Sept 18 (Reuters) – World markets have another high-stakes week in store, with a summit between the US and Chinese presidents in Washington and the United Nations General Assembly taking place against a backdrop of multiplying global crises.
There will be PMI data for the global bond markets to digest. There’s an important central bank meeting in Southeast Asia’s largest economy Indonesia, and the debate about how to stop AI wiping out humanity rages on.
Here’s all you need to know about the coming week in financial markets by Gregor Stuart Hunter in Singapore, Marc Jones and Naomi Rovnick in London and Lewis Krauskopf in New York.
1/POWER COUPLE
Next week’s headline event will be Chinese President Xi Jinping’s three-day state visit to Washington to meet his US counterpart Donald Trump.
The two last met in Beijing in May and have largely had stable relations since a shaky trade truce last October, but markets will be eager to see how things play out here given everything that’s unfolded since, especially regarding the Iran war.
US allies in Asia also worry Trump may be tempted to soften his support for Taiwan in return for an economic win ahead of US midterms, while the fierce US-China AI arms race and the US’ military buildup in space will be other hot topics given the depth of the two countries’ rivalry.
Trump will also hold a state dinner at the White House. It is only the second of his current term and the guest list is expected to be heavily loaded with top tech chiefs, including Nvidia CEO Jensen Huang.
2/WHO’S AFRAID OF THE BIG BAD BOND MARKET
Flash purchasing managers index (PMI) data from the US manufacturing sector landing on Wednesday will give the growling global bond markets something to chew on.
The 10-year US Treasury yield — a key driver of global borrowing costs and currencies, too — has just tested the psychologically important 5% threshold and the Federal Reserve has just delivered its first interest rate hike in more than three years, so investors are waiting to see if anything snaps.
But many assets are not trading as the finance textbooks suggest. World stocks have barely sagged in the last month and the dollar hasn’t really risen either, despite the rise in Treasury yields.
Still, it would be brave to ignore the 10-year yield, considering why it has been climbing.
3/U.N.DER PRESSURE
The 81st UN General Assembly High-Level Week kicks off next week against a backdrop of deep multilateral paralysis and multiplying global crises and with a summit theme of “Restoring trust, managing transformation.”
The primary draw will be the deepening fractures of a fragmenting world order. With deadlocked conflicts in Ukraine and the Middle East widening the gap between the West and the Global South, the debates will spotlight the costs of transactional diplomacy.
The behind-the-scenes horse-trading over who will be the next UN Secretary-General will intensify, too, acting as a proxy battle for future superpower influence.
Meanwhile, urgent panels on artificial intelligence governance, global climate change threats and sovereign debt mechanisms will test whether fragmented states can still unite on the key issues, or avoid a “world of fortresses” that threatens global economic stability.
4/AI-MAGEDDON
AI development will remain firmly centre stage as companies, governments and investors all grapple with the increasingly apocalyptic warnings about the dangers of the emerging technology.
The calls this month by Anthropic’s CEO and other top AI lab heads to “pace” its development have come amid some dire pronouncements about its potential threats to humanity itself, worries that began to impact the share prices of the semiconductor and so-called hyperscaler giants at the centre of the boom.
Investors though are now looking for more concrete signs that things really will slow before declaring the stratospheric two-year rise in AI stocks and the related capital spending over.
President Donald Trump has called the recent AI-mageddon warnings a hoax, signalling he won’t let developers apply the brakes, while European Commission President Ursula von der Leyen wants to get the main AI players to Europe to discuss the risks.
5/FIRE-FIGHTING
Markets will closely watch Indonesia’s central bank interest rate decision on Wednesday after the latest round of changes in the country’s top economic personnel and amid a crisis of confidence of sorts among investors.
It will be new Governor Destry Damayanti’s second meeting, and the first since she was officially sworn in as the first woman to head the central bank following July’s surprise resignation of previous Governor Perry Warjiyo. The decision itself is expected to be either be a hold or a small cut.
It will also come just a week after Indonesian President Prabowo Subianto sacked outspoken Finance Minister Purbaya Yudhi Sadewa following a spate of bureaucratic infighting.
Analysts hope replacing Purbaya with his deputy Suahasil Nazara would help restore some investor confidence in the $1.5 trillion G20 economy after a string of crises amid long-festering concerns about policymaking, fiscal profligacy and a possible downgrade of its equity market to “frontier” status by index provider MSCI.
(Graphics by Sumana Sen; Compiled by Marc Jones; Editing by Hugh Lawson)
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