Market Beats | France Tightens Security After Cost-of-Living Protests Turn Violent; Anthropic to Commit 5% of Shares to Public Benefit Fund; Freshfields Apologizes for Remarks About Middle Eastern Sovereign Wealth Investors; Rising Rates Threaten Fragile Global Commercial Real Estate Recovery; China’s Third-Quarter Growth Accelerates; US Homebuilder Confidence Falls to a 14-Year Low; Saudi Arabia Postpones Flagship FII Investment Conference

—— France Tightens Security After Cost-of-Living Protests Turn Violent; Anthropic to Commit 5% of Shares to Public Benefit Fund; Freshfields Apologizes for Remarks About Middle Eastern Sovereign Wealth Investors; Rising Rates Threaten Fragile Global Commercial Real Estate Recovery; China’s Third-Quarter Growth Accelerates; US Homebuilder Confidence Falls to a 14-Year Low; Saudi Arabia Postpones Flagship FII Investment Conference

1. France Tightens Security After Cost-of-Living Protests Turn Violent

France is stepping up security measures and pledging support for businesses after weekend protests over the cost of living descended into violence, vandalism and looting, with officials acknowledging failures in law enforcement.

Demonstrations were banned in Marseille on Monday, while Prime Minister Sébastien Lecornu urged regional authorities to impose curfews where necessary. Former Prime Minister Gabriel Attal also called for restrictions on social media.

“These are specific acts of delinquency and looting, and there is no question of allowing this to continue,” Lecornu told reporters. He accused an “ultra-left movement” of seeking to create deep disorder across France and potentially sustain it through the presidential election.

More than half a million people took part in demonstrations across the country on Saturday. The protests initially focused on deteriorating conditions in schools and hospitals as well as mounting living costs, but quickly spiraled into violence. According to figures released by the Interior Ministry late Sunday, 2,397 people were arrested on Saturday.

French stocks and bonds fell, weighing on broader European markets. Social media accounts on X associated with the Yellow Vests movement called for protests to continue throughout the week and urged supporters to stage another day of unrest on Saturday.

The disruption could extend well beyond the weekend. Several labor unions have already called for a strike on Nov. 5, adding to pressure on the government as it seeks to contain the unrest.

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2. Anthropic to Commit 5% of Shares to Public Benefit Fund

Anthropic plans to commit 5% of its shares to a new “Public Benefit Fund,” seeking to address growing public backlash against artificial intelligence as the company prepares for a potential blockbuster initial public offering.

The AI startup, valued at about $965 billion, said Sunday that it would transfer shares equivalent to 5% of the company to the fund, subject to shareholder approval. Based on its latest valuation, the stake would be worth roughly $48 billion. Anthropic also plans to contribute an additional 2% of its shares for every 50% increase in the company’s value above an undisclosed baseline.

The fund will operate as a wholly owned limited-liability company and expand on Anthropic’s efforts in areas including AI safety and biomedical research. The company said the structure could allow it to take “bolder approaches” to issues such as job displacement caused by AI.

It could also consider making large donations to traditional nonprofits or distributing funds directly to specific groups, according to Anthropic.

The announcement comes amid mounting public concern over the broader impact of AI, including potential job losses, the rapid expansion of data centers and the possibility that increasingly powerful systems could behave in unpredictable ways or ultimately escape human control.

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3. Freshfields Apologizes for Remarks About Middle Eastern Sovereign Wealth Investors

Freshfields has issued an “unreserved” apology over remarks about Middle Eastern sovereign wealth investors contained in a leaked internal email, as the law firm seeks to limit any damage to its longstanding client relationships in the region.

The firm said Monday that the comment “does not reflect the position or beliefs of the firm or those participating in that email exchange” and expressed sincere regret for any offense caused.

The email exchange, previously reported by the Financial Times, involved Freshfields Global Managing Partner Alan Mason and Ethan Klingsberg, co-head of the firm’s US corporate and M&A practice. The two executives were discussing a possible spinout of Freshfields Lab, the firm’s legal artificial intelligence unit, and said bringing in outside investors could create a company “worth billions.”

As they considered potential investors, Klingsberg suggested approaching “sophisticated investors that are respected by the rest of the investor community for their leadership.” He added that this “probably” excluded “Middle Eastern sovereign wealth money.”

Mason subsequently forwarded the exchange by mistake to a large internal distribution list. Although the email was quickly recalled, some recipients had already taken screenshots, which were later reviewed by the Financial Times.

Freshfields said it holds its Middle Eastern clients “in the highest regard” and places great value on the longstanding relationships and trust it has built across the region. The firm also said it has “enormous respect” for the leadership and global influence of its clients and remains firmly committed to the region.

Freshfields has offices in Abu Dhabi, Dubai, Saudi Arabia and Bahrain. In recent years, the firm has advised major clients including the Abu Dhabi Investment Authority and Qatar Investment Authority, as well as Kuwait Finance House and Dubai-based port operator DP World.

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4. Rising Rates Threaten Fragile Global Commercial Real Estate Recovery

Rising interest rates are putting renewed pressure on an already fragile recovery in global commercial real estate, forcing buyers and sellers to reconsider valuations as some transactions are repriced or put on hold.

Property deal volumes had been expected to recover this year after a prolonged slowdown following the sharp increase in borrowing costs in 2022. But inflation fueled by the conflict in the Middle East, combined with higher financing costs, is prompting investors to revisit deals agreed only a few months ago.

