Global stocks were on the back foot early in the week, with major U.S. indexes dragged down on Monday by weakness in tech megacaps. The selloff broadened into chip stocks, with Korea’s KOSPI sliding nearly 10% and the SOX chip index shedding some 8%.
Market Analysis
A key question is whether AI exuberance has become irrational, leaving markets poised for a bigger correction. Opinions on this remain contentious, with some arguing that the current rally could have plenty of road to run.
The Fed’s policy trajectory is also a concern, with massive gaps in rate expectations between Wall Street banks. This suggests that the push for less Fed communication may end up being a recipe for volatility.
In other news, Britain is set to get its seventh prime minister in a decade, with Prime Minister Keir Starmer announcing his resignation on Monday. The UK’s underlying issues, including tepid productivity growth and a bloated welfare bill, remain a concern.
The US economy was already running somewhat hot before the war, and lower energy prices may well boost spending and other economic activity. The personal consumption expenditures (PCE) index rose 4.1% in the year through May, topping 4% for the first time in three years.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
