Markets were firmly risk-on this week, led by semiconductors, Korea, emerging markets and US growth stocks. The rally was broader than the AI mega-cap trade alone, but the falling US dollar and rebound in gold suggest investors are still hedging against policy, inflation and geopolitical risk.
TOP THEMES THIS WEEK
1. AI remains the dominant market engine, but investors are becoming more selective
Markets rewarded companies with clearer AI revenue links (Google), while punishing firms where AI spending still looks heavy and uncertain (META). This matters because the AI trade is no longer being bought blindly; cash flow, execution and visible payoff now matter more.
2. Semiconductors are still carrying market leadership
Semiconductors surged again this week, with the sector up more than 11% over the week and more than 70% year-to-date. This matters because market momentum remains heavily tied to the AI infrastructure cycle, even though breadth outside semis has improved.
3. Energy risk eased late in the week
Oil reversed sharply lower despite strong year-to-date gains, helped by reports of possible movement towards a US-Iran peace proposal. This matters because lower oil prices reduce immediate inflation pressure and support the risk-on move, but the Strait of Hormuz remains the key tail risk. Expect volatility to be high as both sides remain committed to talks but the gap to breach remains wide.
4. Private credit concerns are rising
Reports of institutional exits, fraud-linked losses and markdowns in software-related loans have damaged confidence in private credit. This matters because stress in private markets can spill into banks, insurers, credit funds and risk appetite more broadly.
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