Global markets face mounting turmoil from wars, debt, and AI trade troubles

Global financial markets are under mounting pressure from wars, surging sovereign debt, and escalating trade tensions, with signs of bond selloffs in Japan and France and sharp declines in emerging market currencies. The once-bullish artificial intelligence trade is now also facing trouble. The AI spending boom, fueled by trillions of dollars in investment under a permissive US policy, had pushed stocks to record highs and lifted global growth forecasts to 3% this year. However, investors are growing anxious about market resilience as Trump's erratic trade policies and energy shocks from the Iran war reignite inflation, pressuring central banks to raise rates. Rising borrowing costs, driven by AI capital investment and high government debt, are at multi-decade highs. With US midterm elections, geopolitical instability, and central bank policy adding uncertainty, economists warn risks are increasing. Former Goldman Sachs chief economist Jim O'Neill noted that high-leverage countries and firms will suffer most if inflation persists, and expressed surprise that the AI sector has not yet seen more disruptions.