Last week …
Was a quieter week in terms of volumes, as I predicted it might be the week before.
Keir Starmer resigned as the British Prime Minister on Monday and London trading was unsurprisingly busier last week.
The Middle East had a relatively quiet week and oil prices dropped another 10%.
The main driver of volatility was the Tech sector. Micron announced impressive results on Wednesday boosting Tech stocks. However, this was followed by a sell off on Thursday when Apple announced price rises for Mac computers and iPads, raising concerns about chip costs affecting the wider industry.
Energy stocks had a quieter week and consumer durables and banking stocks also saw lower volumes last week.
The defence sector saw increased activity after Morgan Stanley downgraded the European defence sector. This coincided with the German government’s decision to scrap a multi-billion euro frigate building order with Rheinmetall. Both Rheinmetall and Indra Sistemas were consequently in our top five most traded stocks.
This week …
Will most likely be bell shaped. Not a great deal happened over the weekend so I’m not expecting a busy start to the week. Friday is likely to be quiet due to US markets being closed. The middle of the week is where the action is likely to be.
Inflation numbers are due from several European markets on Tuesday, including France, Italy and Germany. ECB president Christine Lagarde will speak on Wednesday as will Chairman of the Federal Reserve Kevin Warsh. The latest US jobs figures will be announced on Thursday. So I’m expecting a busier mid-week and a quiet end to the week.
There were more shots fired over the weekend between the US and Iran but it seems to have died down again and I’m not expecting the markets to get too excited about it.
It will be interesting to see how Tech stocks perform this week. The STOXX Europe 600 Technology index is up over 20% year to date but rising costs are pushing up capital expenditure even further. In the US the “Magnificent Seven” have shed around $2trillion in market value this month stoking fears that the bubble could be about to burst. SoftBank’s Masayoshi Son announced last week that talking about an AI bubble was “blasphemy against AI” but with interest rates likely to rise this year, the huge levels of investment are only going to get more expensive.
AI is going to make more and more headlines as the technology begins to reshape markets. There are major concerns about job losses in many different areas now and huge new data centres are proving very unpopular in many countries due to their impact on the surrounding areas. A significant portion of our pensions are also invested in these giant Tech companies. A serious correction could have major implications to world markets. It should be an interesting few months ahead in the Tech sector and Q2 results will be under major scrutiny in a few weeks’ time.
That’s all from me, until next week… Happy investing!
Carl
