Summary
- US stocks remained elevated following a deal between OpenAI and AMD.
- Shifting political dynamics in France and Japan are creating pockets of volatility.
- The upside for base metals has stalled due to a stronger dollar, while aluminium continues to reach new highs.
- Gold and silver show no signs of giving up last week’s gains, rallying higher.
Macro
US stocks opened higher following a deal between OpenAI and AMD to deploy gigawatts of AMD GPUs over several years for AI storage infrastructure. This multi-billion-dollar deal has generated optimism in the tech sector, raising revenue expectations. We believe that markets appear stretched with signs of upside fatigue, but a clear catalyst or confirmation signal is needed for a sustained reversal.
This week's macroeconomic calendar appears to be quiet; however, volatility is expected to stay elevated due to shifting political dynamics. These include the appointment of a new PM in Japan, the resignation of the French PM, and the ongoing US government shutdown, which contributes to uncertainty regarding the release of labour market figures. In particular, the surprise victory of Sanae Takaichi in the Liberal Democratic Party leadership election has introduced new dynamics, as her pro-stimulus stance and criticism of interest rate increases signal a potentially more dovish approach to BOJ policy. Market expectations for an October BOJ rate hike have diminished following Takaichi's win, currently priced in at 14bps until year-end, creating downward pressure on the yen, which weakened to 150 against the dollar on Monday.
Elsewhere, the French PM resigned today, citing inflexibility among political parties and internal conflicts that failed to form a government. French equities declined, and bond yields increased due to deteriorating expectations for public finances. EUR/USD moves were contained, holding above 1.1700, as the political instability in France did not affect the overall outlook for the eurozone.
The dollar opened higher, but it faced resistance at the 100-day moving average of 98.20, which limited its upward appetite, resulting in a moderate increase to 98.15. Meanwhile, the 10-year US Treasury yield opened significantly higher, rising to 4.14%.
Base Metals
The upside in base metals halted on Monday, as a stronger dollar capped their gains, with signs of overextension beginning to show. In particularly, copper opened at elevated levels, remaining above the $10,600/t support level, but Friday's resistance at $10,800/t restricted further upside, leaving copper to close at $10,654.50/t by the end of the day. Similarly, zinc remained above the robust $3,000/t threshold, closing at $3,007/t . Aluminium continued to reach new highs, breaking through a previous high of $2,720/t and rising to $2,725/t, a March high. In contrast, tin weakened, giving up Friday's gains and dropping to $36,798/t.
Precious Metals and Oil
Oil futures opened on the front foot after the OPEC+ meeting over the weekend yielded a more modest crude output increase of 137,000 bpd. WTI and Brent trade at $61/bbl and $65/bbl at the time of writing.
Precious metals are showing no signs of giving up last week's gains, with gold and silver continuing to reach new highs, rallying to $3,956/oz and $48.70/oz, respectively. While market participants are hedging against geopolitical and fiscal uncertainties, the recent upward trend appears to be more speculative than it is based on fundamental factors. This raises the possibility of a sharp correction if indicators of a downturn emerge.
All price data is from 06.10.2025 as of 17:30