We begin this week in Japan, where it has been just over a month since Prime Minister Ishiba resigned. Sanae Takaichi emerged victorious, securing leadership of Japan’s ruling party and positioning herself to become the country’s first female Prime Minister. “I will work, work, work,” Takaichi declared in her victory speech.
We noted at the time that the Liberal Democratic Party (LDP) and its coalition partner had lost their majorities in both houses under PM Ishiba, prompting his resignation. Now, Ms Takaichi is poised to emulate her political idol, former UK PM Margaret Thatcher. She faces a significant challenge in regaining public trust, amid widespread frustration over rising prices, immigration concerns, and growing support for opposition groups promising large-scale stimulus—particularly among younger voters.
A strong advocate of “Abenomics,” Takaichi has outlined plans to cut taxes and increase subsidies. Her proposals have already had an impact, with Japanese equities having a strong week. The market was up close to 5% on Monday after Takaichi’s shock appointment, making further all-time highs during the week.
In our weekly updates, France tends to feature either during World Cup triumphs, protests or when its Prime Minister resigns. This week, it’s the latter. PM Lecornu stepped down just hours after announcing his cabinet lineup, following threats that his newly formed government would be toppled. His tenure lasted only 27 days, making him the shortest-serving PM in modern French history.
Political pressure is now mounting on President Macron, with parties urging him to either call a snap election or concede and appoint a left-wing Prime Minister. Macron has been selective in his previous PM appointments, deliberately avoiding leftist candidates who seek to revise his pension reform and wealth tax policies.
As we head towards the end of the week, the US government remains in shutdown, with over two million employees working without pay. The Senate is not scheduled to reconvene until next Tuesday, so a swift resolution appears unlikely before then.
JPMorgan CEO Jamie Dimon weighed in on the US economic outlook this week, expressing caution about the lingering effects of tariffs and broader geopolitical headwinds. He admitted to being more concerned than others, warning that the US could face a significant market correction within the next “six months to two years.”
Concerns are mounting around a potential artificial intelligence (AI) bubble, driven by stretched valuations and a recent trend of circular cross-dealings among AI firms. Companies are investing vast amounts into AI capabilities and as of yet the route to monetisation is not that clear. As we head into 2026 and beyond, investors will want to see progress being made. Many of the AI hyperscalers have now shifted from being capital-light businesses to capital intensive, with huge investment going into AI.
UK Prime Minister Sir Keir Starmer began a two-day visit to India this week, aiming to implement the free trade deal agreed back in July. He was accompanied by a delegation of over 100 CEOs and entrepreneurs, seeking to explore opportunities across the tech, defence, and clean energy sectors. The deal is expected to boost bilateral trade between the two countries by £25.5 billion by 2040. This would mark a significant win for the Labour government ahead of the challenging November budget, which remains clouded by uncertainty.
Gold sold off during the latter part of the week, as investors took profits following its surge past the $4,000 per ounce mark. Despite the dip, gold remains on track for a weekly gain of over 2%, driven by safe-haven demand amid ongoing geopolitical risks. Encouragingly, a ceasefire between Israel and Hamas was agreed towards the end of the week, offering a glimmer of stability.
Silver continues its remarkable rally, reaching an all-time high of $51 per ounce and gaining over 75% year-to-date. The $50 an ounce mark was met with some resistance, and we did see the price fall on reaching this new all-time high. Silver miners sold off significantly on Thursday. While making new highs can panic investors, it is rarely a successful sell signal, and with strong tailwinds for precious metals there could be further to run.
Despite the US government shutdown, the US Dollar has posed something of a counter-rally this week, rallying against a wide range of currencies, including sterling which now stands below 1.33.
It’s been a data-light week, in part due to the suspension of much US data due to the shutdown. Next week markets will hear from Andrew Bailey (BoE Governor) and Jerome Powell (US Fed Chair) which should provide insight into the direction of travel of interest rates. There will hopefully be US inflation data alongside UK GDP data.
Nathan Amaning, Investment Analyst
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