⏳ Reading Time: 2 minutesIn the latest monthly update, our Chief Investment Officer, Richard Flax, explores how markets are navigating a dual scenario, between geopolitical tensions and optimism on corporate earnings and Artificial Intelligence. You can also find a written version of his commentary below.
Over the past few weeks we’ve continued to see a tug of war between optimism on corporate earnings and Artificial intelligence on the one hand, and geopolitical uncertainty on the other, with the Strait of Hormuz still largely closed and the oil price still sitting around 100 USD per barrel.
So far in May, optimism has won out, with equities continuing to rally. Tech has led the move higher, as the Nasdaq has outperformed global equities. The tech supply chain has driven equity markets outside the US, particularly in Emerging Markets. It’s interesting, though, that we’ve seen some volatility in Korea over the past couple of weeks. There were threats of strikes among tech workers looking for better pay, while the government also floated the idea of a windfall tax on some of the big tech companies that have been benefiting from the recent boom. Investors have largely taken that news in stride – the strikes were called off – but it’s a reminder of the potential tension between shareholders, employees and governments.
