Global Markets Mixed as Investors Weigh AI Bubble Fears, Fed Outlook, and US Shutdown Deadlock

Global markets were mixed on Thursday as investors weighed the sustainability of the AI-driven stock rally, the Federal Reserve’s next interest rate move, and the ongoing US government shutdown.

News of an initial Gaza ceasefire agreement between Israel and Hamas offered some relief from geopolitical tensions, while gold retreated after briefly surpassing a record $4,000 per ounce.

Tech stocks have powered markets higher this year, boosted by massive corporate investments in artificial intelligence. However, analysts warn that valuations may have become overstretched.

“AI is clearly a bubble,” cautioned Neil Wilson of Saxo Markets. “The only question is when it bursts.” He noted that Oracle’s disclosure of slim profit margins from its AI cloud services, including Nvidia-powered servers, has raised eyebrows.

Tesla shares also fell 4.5 percent after the unveiling of lower-priced Model 3 and Model Y cars that failed to impress analysts. Although the automaker’s third-quarter results are expected to remain strong, investors are beginning to question long-term momentum.

Despite these concerns, Wall Street rebounded strongly on Wednesday, with the S&P 500 and Nasdaq closing at new record highs.

In Asia, Tokyo’s Nikkei 225 jumped 1.8 percent amid optimism over pro-business leadership following Sanae Takaichi’s election as head of Japan’s ruling party. Shanghai advanced after reopening from a week-long holiday, while Sydney, Wellington, Taipei, Mumbai, and Bangkok also gained. Frankfurt opened at a record high, with Paris following suit, though Hong Kong, Singapore, Manila, Jakarta, and London edged lower.

Meanwhile, the US government shutdown entered its second week, with no breakthrough between Republicans and Democrats. Lawmakers remain divided over a funding bill, with Democrats insisting on extending healthcare subsidies for 24 million Americans.

Minutes from the Federal Reserve’s latest meeting revealed internal disagreements over rate cuts. Some policymakers pushed for deeper reductions to support employment, while others urged caution amid persistent inflation risks.

Geopolitical tensions eased slightly after Israel and Hamas agreed to the first phase of a ceasefire deal. Former US President Donald Trump also unveiled a 20-point peace plan proposing a full hostage release by Hamas and a partial Israeli troop withdrawal.

Oil prices edged higher after initially dipping on the ceasefire news, while gold eased from its record highs.

In corporate developments, Hang Seng Bank shares soared over 26 percent in Hong Kong following reports that HSBC plans to buy out the remaining shares and take the lender private in a US$37 billion deal. HSBC’s own shares fell seven percent in response.

“This move reflects confidence in Hong Kong’s long-term growth potential,” said David Liao, HSBC’s Asia and Middle East co-chief executive.

Key Market Figures (as of close):

Tokyo (Nikkei 225): +1.8% at 48,580.44

Hong Kong (Hang Seng Index): –0.3% at 26,752.59

Shanghai (Composite): +1.3% at 3,933.97

London (FTSE 100): –0.4% at 9,513.88

New York (Dow Jones): Flat at 46,601.78


Commodities & Currencies:

WTI Crude: +0.2% at $62.67 per barrel

Brent Crude: +0.2% at $66.36 per barrel

Gold: Slightly lower at $4,000/oz

Euro/Dollar: $1.1611 (down)

Pound/Dollar: $1.3352 (down)

Dollar/Yen: 153.09 (up)