▸ Wall Street climbs as investors shrug off risk of US gov­ern­ment shut­down

▸ Dol­lar retreats against lead­ing forex rivals but Treas­ur­ies attract buy­ers

▸ European equity indices advance while pres­sure eases on UK gilt yields

Wall Street stocks rose yes­ter­day as investors shrugged off the risk of a poten­tial US gov­ern­ment shut­down.

Pres­id­ent Don­ald Trump was set to meet law­makers yes­ter­day in an effort to break the budget dead­lock behind the loom­ing fed­eral shut­down.

Fed­eral fund­ing will expire today if no short-term fund­ing agree­ment is reached, with a shut­down fol­low­ing tomor­row.

“In the past, shut­downs have had a mixed impact on equit­ies, rates and the dol­lar with no clear pat­tern,” said ana­lysts from Gold­man Sachs, not­ing that the dol­lar had weakened “in most instances”.

In the clearest sign of investor con­cern, gold prices soared to another fresh record high, punch­ing through the $3,800 a troy ounce mark.

The tech sec­tor car­ried stock mar­kets higher with the Nas­daq Com­pos­ite up 0.6 per cent by early after­noon in New York. The blue-chip S&P 500 index was up 0.2 per cent.

Investors have warned that an Andy Burnham-led Labour gov­ern­ment would spark a sell-off in gilts and the pound if it launched a bor­row­ing spree against a back­drop of fra­gile mar­kets.

Burnham, Labour mayor of Greater Manchester, said that the UK should not be “in hock” to bond mar­kets, as he burn­ished his leftwing cre­den­tials in what is widely seen as a chal­lenge to Prime Min­is­ter Sir Keir Starmer.

But fund man­agers said Burnham’s pro­posal to bor­row an extra £40bn to build coun­cil houses, along­side a mass nation­al­isa­tion scheme, would alarm a gilt mar­ket already under pres­sure from the scale of gov­ern­ment bor­row­ing.

Mark Dowding, chief invest­ment officer for fixed income at RBC Blue­Bay Asset Man­age­ment, said: “I think this speaks to his own fin­an­cial naiv­ety. Mar­ket con­fid­ence would sour very quickly. Yields would rise and the pound would also likely be under pres­sure.”

Starmer respon­ded yes­ter­day by com­par­ing Burnham’s eco­nomic policies to those of former Tory prime min­is­ter Liz Truss, whose eco­nomic plans also spooked the bond mar­kets. 

▸ Strong US eco­nomic data damps hopes for exten­ded series of rate cuts from Fed

▸ S&P 500 and Nas­daq trend lower while Treas­ury yields rise on robust fig­ures

▸ Gilt yields also rise after down­beat com­ments from BoE rate-set­ter on cuts

US stocks slipped and gov­ern­ment bond yields rose yes­ter­day after robust eco­nomic data cast doubt on investors' expect­a­tions for a series of interest rate cuts by the Fed­eral Reserve.

Revised fig­ures for US second-quarter growth showed that the world's biggest eco­nomy grew more strongly than pre­vi­ously estim­ated, with GDP increas­ing at an annu­al­ised rate of 3.8 per cent in the three months to the end of June com­pared with an earlier estim­ate of 3.3 per cent.

Con­sumer spend­ing was also revised higher, grow­ing at an annu­al­ised rate of 2.5 per cent from 1.6 per cent pre­vi­ously. In addi­tion, the num­ber of ini­tial job­less claims data for the US was lower than ana­lysts had expec­ted.

Bond giant Pimco is bet­ting on a fall in UK infla­tion that will, in turn, allow the Bank of Eng­land to cut interest rates fur­ther than traders cur­rently expect, arguing that there is “noth­ing that spe­cial” about the price pres­sures affect­ing the coun­try.

The man­ager of $2tn in assets has an over­weight pos­i­tion rel­at­ive to the bench­mark index in five-year gilts, which stand to bene­fit from more aggress­ive BoE rate cuts.

“We don’t think the UK eco­nomy will prove to be a massive out­lier [on infla­tion],” Andrew Balls, Pimco’s chief invest­ment officer for global fixed income, told the Fin­an­cial Times yes­ter­day.

Bri­tain is on track for the highest rate of infla­tion among the G7 this year, accord­ing to the OECD. The Paris-based organ­isa­tion said this week that con­sumer prices would rise 3.5 per cent in 2025, up from 2.5 per cent last year, and would remain well above the BoE’s 2 per cent tar­get in 2026.

▸ European defence stocks surge after Trump’s remarks on Ukraine war

▸ Wall Street lower on Pow­ell sig­nal that fur­ther rate cuts were not guar­an­teed

▸ Dol­lar ral­lies but US gov­ern­ment bonds sold by investors

European defence stocks rose yes­ter­day after Pres­id­ent Don­ald Trump said that Ukraine could win back all of its ter­rit­ory that has been seized by Rus­sia.

Trump emphas­ised the need for sup­port from Europe when he said on Tues­day that Ukraine should be able to return to its bor­ders from before Rus­sia's full-scale inva­sion in 2022.

European defence names rose as investors bet on more sec­tor spend­ing. In Frank­furt, Hensoldt rose 8 per cent and Rhein­metall climbed 3.5 per cent. BAE Sys­tems rose 2.2 per cent in Lon­don and Thales climbed 2.4 per cent in Paris.

