September 29, 2025

Market Rally Defies Shutdown Fears, Gold Surges on Central Bank Buying, and US Tariffs Reshape Global Industries

The Market Mic Drop

"US markets are rallying to historic highs fuelled by foreign investment and rate cut hopes, yet face risks from a potential government shutdown, persistent inflation, and a major crypto selloff, while new tariffs reshape global supply chains and corporate sectors navigate mixed consumer and infrastructure challenges."

Investor Action

The current market presents a mixed picture for investors. While the strong performance of equities and gold is encouraging, significant risks remain. The potential for a U.S. government shutdown could introduce short-term volatility and delay important economic data. Persistently high inflation and record market valuations suggest that caution is warranted. Investors should ensure their portfolios are diversified to hedge against this uncertainty. The ongoing institutional adoption in the cryptocurrency sector indicates long-term potential, but the recent selloff is a stark reminder of its high volatility and the risks associated with leverage.

Market Snapshot

📈 S&P 500: 6,644 (+0.59%)
📈 Dow Jones Industrial Average: 46,247 (+0.65%)
📈 NASDAQ Composite: 22,484 (+0.44%)
📉 US 10-Year Treasury: 4.152% (-0.84%)
📈 Gold: $3,812 (+1.42%)
📈 Bitcoin: $109,709 (+0.08%)
📉 Ethereum: $4,032 (-0.09%)
📈 FTSE 100 (U.K.): £9347 (+0.44%)

Markets & Economy

U.S. markets are exhibiting unusual strength, with the S&P 500 on track for its strongest September since 2013. The rally is supported by expectations of monetary easing, with traders pricing in a 90% chance of an interest rate cut in October. Despite ongoing trade tensions, this positive momentum has attracted a record wave of foreign investment, with overseas purchases of U.S. equities reaching an all-time high of $290.7 billion in the second quarter.

This risk-on sentiment has coincided with a major surge in gold, which surpassed the $3,800 mark for the first time, achieving its strongest annual return since 1979. The rally is being fuelled by significant safe-haven demand, highlighted by massive purchases from central banks globally, which are on a trajectory to make gold a more popular reserve asset than U.S. treasuries.

However, the optimistic outlook is tempered by significant uncertainty. A potential U.S. government shutdown looms, with lawmakers facing a deadline this week to pass a funding agreement. Prediction markets place the probability of a shutdown between 54% and 58%. While markets have historically been resilient to such events, a prolonged impasse could delay crucial economic data, such as the September jobs report. The Trump administration has escalated the stakes by ordering federal agencies to prepare for potential mass firings, a departure from typical furlough procedures.

Conflicting economic signals further complicate the picture. The latest Personal Consumption Expenditure (PCE) report, the Federal Reserve's preferred inflation gauge, held steady at 2.9%, meeting expectations but remaining above the 2% target. This persistent inflation has contributed to historic lows in consumer sentiment. Furthermore, the Buffett Indicator, which compares stock market capitalisation to GDP, has risen to an all-time high of 217%, reviving concerns about market overvaluation.

US Policy & Global Impact

The Trump administration has implemented a series of new tariffs impacting multiple sectors and global supply chains. A 50% tariff on cabinets and a 30% tariff on upholstered furniture have been introduced, affecting import-reliant retailers.

A 100% tariff on imported pharmaceuticals has also been announced, though it contains significant exemptions. Generic drugs are excluded, and drugs from the E.U. face a lower 15% rate. A key loophole also spares firms that can demonstrate they are already building manufacturing facilities in the U.S., a standard that companies like Novartis, Sanofi, and Eli Lilly are positioned to meet. The policy has reportedly prompted U.K. and Swiss firms, including GSK and AstraZeneca, to consider expanding their U.S. operations.

H-1B Visa Changes and Talent Migration

In a major policy shift, the U.S. has increased the cost of an H-1B visa for skilled workers to $100,000. This has spurred other nations, including Canada, Germany, the U.K., and countries in the Gulf region, to launch initiatives aimed at recruiting highly skilled tech workers who may now find the U.S. market inaccessible.

Turkey Nears F-35 Programme Return

High-level negotiations are in progress that could see Turkey rejoin the F-35 fighter jet programme after a six-year suspension. A potential deal, valued at $6.5–$7 billion, is contingent on Ankara resolving issues related to its 2019 purchase of Russia's S-400 missile system. A resolution would represent a significant development for defence contractor Lockheed Martin.

Cryptocurrency & Digital Assets

The cryptocurrency market has experienced one of its most severe selloffs of the year, with over $300 billion erased from its total market capitalisation. Bitcoin dropped 5% and Ethereum fell 12%, leading to the liquidation of over $1.7 billion in leveraged long positions and affecting more than 400,000 traders. The crash was amplified by a strengthening U.S. dollar and a cascade of liquidations. Spot ETFs saw significant outflows, with Ethereum ETFs losing approximately $796 million and Bitcoin ETFs seeing outflows of around $903 million last week.

Despite the market turmoil, institutional adoption of blockchain technology is advancing. Swift, the global financial messaging network, is collaborating with over 30 major financial institutions, including JPMorgan Chase and Bank of America, to prototype a blockchain-based ledger for cross-border payments. In another notable development, reports suggest that investment firm Vanguard is considering adding a Bitcoin ETF to its offerings.

Meanwhile, cryptocurrency exchange Kraken is reportedly in advanced discussions for a funding round of $200–$300 million, targeting a $20 billion valuation ahead of its planned IPO in 2026.

Corporate & Sector News

Across various sectors, companies are navigating a mixed landscape of consumer behaviour, infrastructure limits, and regulatory pressures. In retail, Costco (COST) shares fell after its Q4 same-store sales missed expectations, suggesting a moderation in consumer spending. Upcoming earnings from Nike are expected to provide further insight into this trend.

In technology, the artificial intelligence boom is encountering physical constraints. The construction of data centres declined by 17.5% in the first half of 2025, a slowdown attributed not to a lack of demand but to difficulties in securing the necessary power grid infrastructure.

On the jobs front, consultancy firm Accenture (ACN) has cut over 11,000 employees in the last three months as part of a restructuring focused on AI. The company has stated that employees must adapt and learn AI skills to secure their future roles, even as it invests in upskilling its workforce.

Several major companies are also navigating regulatory and geopolitical developments. U.S. Vice President JD Vance has stated that TikTok has been “successfully separated” from its parent company, ByteDance, to address data security concerns. The Trump administration has valued the U.S. arm of the business at $14 billion, well below the $40 billion previously projected. Elsewhere, Amazon (AMZN) has agreed to a $2.5 billion settlement to resolve an FTC lawsuit alleging the company enrolled users in its Prime service without consent and made cancellations difficult.

In other news:

Tesla (TSLA): The electric vehicle maker is expected to report its Q3 delivery figures this week, with Wall Street forecasting around 447,000 vehicles.
Real Estate: Zillow (ZG) is on course to post its first full-year profit since 2012, driven by growth in its rentals and mortgage divisions, despite facing a new class-action lawsuit.
M&A: Ferrero has completed its acquisition of WK Kellogg, taking the cereal company private in a deal valued at $23 per share.
Entertainment: Warner Bros. Discovery is enjoying a strong year, with its latest film, One Battle After Another, becoming its ninth domestic box office number-one debut of the year.

NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).