The world's most effective equity-market strategy in 2026, buying anything even loosely linked to the semiconductor industry, hit a small bump yesterday. Broadcom's results, from one of the sector's standard-bearers, prompted a bout of profit-taking in stocks that were badly in need of one. As a symbol of the shift, the iShares Semiconductor ETF fell 2%. It is now up only 100% this year, to give you the relative picture as well as the absolute one.

But Thursday's session was not an isolated event. Since the chip ecosystem chose the lift rather than the stairs for its rebound at the end of March, there have already been three episodes of this kind. The sharpest came across the sessions of Friday 15 May and Monday 18 May, when US semiconductor stocks fell by more than 6%. Each time, the rally resumed with even greater force.

I should be clear: I am not trying to prove that yesterday's fall will be a one-day wonder. I am simply pointing out that investors’ infatuation with chips is starting to look like a full-blown fetish. So far, the market has occasionally found excuses to take profits, a set of results here, a technical ceiling there, the odd apocalyptic guru comment thrown in. But it has consistently found twice as many reasons to buy back in with abandon.

A session like yesterday's gave investors a chance to rediscover sectors that had become invisible: healthcare, consumer cyclicals and banks. That was enough to give Europe a small boost, as it struggles to keep up.

If AI does not eat us alive, it will at least have swallowed a staggering amount of investment. Investors have settled comfortably at the bottom of of a bottomless pit, to make quite sure they are showered with dollars. And it is working very well. The story is being reinforced by the excitement around the giant IPOs in preparation. OpenAI and Anthropic, AI's best enemies, in a few months. SpaceX, in a few days. With a second Elon Musk company coming to market at a stratospheric valuation, the message, both implicit and explicit, is that "the sky is no longer the limit", or "to infinity and beyond", to bring us back to today's title. During yesterday morning's detailed presentation of the deal, Wall Street's big investment banks vied with one another to produce ever more glowing commentary. And it was not necessarily a parade of false sincerity: they really are excited about the transaction, quite apart from the fees they will earn as members of the IPO syndicate.

The real question now is whether SpaceX's IPO will prolong the technology sector's state of weightlessness through to the Anthropic and OpenAI flotations, or whether it will prove to be the high-water mark of the current market cycle. Even though investors are somewhat unnerved by all this exuberance, they continue to pile in, despite high energy prices, strains in private debt and private equity, and the growing likelihood of rate increases almost everywhere, which would make money more expensive and therefore scarcer. It is a curious market era, resting entirely on the promise of technology.

Back on more earthly matters, very much against the grain of the current news agenda, the monthly US employment figures will be released this afternoon. The leading indicators point to no obvious weakening. If the US labour market remains strong, expectations of Fed rate rises will build, because policymakers would have more room to fight inflation without doing too much damage to the economy. The consensus forecast is for the unemployment rate to remain stable and low at 4.3%, with 85,000 jobs created outside agriculture.

The situation in the Middle East is barely changing. Things do, however, appear to be moving in eastern Europe. Volodymyr Zelensky has written to Vladimir Putin about resuming peace talks.

In Asia-Pacific this morning, the Korean market is sinking, as it tends to exaggerate semiconductor moves both up and down. The KOSPI is down more than 4% to end the week. Japan and Taiwan are losing more than 1%. Australia is giving back 0.7%. Declines are more moderate in Hong Kong, mainland China and India. Europe is expected to open lower.

Today's economic highlights:

On today's agenda: RBA Hauser's speech in Australia; the Halifax House Price Index in the United Kingdom; industrial production and trade balance in France; retail sales in Italy; in the United States, the participation rate, unemployment rate, non-farm payrolls, and average hourly earnings; in Canada, full-time and part-time employment changes, participation rate, unemployment rate, and the Ivey PMI; finally, BoE Governor Bailey's speech in the United Kingdom. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,438.02
  • Crude Oil (BRENT): US$95.4
  • United States 10 years: 4.47%
  • BITCOIN: US$62,178.9

In corporate news:

  • HSBC’s Swiss subsidiary is under investigation in Paris over suspected money laundering and corruption in Lebanon.
  • Oxford BioMedica remains open to takeover bids after rejecting EQT’s proposal.
  • JD Sports is considering selling its Billionaire Boys Club retail business.
  • Heineken shareholders are calling for an external successor to Dolf van den Brink, according to the FT.
  • Givaudan has acquired a majority stake in the Spanish perfume house Eurofragance.
  • ABB will supply the power and propulsion systems for two electric tugboats in India.
  • Generali appoints a new chief investment officer for the group.
  • Terna increases its EMTN programme to €6 billion.
  • SBM Offshore is selling a 45% stake in the Chalchi vessel, which is chartered to Woodside Energy.
  • The US Supreme Court has ruled in favour of Hikma in the patent infringement dispute against Amarin.
  • Blackstone has limited redemptions from its flagship private credit fund for the first time.
  • Lululemon falls 11% in after-hours trading following its quarterly results.
  • Boeing is considering ramping up production of the 737 to close the gap on Airbus’s production targets, according to Air Current. Lufthansa has also reported that the nose gear of a Boeing 787-9 Dreamliner collapsed at the boarding gate at Frankfurt Airport.
  • Walmart is adding Subway menus to its 30-minute delivery service.
  • Visa and Brale are exploring private stablecoin settlement for institutional payments.
  • Lakefront Biotherapeutics and Gilead finalise the acquisition of Ouro for $1.68 billion in cash.
  • Terry Duffy, CEO of CME Group, warns of the systemic risk posed by new crypto perpetual contracts.
  • The CEO of Ciena rejects any comparison with the dot-com bubble.
  • Brian Chesky, CEO of Airbnb, launches a new AI lab.
  • PG&E passes the milestone of one million residential solar connections.
  • TES secures a KRW 21.2 billion chip supply contract with SK Hynix.
  • SoftBank Group sets the price for a 260 billion yen hybrid securities issue.

See more news from UK listed companies here

Analyst Recommendations:

  • Mitie Group Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 210 to GBX 215.
  • Travis Perkins Plc: Rothschild & Co Redburn maintains its neutral recommendation and reduces the target price from GBX 600 to GBX 590.
  • Discoverie Group Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 950 to GBX 1050.
  • Anglo American Plc: Berenberg maintains its buy recommendation and raises the target price from USD 27 to USD 28.
  • Discoverie Group Plc: RBC Capital downgrades to sector perform from outperform with a target price of GBX 800.
  • Big Yellow Group Plc: Panmure Liberum maintains its buy recommendation and reduces the target price from GBX 1300 to GBX 1150.
  • Paragon Banking Group Plc: UBS maintains its buy recommendation and reduces the target price from GBX 1035 to GBX 1010.
  • Watches Of Switzerland Group Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 7.25 to GBP 8.25.
  • Cmc Markets Plc: Jefferies upgrades to buy from hold with a price target raised from GBX 275 to GBX 500.
  • Legal & General Plc: Morgan Stanley maintains its equalwt recommendation and reduces the target price from GBX 250 to GBX 240.
  • Rio Tinto Plc: Goldman Sachs maintains its neutral recommendation and raises the target price from GBX 7600 to GBX 7700.