Renewed volatility across equity and bond markets reflects the convergence of several familiar risks: fiscal and political uncertainty in France, scrutiny of artificial intelligence-related investment, and renewed inflation concerns as oil prices rise.
Key Takeaways
- French fiscal uncertainty, scrutiny of AI investment and rising oil prices are combining to drive renewed market volatility.
- France’s political stalemate is complicating deficit reduction, with little prospect of an immediate resolution.
- AI capital expenditure remains supportive of earnings and growth, but differing investment and financing needs are likely to drive divergence between companies.
- Higher energy prices are adding to inflation concerns, while tighter financial conditions are tempering expectations for further interest rate increases.
- Our overall outlook remains positive, although weaker confidence in AI investment could transmit more bond-market volatility to equities.
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