The recent stock rally is losing some momentum as Nvidia’s strong earnings failed to reignite enthusiasm for AI-related tech stocks, highlighting investor skepticism about the sustainability of AI-driven growth. While Nvidia rose (albeit modestly), other major tech names declined and Salesforce’s weak outlook reinforced concerns that AI could disrupt traditional software firms. Outside of tech, markets remained cautious amid geopolitical risks, including ongoing U.S.–Iran nuclear negotiations and trade uncertainty, prompting investors to reduce risk exposure despite a partial recovery from previous selloffs. Meanwhile, emerging markets have outperformed significantly this year, supported by strong gains in chipmakers and increased investor allocations, while European and Canadian stocks continue to reach record highs helped by strong bank earnings and gold.
Mark Carney’s visit to India marks a major diplomatic reset and could unlock significant new trade agreements spanning uranium exports, oil, critical minerals, infrastructure, and advanced technologies like AI and quantum computing. India is particularly interested in expanding purchases of Canadian uranium and heavy crude, while both countries aim to revive free-trade negotiations that could be finalized within a year. The trip reflects Canada’s new strategy of diversifying trade away from the U.S. amid tariffs and geopolitical tensions. The visit also highlights improved relations after tensions under Trudeau, with both governments emphasizing a balanced partnership, and forms part of Carney’s wider Indo-Pacific push, including stops in Australia and Japan to deepen economic, defense, and technology ties.
M&A activity is expected to be more muted this year than originally anticipated, as higher valuations and market volatility make deals harder to execute despite strong demand. Elevated asset prices have widened bid-ask gaps, complicating negotiations and increasing the risk of execution challenges, even though companies still see M&A as necessary for growth and positioning. Corporate boards are responding cautiously by prioritizing balance sheet strength, extending debt maturities, and maintaining liquidity to prepare for potential market volatility. Still, Canada’s IPO market is showing early signs of recovery after several weak years, with companies like AGT Food and Ingredients looking to raise about $460 million and Apotex targeting up to $1 billion in potential listings. These deals mark a pickup compared with the past few years, when IPO activity fell significantly from 42 listings in 2021 to just one in 2023 due to higher interest rates, weak post-IPO performance, and limited tech sector representation.
Fear of AI replacing white-collar jobs is making higher-income workers more cautious and less likely to switch roles, leading to historically low confidence in job security and record-low turnover in professional sectors. Surveys from the University of Michigan and the New York Fed show rising anxiety about unemployment and declining confidence in finding new work, especially among top earners, while ADP data confirms reduced job mobility in finance and business services. Despite this caution, actual unemployment rates in these professions remain low, suggesting these are simply fears (at least at the moment) and don’t reflect the current environment. Policymakers and economists view AI as both a source of disruption and a long-term productivity boost, noting that while it may displace some roles, it is also likely to support economic growth.
AI has certainly become the dominant theme in markets and macroeconomic outlooks, driving massive investment and sector volatility, but it is not the sole force behind global economic growth. While tech giants are expected to spend at least $630 bln on AI this year, broader growth has also been helped by recovering non-tech production, resilient consumer spending, global investment in infrastructure, and defense. Global industrial output grew 2.4% last year, more than double the pace of prior years, driven not just by AI-related capital expenditure but also by improved hiring prospects, easing interest rates, and sustained demand beyond the tech sector. Although AI is reshaping industries and investor behaviour, experts are noting that there is little evidence so far of widespread job destruction, and the global economy remains supported by a broad-based recovery across both tech and traditional sectors.
Down but not out. Bitcoin has fallen nearly 50% from its October peak above $126,000 to below $70,000, marking its worst decline since the FTX collapse and wiping out about $1 tln in value. However, unlike prior crashes, the institutional infrastructure supporting the asset remains intact. ETF inflows since 2024 still total tens of billions of dollars, with only about 6% withdrawn recently. Major holders, including institutions, public companies, and endowments, continue to maintain or even increase positions, and now collectively control nearly 12% of circulating supply. Banks and financial firms are expanding crypto access and products, while Bitcoin’s halving has reduced new supply, tightening available liquidity. Bulls argue this stronger institutional base, reduced issuance, and expanding access create a structural demand floor that could support future rallies, even though bearish sentiment, price weakness, and uncertainty still dominate the near-term outlook.
That’s one way to spend your money. An anonymous donor in Osaka elevated civic duty to a new level, donating 21 kg of gold bars worth roughly ¥560 mln, or about US$3.6 mln, on the condition that the proceeds be used to repair the city’s aging water infrastructure. With gold now trading above US$5,000 per ounce, the timing suggests a strategic decision to convert record-high bullion into long-term public investment. Mayor Hideyuki Yokoyama said he was moved by the gesture, sharing it was not the donor’s first contribution, having previously given cash to support municipal waterworks. The contribution arrives at a critical time. More than 20% of Japan’s water pipes have exceeded their 40-year service life, and Osaka alone recorded over 90 pipe leaks last fiscal year. Hard to argue with this version of public-private-partnership.
Diversion: Gotta work on that vertical
