Gold hits another record

The gold price surged past the $4,000 per ounce mark, driven by a confluence of economic anxiety, geopolitical tensions, and expectations of looser monetary policy. Investors have flocked to the precious metal amid the ongoing US government shutdown, a weakening dollar, and fears over Federal Reserve independence, viewing gold as a safe haven in turbulent times. 

The FTSE 100 was up 0.1% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading down 0.9%.

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Donald Trump

The US government shutdown entered its second week with no resolution in sight, as partisan deadlock over healthcare subsidies and budget priorities continues to paralyse Washington. Senate Republicans have failed six times to advance a short-term funding bill, while Democrats insist on extending Affordable Care Act subsidies before supporting any deal. Roughly 750,000 federal workers have been furloughed, and essential services – from air traffic control to military operations – are running without pay. President Trump has signalled sweeping cuts to federal programs and jobs, framing the shutdown as an opportunity to eliminate “wasteful” spending. The economic fallout is mounting, with delayed services, strained agencies, and growing uncertainty for contractors and public sector employees. The Senate is expected to vote again, but without bipartisan compromise, the shutdown could drag on indefinitely. The shutdown meant US payrolls data was not released on Friday and inflation data, due next week, may also not be issued. 

Donald Trump announced a breakthrough in his Gaza peace initiative, confirming that Israel and Hamas had signed off on the first phase of a US-brokered ceasefire deal aimed at ending two years of devastating conflict. The agreement includes the immediate release of hostages and prisoners, a withdrawal of Israeli troops to agreed lines, and the suspension of military operations. Mr Trump’s 20-point plan also calls for Hamas’s demilitarisation, international oversight of Gaza’s reconstruction, and the deployment of a stabilisation force. While hailed by mediators and welcomed by the Palestinian Authority, the deal faces resistance from parts of Israel’s far-right government and uncertainty over long-term governance of Gaza. Trump described the moment as “historic”, pledging continued engagement to secure lasting peace. 

Autumn Budget

The Office for National Statistics has revised UK government borrowing figures downward by £3bn after uncovering a data error in VAT receipts supplied by HMRC. This correction offers Chancellor Rachel Reeves a modest but politically valuable boost in fiscal headroom ahead of the Autumn Budget, easing pressure as she faces a projected £20bn–£40bn shortfall. While the revision softens the immediate outlook, borrowing remains historically high and well above forecasts, reinforcing expectations of tax rises or spending restraint. The episode also raises concerns about the reliability of public finance data, underscoring the stakes as Reeves prepares to unveil her first full Budget on 26 November amid fragile economic conditions. 

The Institute of Chartered Accountants in England and Wales (ICAEW) issued a stark warning ahead of Chancellor Rachel Reeves’ Autumn Budget, urging the government to freeze business taxes or risk “sleepwalking into stagnation”. In its latest Business Confidence Monitor, ICAEW revealed sentiment among UK businesses has plunged to a three-year low, with a record 60% of business leaders citing tax burdens as their top concern – a tenfold increase since 2020. Chief Executive Alan Vallance described the situation as “Groundhog Day for Britain’s businesses”, highlighting collapsing confidence, rising costs, and faltering investment. 

Economics

Minutes from the Federal Reserve’s September rate-setting meeting revealed a growing divide among policymakers over the pace and extent of interest rate cuts, as the central bank grapples with persistent inflation and signs of labour market softening. While most officials supported the quarter-point cut to 4.00–4.25%, some advocated for a more aggressive move, and others warned against easing too quickly. Chair Jerome Powell acknowledged the lack of a “risk-free path”, highlighting the Fed’s data-dependent stance amid economic uncertainty. The implications are significant: markets now expect further cuts this year, but the Fed may slow its easing cycle if inflation proves stubborn or financial conditions remain loose. Businesses and consumers could benefit from lower borrowing costs, but the path ahead remains fraught with policy tension and macroeconomic risks. 

Germany’s industrial sector suffered a sharp setback in August, with factory orders falling 0.8% month-on-month – marking the fourth consecutive decline – and industrial production plunging 4.3%, the steepest drop in more than three years. The slump was driven by collapsing demand in the automotive sector, exacerbated by frontloaded US purchases ahead of new tariffs and seasonal factory shutdowns. Core factory orders, excluding large contracts, fell 3.3%, and foreign demand dropped 4.1%, highlighting persistent weakness in Germany’s export-driven economy. Analysts warn that without structural reforms and fiscal stimulus, Germany risks stagnation through the second half of 2025, with hopes for recovery now pinned on government spending in 2026. 

Geopolitics

The EU’s decision to slash tariff-free steel import quotas and double out-of-quota tariffs to 50% has triggered alarm across the UK, with industry leaders warning of an “existential threat” to British steelmakers. Nearly 80% of UK steel exports go to the EU, and the new measures - designed to shield European producers from global oversupply and redirected imports following US tariff hikes - could effectively price British steel out of its largest market. The UK government is in urgent talks with Brussels to secure country-specific quotas and avoid a flood of diverted global steel destabilising domestic prices. The move also threatens to derail major infrastructure projects, inflate construction costs, and deepen post-Brexit trade tensions. 

