France's political theatre has plunged deeper into chaos after Prime Minister François Bayrou lost a confidence vote, becoming the fifth to fall in under two years. President Emmanuel Macron now faces the task of appointing another leader to deal with a fractured parliament where his centrist bloc lacks a majority, caught between far-right, hard-left, and centre-left forces. The crisis stems from his failed snap election gamble, which produced a three-way deadlock and left governing nearly impossible. With no constitutional mechanism to remove him and approval ratings at 15%, Macron faces growing pressure for new elections or resignation. The paralysis threatens efforts to address the fiscal deficit, exposes the fragility of the Fifth Republic’s institutions, and risks empowering the far right as protests continue to grow.
EQUITY
Main board constituents were mixed across the board, with giants gaining slightly, pushing the index higher on opening. Broadcom and Uber were among the big boys that made the most gain, rising on robust AI-related demand. Consumer sectors lagged with no tariff relief and soft spending trends, with Walmart and others absorbing costs to avoid price hikes. Investors await key inflation data and payroll revisions for clearer signals on Fed’s next move.
GOLD
Gold was relentless in its way to a record $3,650 per ounce after breaking out of a multi-month consolidation now that a rate cut is imminent following weak labour data and rising unemployment. Strong demand continued in India, where gold ETFs saw their third consecutive month of inflows, and Chinese reserves expanded for the tenth straight month, with growing diversification away from the U.S. dollar.
OIL
Oil opened the week higher after OPEC+ opted for a lower output increase in October, lowering concern for market surplus. Combined with Russia’s largest air assault on Ukraine, disruptions to Russian oil exports are due to impending additional U.S. and EU sanctions. However, the rally was limited by Saudi Arabia’s move to lower crude prices for Asian customers.
CURRENCY
The U.S. dollar fell to a seven-week low, with the 30-year treasury yield falling to 4.7% and the 10-year at 4%, with markets pricing in a near-certain 25 basis point cut in September. Political turmoil in Japan following Prime Minister Shigeru Ishiba’s resignation weighed on the yen, though broader currency moves remained anchored to U.S. monetary policy outlook. The euro held steady given France’s political crisis, awaiting the ECB decision on Thursday.
