Key Points

• U.S.–Australia Critical Minerals Pact: Shares of Australian rare earth and lithium producers surged after Washington and Canberra signed an $8.5 billion minerals partnership aimed at strengthening non-Chinese supply chains for critical materials.
• European Equities Gain: European markets opened higher, led by continued gains in defense stocks following Thyssenkrupp’s TKMS debut and renewed geopolitical tensions, while investors monitored strong Q3 earnings momentum.
• Gold Eases After Record High: Bullion slipped 0.3% to $4,340 per ounce as investors booked profits following an all-time high, though expectations of further Fed rate cuts kept sentiment broadly supportive.
• Japan Pushes Back on U.S. Demands Over Russian Energy: Tokyo reaffirmed its energy independence, maintaining Russian LNG imports vital to national power security despite U.S. pressure to suspend purchases amid tightening sanctions.

Australia’s Critical Minerals Surge on $8.5 Billion U.S. Deal

Australian rare earth and critical metal producers rallied sharply after Washington and Canberra unveiled an $8.5 billion partnership to strengthen non-Chinese supply chains for strategic materials.

The deal, signed by U.S. President Donald Trump and Australian Prime Minister Anthony Albanese, targets joint investment in rare earths, lithium, and gallium refining projects, including Alcoa’s priority gallium recovery initiative in Western Australia. Shares of Lynas gained 4.7%, Iluka 9%, and Pilbara Minerals 5%, while smaller miners such as VHM and Latrobe Magnesium soared up to 47%.

The agreement underscores U.S. efforts to secure critical minerals for defense, energy, and semiconductor industries amid escalating trade tensions with China.

European Markets Edge Higher as Defense Stocks Extend Gains

European equities opened modestly higher on Tuesday, led by continued strength in defense shares following a surge earlier in the week.

The pan-European Stoxx 600 rose slightly in early trade, supported by gains in the Stoxx Europe Aerospace & Defense index, up 0.2%, with Renk adding 0.8% and Italy’s Leonardo advancing 1.4%.

The upbeat momentum followed the successful market debut of Thyssenkrupp’s warship division TKMS and renewed geopolitical tensions between Washington and Kyiv.

Investors also awaited key third-quarter earnings from L’Oréal and Assa Abloy, while U.K. data showed public borrowing climbed to a record £20.2 billion in September, underscoring fiscal challenges ahead of the Autumn Budget.

Gold Retreats Slightly as Investors Lock in Profits After Record High

Gold prices eased on Tuesday as investors took profits following bullion’s surge to a new all-time high of $4,381 per ounce in the previous session, driven by expectations of further Federal Reserve rate cuts and persistent safe-haven demand.

Spot gold slipped 0.3% to $4,340, while U.S. futures dipped 0.1% to $4,356. Analysts said the pullback reflected short-term profit-taking rather than a reversal of trend, with dips likely to attract new buyers amid dovish Fed expectations.

Markets are pricing in two more quarter-point rate cuts by year-end, while investors await delayed U.S. CPI data for confirmation of inflation’s trajectory.

Japan Resists U.S. Pressure to End Russian Energy Imports

Japan signaled it will prioritize national energy security over U.S. pressure to halt Russian oil and gas purchases, Trade Minister Yoji Muto said Tuesday after talks between U.S. Treasury Secretary Scott Bessent and Finance Minister Katsunobu Kato.

While Tokyo has gradually reduced its reliance on Russian energy since the Ukraine invasion and aligned with G7 sanctions by lowering the oil price cap to $47.60, it maintains a waiver due to the strategic importance of LNG from Sakhalin-2, which supplies 3% of Japan’s electricity.

Analysts view Japan’s stance as balancing geopolitical alignment with Washington against the practical realities of securing stable energy supply.

Conclusion

Global markets reflected a cautious yet resilient tone as geopolitical realignments and sector-specific catalysts shaped sentiment.

The U.S.–Australia minerals pact reinforced efforts to diversify critical supply chains, while Europe’s defense sector continued to attract investor inflows amid rising geopolitical tensions.

In commodities, gold’s minor pullback highlighted ongoing sensitivity to Fed policy expectations, and Japan’s firm stance on Russian energy underscored the tension between energy security and allied diplomacy.

As the week unfolds, investors will closely monitor central bank signals and trade developments, with commodities and defense-linked equities likely to remain in focus amid persistent global uncertainty.

Investment Insights

• Critical Minerals Repositioning: The U.S.–Australia deal signals accelerating Western efforts to localize supply chains, potentially benefiting non-Chinese miners and advanced material refiners across Australia and North America.
• Defense Sector Strength: Continued investor rotation toward defense and aerospace stocks reflects structural rearmament trends in Europe and Asia—momentum likely to persist amid elevated geopolitical risk.
• Gold’s Role Reinforced: Despite short-term profit-taking, sustained Fed easing expectations and geopolitical tensions reaffirm gold’s appeal as a core portfolio hedge.
• Energy Security Dynamics: Japan’s pushback against U.S. demands highlights diverging national energy priorities, suggesting selective opportunities in LNG infrastructure and diversified energy assets.

Economic Calendar