Nato is intensifying deliberations over how to counter Russia’s escalating hybrid warfare campaign, which includes cyberattacks, drone incursions, sabotage, and military provocations across alliance borders. Following a series of airspace violations and clandestine operations targeting infrastructure in Poland, Denmark, and Germany, member states are considering deploying armed drones along Russia’s borders and easing rules of engagement for pilots to respond more decisively to threats. Intelligence from Denmark and other frontline nations warns that Moscow views itself as already in conflict with the West, using tactics designed to stay below Nato’s Article 5 threshold while testing the alliance’s resolve. Critics, including former Lithuanian foreign minister Gabrielius Landsbergis, have urged Nato to define red lines and take firmer action, warning that continued inaction risks a catastrophic escalation.

France remains in political turmoil as President Emmanuel Macron prepares to appoint a new prime minister within 48 hours, following the dramatic resignation of Sébastien Lecornu - whose 14-hour tenure marked the shortest in modern French history. Mr Lecornu stepped down after his hastily assembled cabinet was rejected by both allies and opposition, failing to resolve the deadlock triggered by the collapse of his predecessor’s austerity-driven government. Mr Macron’s office says a “platform for stability” now exists to pass a budget by year-end, but the president faces mounting pressure from across the political spectrum, with calls for snap elections and even resignation. The crisis underscores the fragility of President Macron’s minority government and the fractured state of France’s legislature. 

China dramatically tightened its export controls on rare earth elements and related technologies, reinforcing its grip on a sector critical to global high-tech industries and defence systems. The new rules, announced by the Ministry of Commerce, require foreign companies to obtain special licenses to access Chinese-sourced rare earths or collaborate on processing technologies, with explicit bans on exports to overseas defence and semiconductor users. As the dominant global supplier – controlling more than 90% of rare earth processing – Beijing’s move is widely seen as a strategic play to safeguard national security and bolster leverage in trade negotiations, particularly with the US. The curbs are expected to disrupt supply chains for electric vehicles, aerospace, and advanced electronics, prompting Western nations to accelerate efforts to diversify sourcing and invest in domestic production. 

IPOs

EY’s latest update on the UK initial public offering (IPO) market paints a cautiously optimistic picture, with London listings remaining subdued in the third quarter but signs of revival emerging. Just three companies floated on the Alternative Investment Market (Aim) during the quarter, raising £16.3m, bringing the year-to-date total to nearly £200m – down 66% from the same period last year. EY notes that the market has largely been in “wait and see” mode amid geopolitical and macroeconomic instability, but sentiment is shifting. Several sizeable IPOs have already been confirmed, and the pipeline for early 2026 is strengthening. EY’s Scott McCubbin highlighted London’s depth of capital and international investor base as enduring strengths, although he noted that timing and pricing remain critical for successful listings. Speculation is mounting that Chancellor Rachel Reeves is considering a stamp duty holiday on new London listings to boost the capital's competitiveness as a public capital market.

Last week we saw the successful market debut of LED light mask maker The Beauty Tech Group, with small business lender Shawbrook and canned food maker Princes Group also confirm plans to float in London. Wall Street’s IPO boom: can London catch the wave?

Companies

Shell delivered a resilient third-quarter performance, posting revenues of $71.09bn – well ahead of analyst expectations – despite facing headwinds from lower refining margins and oil prices. Net income rose to $4.29bn, while adjusted earnings slipped 4% quarter-on-quarter to $6.03bn. The energy giant announced a $3.5bn share buyback. Upstream production climbed 2%, offsetting a 4% dip in Integrated Gas output. Shell also revised its capital expenditure guidance downward, signalling tighter fiscal discipline amid volatile market conditions. 

TSMC delivered a standout third-quarter performance, posting net revenue of $32.5bn – beating forecasts and marking a 36% year-on-year surge – driven by booming demand for AI and high-performance computing chips. Gross margins at the Taiwanese contract chipmaker rose to 57.8%, underscoring the group’s pricing power and operational efficiency. As the sole manufacturer of cutting-edge 3nm and 5nm chips for tech giants, such as Apple and Nvidia, TSMC is capitalising on structural shifts in the semiconductor industry. The company also issued bullish guidance for the fourth quarter, projecting up to $26.9bn in revenue, with management signalling confidence in sustained momentum. 

In an unscheduled update Lloyds Banking Group warned that it may need to set aside a “material” additional provision to cover potential compensation costs linked to the UK’s motor finance mis-selling scandal. The bank, which already holds £1.2bn in reserves for the issue, said the Financial Conduct Authority’s proposed redress scheme – affecting up to 14 million car finance agreements – could significantly increase its exposure. Lloyds, which operates the Black Horse motor finance brand, cited ongoing uncertainty around the scheme’s implementation and pledged to update the market as its analysis progresses. Close Brothers, another lender with significant exposure to the scandal, also revealed it would increase provisions from the existing £165m to pay for the scheme, sending its shares lower.

In a trading update, Johnson Matthey guided to strong underlying operating profit for the first half of its fiscal year – excluding its Catalyst Technologies and Value Businesses – driven by efficiency gains and robust performance in its PGM Services division. The group’s full-year outlook is now at the upper end of its initial guidance for mid-single-digit profit growth. Meanwhile, Catalyst Technologies, now classified as a discontinued operation ahead of its sale to US group Honeywell, saw a sharp decline in first-half profit due to weaker demand and delayed licensing wins.