HL commentary as it happens

US government shutdown in record territory

As well as valuation fears, the US grappling with a nation in shutdown – now the longest in US history. And while it has yet to impact markets in any meaningful way, consumers are being affected. As well as public sector workers not receiving pay, one key impact is travel disruption. The US is nearing peak travel period, with Thanksgiving later this month. Listed airlines are likely to see share prices fall should flights be cancelled en masse. The stalemate also adds to macroeconomic concerns regarding the attractiveness of the US to do business and invest new money – potentially benefiting Europe in a best-of-the-rest trade.

Stock markets have fallen on AI concerns

Halloween may be over, but markets are feeling spooked over AI stock valuations fears. Overnight, the S&P 500 fell 1.18% and the Nasdaq pulled back 1.84%, as Wall Street giants including Morgan Stanley and Goldman Sachs warned that AI stocks were in bubble territory. The negative momentum rippled through Asian markets in the early hours this morning, with Bloomberg estimating a total of $500 billion wiped off semi-conductor stock valuations globally.

The concerns are valid. While a number of AI firms have benefits from strong revenue and profit growth, this has been a narrow and extreme rally. Earlier this year, following both the DeepSeek disruption in January and the tariff tantrum in April, returns seemed to be more broad-based, with the equal weighted S&P 500 outperforming the market cap for periods. But this did not last, and once again high growth, tech biased, AI focused businesses have delivered much of the aggregate S&P 500 returns over the past six months.

Investors should use this opportunity to crystallise impressive gains and diversify their portfolios to include a range of sectors, geographies and asset classes – adding resilience to portfolios. The gold price tipping up is screaming a warning again – a siren that this rally will not last.

Gold rises as US rate cut odds drop

Gold edged up to $4,010 per ounce after an early dip, as traders weighed fading hopes for aggressive US rate cuts against easing safe-haven demand following a US-China trade truce. Fed Chair Powell signalled last week’s cut could be the last for now, trimming market odds of a December move to about 70% from over 90%. With geopolitical tensions cooling and monetary policy uncertainty lingering, this mini rally looks cautious rather than convincing.

US futures point to positive open

US futures point to a positive open as upbeat sentiment from the weekend’s US-China trade updates combines with ongoing earnings momentum. Tech remains in focus with Palantir and AMD set to report this week, both riding strong year-to-date gains and investor optimism around AI and chip demand. With trade tensions easing and big names driving the narrative, Wall Street looks ready to reward the positive narratives.

London’s blue-chip index opens higher

London stocks have a touch higher this morning as investors brace for a pivotal week at the Bank of England. Rates are widely expected to stay at 4% on Thursday, but the real debate is whether policymakers deliver a cut in December, with odds hovering near 50-50. With stubborn inflation and slowing growth, expectations for the year ahead are in the balance.