Those who switched off from the markets at the European close on Friday because they had better things to do missed a brutal sell-off in US technology stocks. The Nasdaq 100 was down 4.77% at the bell. The last worse session was on 4 April 2025, when the index fell 6.07% after the now infamous "reciprocal tariffs". The slide, which had begun the previous day, gathered pace as several chipmakers, including Micron, Sandisk and Intel, suffered double-digit falls. The damage spread across the wider AI ecosystem, from power generation and industrial-metals suppliers to cryptocurrency names. Nvidia, the world's largest company, lost more than 6%. All told, several hundred billion dollars of market value were wiped out.

As noted in these columns last week, investors are holding their breath, trying to decide whether this is just another pause in a bull market or the start of a broader correction after months of excess. After the weekend allowed Wall Street to recover from Friday's blow, the market seems to think a rebound is possible: US futures are pointing higher, at least in technology. Even so, investors remain uneasy about the sheer scale of spending now under way. In a conventional cycle, exceptional capex is normally accompanied by a clear promise of returns, in both timing and magnitude. With AI, the promise is rather more nebulous, at least for those companies spending heavily while generating little or no revenue from it for now.

The return of doubts about the health of equity markets comes alongside a messy accumulation of economic risks. The clearest technical sign is that stocks and bonds are once again falling together. The Middle East, meanwhile, does not appear to be heading in the right direction. Iran fired missiles at Israel, which responded with strikes on Iran despite Trump urging Netanyahu not to retaliate. Oil has moved another step higher.

The approaching "central-bank fortnight" will also bring its share of turbulence. The ECB is expected to raise rates on Thursday. But the debate is fierce between Europe's monetary-policy hawks and doves: some are warning against a repeat of the ECB's 2011 mistake, when it tightened policy at the wrong time. In the United States, political pressure is already bearing down on the Fed's new chair, Kevin Warsh. Donald Trump told NBC there was no reason to raise interest rates. The US central bank meets on 16 and 17 June and is expected to sharpen its tone without actually raising rates. Traders, however, are pricing in a tightening move later in the year. Much can happen before then, but the cost of money is rising, partly because crude has surged amid the war with Iran, and partly because the frantic AI race has put pressure on some raw materials.

Key developments to start the week:

  • Trump says Netanyahu will have "no choice" but to accept a deal with Iran.
  • Chinese President Xi arrives in North Korea to meet Kim, marking a thaw in official relations between the two countries.
  • Trump is already turning the screws on Warsh by demanding a rate cut.
  • The United States is reportedly considering buying the Chagos Archipelago from Mauritius to secure control of Diego Garcia, which hosts a strategic US-British military base.
  • Zelensky used Abramovich to pass a message to Putin on peace negotiations, according to the Financial Times. London, Paris and Berlin support the idea of a meeting between the Ukrainian and Russian presidents.
  • OPEC+ has once again raised its production targets.

On the corporate calendar, Oracle and Adobe will be the week's main attractions, with the now familiar question: is AI a drag or a catalyst for these legacy players in the technology ecosystem?

On the macro calendar, central banks will dominate this week and next. First up are the Bank of Canada on Wednesday, where no change is expected, and above all the ECB on Thursday, where economists are forecasting a rate rise.

In Asia-Pacific, the reversal of the "AI trade" is inflicting heavy damage on the three markets most exposed to the theme. In Japan, the Nikkei 225 is down 4.6%. In Taiwan, the TAIEX has fallen 3.2%. South Korea is, unsurprisingly, taking the hardest hit, given how heavily the KOSPI depends on Samsung Electronics and SK Hynix. The index is down more than 8.0% in the session.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,303.73
  • Crude Oil (BRENT): US$97.3
  • United States 10 years: 4.58%
  • BITCOIN: US$62,873.6

In corporate news:

  • HSBC Holdings unit faces criminal charges in France.
  • AstraZeneca warns it could delay European drug launches over pricing concerns, according to the FT.
  • Frasers could buy the Metrocentre in Gateshead, UK, for £500 million, according to Sky News.
  • US firm Ingredion is in talks to acquire Tate & Lyle for $3.6 billion, according to Bloomberg.
  • Intesa, backed by Unipol, is launching a takeover bid for Banca Monte dei Paschi, which has been approached by Banco BPM regarding a merger.
  • ASML describes Terafab as a serious company, and Elon Musk is set to speak at an internal group event.
  • Obesity falls by 22.7% with Roche’s treatment in the intermediate phase.
  • The co-founder of Partners Group describes the share price fall as a massive overreaction.
  • Kardex warns of a drop in profitability in the first half of the year.
  • Nyxoah aims to raise $95 million via a public offering in the US.
  • Meta is considering a massive fundraising drive to accelerate its investments in AI; the share price plummets.
  • Nvidia has signed agreements with SK Group and other South Korean giants to accelerate the roll-out of AI. Its CEO predicts that the memory shortage will persist for several years.
  • SpaceX has signed a contract to provide computing power to Google.
  • OpenAI plans to transform ChatGPT into a super-app ahead of its IPO, according to the FT.
  • Boehringer Ingelheim and Zealand Pharma report promising results on reducing visceral and hepatic fat in obesity.
  • Eli Lilly claims that its next-generation obesity treatment reduces sleep apnoea.
  • Netflix has appointed Jay Hoag as chairman of the board, succeeding co-founder Reed Hastings.
  • Saudi Aramco is cutting its benchmark crude oil prices for July.

See more news from UK listed companies here

Analyst Recommendations:

  • Vistry Group Plc: Stifel maintains its hold recommendation and reduces the target price from GBX 340 to GBX 280.
  • Bellway P.l.c.: Stifel maintains its hold recommendation and reduces the target price from GBX 1900 to GBX 1760.
  • Barratt Redrow Plc: Stifel maintains its buy recommendation and reduces the target price from GBX 365 to GBX 295.
  • Persimmon Plc: Stifel maintains its buy recommendation and reduces the target price from GBX 1350 to GBX 1220.
  • Rio Tinto Plc: Jefferies maintains its hold recommendation and raises the target price from GBX 7700 to GBX 8500.
  • Anglo American Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 4200 to GBX 5000.
  • Glencore Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 650 to GBX 720.
  • Serica Energy Plc: Panmure Liberum maintains its buy recommendation and reduces the target price from GBX 353 to GBX 342.
  • B&M European Value Retail Plc: RBC Capital maintains its outperform rating and raises the target price from GBX 195 to GBX 240.
  • Diploma Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 74 to GBP 83.