Russell, Nasdaq, Gold Touch All-Time Highs as Another AI Deal Overshadows Shutdown Risk: Oct. 6, 2025

Open AI is sparking animal spirits again on this Merger Monday, as a multibillion-dollar package signed with AMD energizes the outlook for tech stocks. Meanwhile, news that Fifth Third Bancorp will acquire Comerica Inc. for about $10.9 billion in shares to create the nation’s ninth-largest bank is bolstering enthusiasm regarding deal flow and M&A prospects. These developments are overshadowing the sixth day of the government shutdown, with senators scheduled to vote this afternoon and President Trump threatening to take sharp measures, including the potential for the mass firings of federal workers unless an agreement is reached. The GOP and Democrats remain at odds over the latter’s efforts to pare back Medicaid expenditure reductions implemented in the Big Beautiful Bill alongside adjusting the looming expiration of health insurance subsidies. Wall Street, for its part, is looking for buoyant earnings growth and Fed rate cuts to continue lifting risk assets, as the Russell 2000 and Nasdaq 100 touch all-time highs amidst strong participation across sectors. Safe havens are thriving too, as gold also hit a record today. Additionally, bitcoin traded at its highest level ever this past weekend and is gaining ground. The commodity complex is bullish as a result, with all majors advancing minus copper, while crude oil experiences a relief rally due to OPEC+ delivering a lighter-than-projected production hike. The greenback is stronger as political issues in Paris and Tokyo drive a bid for US tender, but those same budget and government worries from abroad are sending the domestic Treasury curve north, as yields march higher led by the longer tenors in bear-steepening fashion as global term premium revaluations spread to Washington.

Data Last Week Supports Expanding Earnings, Fed Rate Cuts

The government data blackout has generated a hazy backdrop for Wall Street, as participants have flown with limited information since last Wednesday. But private providers have saved the day by offering numbers that can be used to make investment and business decisions, at least for the time being. Last week’s figures depicted weakening hiring amidst softening layoffs, and decelerating ordering momentum in both the services and manufacturing industries. The developments occurred alongside a strong rebound in the real estate. Meanwhile, the results are confirming that the economic cycle remains on solid footing even as sluggish areas exist, which bodes well for corporate earnings buoyancy as well as for rate cut prospects. Still, a shorter shutdown that would avoid the termination of thousands of federal workers is best for market bulls at this juncture, as an augmented standoff could lay the groundwork for a slowdown.

International Roundup

Europeans Increased Their Spending in August

Retail sales among countries that use the euro climbed 0.1% month over month (m/m) and 1% year over year (y/y) in August. The m/m result matched the economist consensus estimate and strengthened from the 0.4% decline in the preceding month. Relative to last year, however, volumes decelerated from the 2.1% y/y gain in July, according to Eurostat. When compared to July, automotive fuel at specialty stores led, climbing 0.4% and the food, drinks and tobacco group was up 0.3%. Non-food items except for automotive fuel sank 0.1%.

While Eurozone Construction Downturn Accelerates

Construction activity in the Eurozone fell at a faster pace last month as depicted by the HCOB Eurozone Construction PMI weakening from 46.7 in August to 46, considerably below the contraction-expansion threshold of 50.

Output by civil engineering slipped only modestly but the commercial sector headed south at its most dramatic pace since last November while residential construction sank at the worst rate in three months. Firms continued to cut their workforces, albeit at the slowest level in at least six months. Businesses also scaled-back their use of subcontractors and reported another month of steep, but slightly less, declines in orders. Construction companies also experienced higher input costs and were pessimistic about business activity in the coming 12 months. It was the fourth consecutive month of negative sentiment.

Inflation Returns in Australia

Higher costs of living, transportation and recreation in Australia pushed the Melbourne Institute (MI) inflation gauge up 0.4% m/m in September after consumers enjoyed a 0.3% decline in August. The MI notes that annual inflation remains at the top-end of the Reserve Bank of Australia’s (RBA) 2%-to-3% target. The RBA has cut its key rate three times this year, bringing it to 3.6% and decided to make no change during its September meeting.

Hong Kong’s Growth Slows

Hong Kong’s business conditions continued to improve last month, but the gains were slower than in August with the S&P Global Manufacturing Purchasing Managers’ Index dropping from 50.7 to 50.4. Export orders slipped at the fastest pace since March 2022 and firms commented that US tariffs weighed on global demand. Conversely, domestic orders from online platforms increased, but the net fall in requests caused backlogs to fall. In other areas, higher raw materials charges caused import prices to climb, but firms were limited in their ability to raise prices, and some increased their use of discounts to support sales. Staffing expenses also rose at the strongest pace since the middle of last year. Business reported higher numbers of jobs in services, retail and wholesale sectors, but payrolls in manufacturing and construction industries sank. Business sentiment, while still negative, also improved.

Japan Elects PM

Sanae Takaichi was elected as the head of Japan’s Liberal Democratic Party (LDP), making her the first woman to become the country’s prime minister. She previously served as a government minister and TV host. She also did a stint as a drummer in a heavy metal band. Takaichi’s challenges include restoring faith in the LDP, which has been rocked by scandals. Additionally, Japan is struggling with low birth rates and escalating geopolitical tensions. 

If You Think Hollywood Marriages are Short-Lived

French Prime Minister Sébastien Lecornu just resigned, only four weeks after accepting the position, which is deepening the country’s political turmoil. Runo Retailleau, head of the Republican party, called for an emergency meeting last night, explaining that he was unhappy with the role that conservatives would play in the PM’s cabinet. Lecornu promptly resigned, explaining that political divisions were blocking progress. French President Emmanuel Macron is now searching for a replacement—the third of the year. Macron can appoint a PM or call for a special election.