London – Financial markets are struggling under the weight of wars, soaring sovereign debt and trade tensions, with signs of trouble showing across the world — from the selloff in Japanese and French bonds to plunging emerging-market currencies. Now, the one trade that helped investors remain optimistic is starting to show cracks as well. So far, the multitrillion-dollar spending splurge on artificial intelligence, aided by Washington’s light-touch approach to business, has propelled stock markets to record highs and raised expectations for the global economy to grow a healthy 3% this year.
But investors are getting nervous about market resiliency. President Donald Trump’s erratic trade policies and the Iran war’s energy shock have revived inflation worldwide, putting pressure on central banks to raise interest rates. That, along with AI’s capital-investment surge and highly indebted governments, is driving up borrowing costs to multidecade highs.
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