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• European indecision in place, as FTSE traders await budget
• Alphabet pushes into fresh highs on wave of good news
• Gold starts to find its shine once again

European markets are taking on a largely indecisive tone in early trade, coming off the back of an Asian session that saw positive moves for Chinese assets in particular. A “very good call” between Trump and Xi this week provides a rare trade-related boost, with the two seeking more regular communication lines that should help avoid the kind of standoff that saw tariffs rise to 145% earlier in the year. While there are a handful of gainers in the mining and financial space, the sheer number of FTSE 100 stocks trading essentially flat does highlight a significant degree of indecisiveness on whether the recent recovery in US stocks is a short-term reprieve or the beginning of another leg higher in the bull market. With the UK budget up ahead tomorrow, there is a degree of caution for many. However, with huge speculation around the different type of tax hikes that could be coming into play, this could easily be a sell the rumour, buy the fact situation as the uncertainty clears.

US tech stocks have enjoyed a strong start to the week, with Alphabet particularly in the limelight after soaring into fresh highs. The release of Gemini 3 has been greeted with optimism, and comments from Salesforce CEO Marc Benioff that he is moving across from ChatGPT highlights the perceived quality of the product. Meanwhile, the $4.3 billion Berkshire Hathaway acquisition of Alphabet shares stands out as an anomaly given Warren Buffett’s focus on value. Coming at a time when markets have been widely questioning the valuations and multiples paid for AI stocks, the decision from Berkshire Hathaway to load up on Alphabet shares does provide confidence for many that it will emerge as one of the winners despite the elevated investments seen in this build out phase. Finally, with Meta rumoured to be in talks to spend billions on Google chips, the gains expected from Alphabet today look to be coming at the expense of Nvidia.

Equities are not the only market that has shown early signs of staging a recovery, with gold pushing up through $4130 to hit the highest level in over a week. Notably, the bull run for precious metals hit the buffers off the back of two particular news headlines, with US-China relations improving and December rate cut hopes fading. However, we have seen a resurgence in expectations for a rate cut next month following comments from Williams, and Waller, with the CME now pricing an 80% chance that the Fed ease again before year-end. Notably, we have also seen additional debt fears emerge thanks to stimulus measures in Japan and lower deficit reduction efforts in the US. The Japanese have just approved a fresh $135 billion stimulus package, adding yet more borrowing for a country with a debt-to-GDP ratio over 260%. Soaring bond yields mean that figure is likely to rise further. Meanwhile, Trump’s recent tariff adjustments have lowered the overall effectiveness at reducing the debt burden, with the CBO forecasting that their previous prediction of $4 trillion by 2035 would instead look more like $3 trillion when adjusting for the new tariff rates.

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