buying activity and rising stock prices.
A stock market is a collection of markets where shares of publicly traded companies are bought and sold, allowing investors to trade ownership in businesses.
A gold price surge refers to a significant increase in the market price of gold, often driven by factors such as economic uncertainty, inflation, or increased demand for safe-haven assets.
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