“The only logical conclusion is that real estate values have to fall,” said Ronald Dickerman, president of Madison International Realty. He said buyers who agreed to a purchase three months ago could reasonably question the price if interest rates had subsequently risen by 85 basis points.

Commercial real estate is particularly sensitive to long-term bond yields because development and investment projects rely heavily on borrowed money. Higher interest rates raise financing costs and tend to weigh on property values.

Bond yields have surged since the outbreak of the war in Iran, pushing benchmark borrowing costs for the global economy to their highest levels since the 2000s. The 10-year US Treasury yield has risen above 5%, from about 4% at the end of February, and reached its highest level since 2002 this month. The 10-year UK gilt yield has climbed as high as 5.53%, its highest since 2007.

Several real estate investors told the Financial Times they were seeking price reductions of several percentage points as they renegotiated transactions. One firm is seeking a 5% discount on a $100 million industrial property deal agreed three months ago.

The repricing is also affecting smaller transactions. In a recent sale of a UK warehouse, second-round bids came in below the first round, according to a person familiar with the deal, highlighting how quickly buyers are adjusting their expectations as financing costs rise.

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5. China’s Third-Quarter Growth Accelerates

China’s economic growth accelerated in the third quarter, as a surge in exports fueled by the artificial intelligence boom helped offset weakness in retail spending and investment.

Gross domestic product rose 4.5% in the three months through September from a year earlier, according to data released Monday by the National Bureau of Statistics. The figure exceeded the 4.4% median estimate of economists surveyed by Bloomberg and compared with 4.3% growth in the previous quarter, one of the weakest readings in years.

For the first nine months of the year, the economy expanded 4.6%, supported by stronger growth in the first quarter. China’s official full-year growth target is between 4.5% and 5%.

“This will likely keep the year’s growth target on track,” said Lynn Song, chief economist for Greater China at ING.

Mao Shengyong, deputy director of the National Bureau of Statistics, said third-quarter growth was among the weakest China has recorded in decades outside the Covid-19 pandemic. Even so, he noted that the pace remained relatively strong compared with other major economies.

Mao said the economy had continued to expand despite a “complex and constantly changing” international environment and “insufficient domestic demand.” He added that the foundations for stable and improving economic performance still needed to be strengthened.

The latest figures underscore the importance of exports in supporting China’s economy, even as domestic consumption and investment remain subdued. The strength of domestic demand will be a key factor in determining whether growth can remain on a sustainable path through the final quarter of the year.

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6. US Homebuilder Confidence Falls to a 14-Year Low

US homebuilder confidence fell to its lowest level in 14 years this month, as mortgage rates above 7%, labor shortages and elevated construction costs continued to weigh on the housing market.

The National Association of Home Builders/Wells Fargo housing market index dropped 3 points to 29, the lowest reading since June 2012. The result also fell short of the median forecast of 31 in a Bloomberg survey of economists.

A reading below 50 indicates that more builders view market conditions as poor than favorable. The index has remained below that threshold for more than two years.

Other components of the survey also deteriorated. The measure of current sales fell to 33, its lowest level in 14 years, while the gauge of expected sales over the next six months dropped to its weakest reading since November 2022. An index tracking prospective buyer traffic declined to its lowest level since the onset of the Covid-19 pandemic.

The figures point to mounting pressure on homebuilders as higher borrowing costs discourage buyers and new-home inventory remains elevated. Builders have increasingly turned to price cuts and incentives to attract customers, putting further strain on operating margins.

“Housing remains squeezed by supply-side constraints and significant affordability challenges,” NAHB Chief Economist Robert Dietz said in a statement Monday. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines.”

The share of builders reporting price cuts rose to 43%, while about two-thirds said they were offering incentives this month, according to the NAHB survey.

Investors remain cautious about the sector. The iShares US Home Construction ETF (ITB), which holds homebuilders and building-materials companies, has declined steadily over the past three months.

Regional data showed builder confidence in the South at its weakest level since mid-2012. Sentiment in the West fell 10 points to the lowest since late 2011. Confidence also declined in the Midwest, while the Northeast recorded an increase.

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7. Saudi Arabia Postpones Flagship FII Investment Conference

American households that rely primarily on heating oil are facing significantly higher energy costs this winter. The US Energy Information Administration (EIA) expects heating bills for these households to rise about 21% from last winter.

The forecast adds to the energy-cost pressures facing the Trump administration. With the midterm elections just four weeks away, Republicans are expected to face voter dissatisfaction over higher gasoline, electricity and other energy costs.

Heating oil prices are closely linked to diesel, which has surged as the US-Iran war and Ukrainian drone strikes on Russian refineries have tightened fuel supplies.

The EIA expects heating oil prices across the US to rise about 30% this winter from a year earlier. However, milder weather in the Northeast is expected to partially offset the impact on household bills, as homeowners may consume less fuel.

About 3% of US households primarily rely on heating oil, with the vast majority located in the Northeast. Maine has the highest share of heating-oil-dependent households in the country. As of Sept. 28, heating oil prices in the state stood at $5.96 per gallon, nearly 80% above the level a year earlier.

The EIA also raised its forecast for crude oil prices. It now expects Brent crude to average $105 a barrel in the fourth quarter, $14 higher than its previous estimate. US retail diesel prices are expected to remain above $6 a gallon through October before falling toward $4.50 a gallon next year.

On the supply side, the agency expects Middle Eastern oil production and exports to gradually recover. Increased shipments through the Strait of Hormuz, combined with alternative transportation routes and other supply workarounds, could eventually ease pressure on global oil markets.

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