Dhara Ranasinghe

Financial markets are struggling under the weight of wars, soaring sovereign debt and trade tensions, with signs of trouble showing across the world — from the selloff in Japanese and French bonds to plunging emerging-market currencies. Now, the one trade that helped investors remain optimistic is starting to show cracks as well.

Trend-following hedge funds witnessed their worst weekly performance in two years last week, as concern about the eventual pay-off from ​hefty AI spending ignited volatility across stocks and bonds, a ‌Goldman Sachs note seen by Reuters on Monday showed.

As a selloff in French government bonds deepens, the region's debt-laden economies risk ​a surge in borrowing costs while also grappling with increasing social unrest.

World stocks rose on Friday, with government bond yields and oil prices only incrementally higher, ahead of key ​economic data next week, along with quarterly earnings reports from the largest US banks.

A sliding euro is the latest alarm bell for policymakers facing a surge in French borrowing costs that has started to spill over into the broader euro ​area.

Brazil's voters will choose from a field of presidential contenders with two familiar frontrunners on Sunday - President Luiz ​Inácio Lula da Silva and right-wing challenger Flavio Bolsonaro - in a closely watched race.

UK bank stocks fell sharply on ​Thursday, as British 30-year borrowing costs hit ‌their highest since 1998, as jitters mounted about Britain's finances and vulnerability to high oil prices and ​inflation ahead of this month's budget.

Take a look at what's behind ‌the move in some major economies.

The fortunes of the euro, trading not far off its lowest levels of the year against ​the dollar, are in the grip of a global energy shock and growing political risk in Europe.

The world's biggest sovereign bond markets are heading for their worst month in years as soaring energy costs fan inflation and the ​AI boom lifts economic growth, leaving investors positioning for an era where interest rates stay higher for longer.