MARKETS IN BRIEF
Equity markets posted a broad, mostly positive week. Gains were seen across the US, Asia, and emerging markets. Europe was the laggard. The notable exception was credit, where both high-yield and investment-grade bonds slipped even as stocks rose, a warning that not every part of the market shares the same optimism. Gold fell sharply and long-dated US government bonds continued their slow decline, suggesting investors are antsy about inflationary pressures.
TOP THEMES THIS WEEK
1. Big Tech is spending like there is no ceiling on AI Microsoft, Alphabet, Meta, and Amazon are collectively on track to spend over $670 billion on AI infrastructure in 2026 alone, driving strong earnings but raising serious questions about when and whether the returns will justify the cost. For markets, this level of spending is both a source of near-term economic resilience and a longer-term vulnerability. If growth disappoints, Big Tech valuations are likely to take a hit.
2. The Iran war is reshaping the energy market in ways that go beyond the price of oil Brent crude hit $126 a barrel this week before pulling back to $108, and an estimated one billion barrels of supply has effectively been locked out of global markets by Strait of Hormuz disruption. More structurally significant: the UAE announced it is leaving OPEC, a move that could eventually trigger a price war with Saudi Arabia. Expect lower prices when the Strait is open for business.
3. The US economy looks resilient on the surface but the underneath is uneven US jobless claims fell to their lowest level since 1969, and Q1 GDP growth came in at 2% annualised, partly driven by a 10.4% surge in business investment linked to AI. But the picture is described as “extremely polarised”. Large companies and wealthy households are doing well, while smaller businesses and average earners are under real pressure, a dynamic that matters for how long the current consumer-driven resilience can last.
4. Emerging markets are quietly having a very strong run The MSCI Emerging Markets index is rising roughly three times faster than US equities this year and trades at a 44% discount to the S&P 500, the widest gap in a year. South Korea, which is heavily weighted towards semiconductors, is up over 66% year to date and gained nearly 5% in the week alone. This is not a small or speculative move; it has the character of a genuine reallocation.
WATCH THIS NEXT WEEK
Long-dated US government bonds (TLT).
This instrument has now fallen across every time period on a weekly, monthly, year to date, one year, and three years. This week it fell again even as equities rallied broadly. Normally, when risk appetite is healthy, bonds simply go sideways; actively selling government bonds while buying equities is a more pointed signal. It suggests that at least part of the market is worried about the US fiscal position and inflation staying sticky, both of which connect directly to the Iran war energy shock and the AI-driven spending surge.
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