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Note: This is marketing material. This article is not investment advice, capital is at risk.
FTSE opens higher above 10,400
Dow Transports hit as logistics services firms latest to fall under AI fear trade
US stock markets fall with tech stocks coming under fresh pressure
The FTSE 100 was broadly steady in early trade on Friday with RELX +5% as it tried to scrub some AI-related losses of the last week with a £2.35bn buyback after shares rallied post-earnings on Thursday. This AI fear trade has been the main narrative of the last few sessions as a whole host of industries and sub-sectors have been caught up in selling as investors think companies will be exposed to significant AI disruption.
Wall Street fell with the Dow Jones -1.34%, the S&P 500 -1.57% and the Nasdaq -2.04% as investors turned defensive and continued to rotate out of tech and AI into things like staples and utilities. Cisco provided the latest reason to get out of momentum tech as it fell -12.3% after missing on adjusted gross margin. The move hit the wider tech space, while Apple was smashed –5% on Siri update delays and an FTC letter about its news app. A bad news day when tech was being roiled was a bad combo. High beta retail favourites were especially exposed with AppLovin –20% on the day despite strong Q4 earnings beat, Palantir -5% to take its year-to-date loss to 27%. IGV - the iShares Expanded Tech-Software Sector ETF - is down 31% from its recent high.
The latest show to drop is logistics with C.H. Robinson plunging -14%, Expeditors International -13% on worries that AI would upend freight operations. The Dow Transports fell 4%.
We can see a broad AI fear trade taking place and it’s touching all corners except those that are immune to disruptions – materials, energy, staples. I had a look at some of the moves related to AI fears here.
Elsewhere, President Trump plans to roll back some tariffs on metal and aluminium goods, while the US is sending a second aircraft carrier to the Persian Gulf area. Oil prices were lower after a sizeable drop yesterday on supply fears as the IEA forecast global demand would rise more slowly than previously thought. And whilst there is a buildup of military force in the Middle East the US and Iran continue to talk, which is trimming some geopolitical risk premia at the edges. The chunky drop in demand forecast by the IEA is more important to traders at the margins as the market anticipates more supply coming from Venezuela.
US CPI inflation is the major event on the calendar today.
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