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World stocks added another $5 trillion as AI surged

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Dollar stabilises after torrid start to year

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Gold, silver and weapons stocks biggest gainers

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Q4 may start with U.S. government in shutdown

By Marc Jones

LONDON, Sept 30 (Reuters) - After the storms earlier in

the year, investors have basked in a steamy summer market

melt-up that has added another $5 trillion to record-high share

markets and lifted almost everything else, too.

Those looking after public finances in Paris or London may

disagree, but it is as if all the fiscal and trade worries have

eased and investors are back to doing what they do best - buying

expensive tech stocks.

Google's have leapt almost 40% during a quarter

when AI darling Nvidia ( NVDA ) also became the world's first $4

trillion company, and China's nearest equivalent, Cambricon

, surged 120%.

The headscratcher, though, is that the usual go-to asset

when traders suspect trouble, gold, has jumped another

15% to fresh record highs too and silver almost 30%.

Japan's yen, another safety play, has dropped but

the ominous rumblings in the bond markets certainly haven't gone

away either with the collapse of another French government

briefly pushed its borrowing costs above Italy's for the first

time and 30-year yields hitting a record high in Japan.

At the same time, implied U.S. bond volatility has

dropped to its lowest in over three years. That's a sign that

markets may be learning to live with the trade war while Moritz

Kraemer, chief economist at LBBW and the former head of

sovereign ratings at S&P Global, also points to the stock

market's surge.

Not only is price-to-earnings ratio on U.S. stocks now in

the top 2-3% in history, just 10 firms also now account for 40%

of the S&P 500's value.

"When you then throw in all the uncertainty around

Trumponomics, that's hard to square," Kraemer said.

GOLD AND SILVER SHINE

A steadier dollar has also lowered stress levels

. While still down nearly 10% for the year - the

most at this stage of a year since 1989 - it is up 1% in the

third quarter, largely thanks to a weaker yen.

Oil prices are pretty much where they started Q3, whereas

gold's record run leaves it up 45% and heading for its biggest

annual jump since 1979. Silver is over 60% higher.

"Gold and silver have been the big trade," said Saxo Bank's

head of FX strategy John Hardy, explaining the gains have been

driven by worries huge government debt loads will lead to "some

form of financial repression".

There has also been the ongoing rise in European weapons

makers, up almost 85% this year and leaving everything

bar Chinese tech stocks and, wait for it, European

banks, for dust.

That has been driven by U.S. President Donald Trump, too,

following signals he will scale back Europe's military

protection forcing the region - and other NATO members - to

rearm.

Another small U.S. interest rate cut and Trump's attacks on

the Fed meanwhile have shifted bond markets.

The 30-year Treasury yield surged past 5.1% to its highest

since 2007 in May, but is now back at 4.7%, while Switzerland

has taken its rates back down to 0%.

ARGENTINA GOT MESSY AGAIN

The dollar's stabilisation leaves the euro up 13%

for the year, the yen over 6% higher and the Swiss franc

up 13.5%, while some of the fastest-charging emerging

market currencies had been checked.

Trump's grumbles at Russian President Vladimir Putin have

trimmed the rouble's surge, albeit to a still world

leading 32%, while gold producer Ghana's cedi has pulled back

16% this quarter having been up over 40% at the end of H2.

The Hungarian forint and Czech crown have

crept up in Eastern Europe, and Brazil's real, the Mexican and

Colombia's pesos and emerging market local currency debt are all

enjoying double-digit gains too.

Argentina has been the quarter's standout story though after

a corruption scandal and thumping regional election defeat for

Javier Milei's party crashed the peso it the rest of its

markets.

The central bank tried to prop it up but to no avail.

Washington then left markets open-mouthed as it rowed in with a

Mario Draghi-style whatever-it-takes promise of support.

"This is a country that is undergoing a major restructuring

of the entire economy," Vanguard's co-head of emerging market

debt Daniel Shaykevich said. "There is a lot of risk if that

programme doesn't continue as expected".

There won't be much downtime in Q4.

The U.S. government could be about to shut down, Trump is

dishing more tariffs out, China's new 5-year economic plan is

due October 20-23, Argentine midterms are three days later, and

there's all the Fed, growth and AI unknowns, too.

"It is a tricky market to read at the moment," Charles

Schwab managing director, Richard Flynn, said. "Investors have

had a really good time of it in the last five years, but as we

know from history it doesn't last forever".

(Additional reporting by Yoruk Bahceli; Editing by Dhara

Ranasinghe and Nick Zieminski)