Economies thrown into renewed turmoil as AI debt, Iran war and soaring government bond yields fuel alarm

At the height of the summer, the mood was optimistic in the world’s financial capitals. Powered by the AI revolution, the US stock market had rallied to a fresh all-time high, as investors bet the multitrillion-dollar investment spree would overshadow the hit from the Iran war.

Now the warning lights are flashing red. As the fighting in the Middle East intensifies without clear sign of a resolution, financial markets have been thrown into renewed turmoil. A slowdown looms in the AI arms race, and tinderbox conditions in the market for government debt are fuelling alarm.

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