Global Markets Split Between Higher Yields and the AI Boom

Global equity and bond markets are being pulled in two directions: rising long‑term interest rates driven by strong U.S. labour data, and continued enthusiasm for artificial‑intelligence related stocks. The World Gold Council’s latest weekly markets monitor notes that in the first week of September, higher government bond yields and firmer oil prices left global equities mixed across regions, rather than moving in one clear direction.

Asia has been a relative bright spot, with semiconductor and AI‑linked names in Japan and South Korea leading gains, underscoring how the “AI trade” remains a key support for risk assets. At the same time, the report highlights notable regional divergences in economic momentum, including India’s robust GDP growth in the high‑7% range and resilient services activity in Japan, contrasting with soft manufacturing in China.

While the U.S. dollar has eased somewhat, elevated bond yields still cap equity valuations and make cash and high‑yielding bonds competitive alternatives. For global investors, the core question remains how much to lean into growth‑oriented AI winners versus maintaining more conservative allocations to fixed income and cash as the rate environment stays restrictive.