Defence stocks have been among the best per­formers in Europe this year, driv­ing equity mar­ket returns as gov­ern­ments on the con­tin­ent pledge higher defence spend­ing.

Amazon Fresh gro­cery stores are clos­ing in the UK after just four years, as the US tech giant’s attempt to revolu­tion­ise old-fash­ioned food shop­ping failed to win over enough cus­tom­ers.

The eco­m­merce group said yes­ter­day that it planned to close 14 of its Fresh stores, which use tech­no­logy to track what cus­tom­ers are put­ting in their shop­ping bas­kets and dis­pense with the need for check­outs.

Amazon plans to replace the final five Fresh stores with its Whole Foods Mar­ket brand, increas­ing the total num­ber of these stores in the UK to a dozen by the end of next year.

Amazon did not dis­close when the Fresh clos­ures would take place, with UK law man­dat­ing it under­take a con­sulta­tion period with employ­ees. All of its stores are in or around Lon­don.

The decision to shut its Fresh stores comes as Amazon has struggled to mount a ser­i­ous chal­lenge against incum­bent super­mar­kets such as Tesco and Sains­bury’s.

▸ US interest rate cut expect­a­tions push gold to another record high

▸ Gilt yields fall as data shows UK private sec­tor activ­ity grows less than expec­ted

▸ Argen­tine peso gains before Trump talks with Milei over eco­nomic sup­port

Gold prices hit another record high yes­ter­day as traders waited for a speech by the US Fed­eral Reserve chair for clues about the cent­ral bank's next move.

The price of bul­lion rose to as much as $3,790 a troy ounce before drop­ping back to about $3,775 later in the day.

The pre­cious metal has punched through a series of record high prices in recent weeks, fuelled by the expect­a­tion of interest rate cuts in the US.

Investor nerves about infla­tion and bal­loon­ing pub­lic debt in the world's biggest eco­nomy — coupled with Pres­id­ent Don­ald Trump's threats to the inde­pend­ence of the Fed — have also sparked con­cerns about the viab­il­ity of dol­lar assets as a store of value.

Nvidia has announced plans to invest up to $100bn in OpenAI in return for a sig­ni­fic­ant stake in the Chat­GPT maker, as part of a joint effort to build data centres for arti­fi­cial intel­li­gence.

OpenAI is plan­ning to buy mil­lions of Nvidia’s AI pro­cessors as part of a deal to deploy up to 10 gigawatts of capa­city, the two tech groups said yes­ter­day, the equi­val­ent out­put of 10 nuc­lear react­ors.

Should Nvidia com­mit the full $100bn, it would be the largest-ever invest­ment in a private com­pany, reflect­ing the vast resources the $4.5tn chip giant wields as the world’s most valu­able com­pany. The con­tract will ensure that Nvidia stays at the heart of OpenAI’s products for years to come.

The deal could gen­er­ate hun­dreds of bil­lions of dol­lars in rev­enue for Nvidia, whose shares rose about 4 per cent. But the groups did not spe­cify a time­frame for the deploy­ment and much of the details remain uncer­tain.

▸ Wall Street extends record-break­ing streak des­pite visa fears for Big Tech

▸ Treas­ury bonds exper­i­ence mod­est selling as traders await Fed com­ment­ary

▸ Dol­lar retreats against rivals and European stocks edge down­wards

Wall Street stocks exten­ded a record­break­ing streak yes­ter­day des­pite warn­ings that Pres­id­ent Don­ald Trump's new visa rule change could hit big US tech­no­logy com­pan­ies.

The pres­id­ent announced late on Fri­day that he planned to raise the applic­a­tion fee for a H-1B for­eign worker visa to $100,000.

Tech com­pan­ies in Sil­icon Val­ley — whose sur­ging share prices have car­ried US stock mar­kets to new highs in recent years — have typ­ic­ally relied heav­ily on the visa to hire skilled engin­eers, sci­ent­ists and coders from over­seas.

Wall Street's blue-chip S&P 500 index was up 0.1 per cent by lunch­time in New York while the tech-heavy Nas­daq Com­pos­ite index had risen 0.2 per cent.

Sir Keir Starmer is explor­ing pro­pos­als to abol­ish some visa fees for top global tal­ent at a time when the US has moved sharply in the other dir­ec­tion.

The prime min­is­ter’s “global tal­ent task force” is work­ing on ideas to lure to the UK the world’s best sci­ent­ists, aca­dem­ics and digital experts, as it seeks to stim­u­late eco­nomic growth.

One option being con­sidered is abol­ish­ing visa charges for the global elite, accord­ing to people briefed on the dis­cus­sions inside Num­ber 10 and the Treas­ury. “We’re talk­ing about the sort of people who have atten­ded the world’s top five uni­versit­ies or have won pres­ti­gi­ous prizes,” said one offi­cial. “We’re kick­ing around the idea of cut­ting costs to zero.”

The reforms were being dis­cussed in Num­ber 10 and the Treas­ury before the Trump admin­is­tra­tion announced last week it would increase to $100,000 the applic­a­tion fee for an H-1B visa, which is relied on by US tech groups.