Market Commentary: 9 June 2026
AI Euphoria: Peak or Long-Term Trend?
• Stock markets (MSCI World Index) have gained 9% year-to-date.
• Bond markets (Bloomberg Global Aggregate Index) are flat for the year.
Please note that the content of this review should not be considered as investment advice or any form of recommendation. If you require investment advice, please do not hesitate to get in touch with a member of our qualified team.
Key Themes
Financial markets have become increasingly focused on a single dominant theme: artificial intelligence. What began as a promising technological trend has developed into a powerful driver of market returns, with large inflows of capital pushing certain stocks sharply higher. If the spending continues, so can the party, but that is by no means guaranteed. In a wider context, inflation is rising once again, placing pressure on bond markets and creating the risk of interest rate hikes from central banks across the globe.
UK
The FTSE 100 has gained 6% this year – less than the global average, but comfortably ahead of the French and German markets. Miners such as Glencore (+44%) and Rio Tinto (+26%) have led the way, with BP also gaining 26% due to the Strait of Hormuz closure. The inflationary effect has hurt housebuilders, with Barratt Redrow, Taylor Wimpey and Persimmon all experiencing double-digit declines.
United States
The US tech sector has achieved its best 9-week return (+47%) in history, benefitting from a record amount of AI spending.1,2 However, with so much focus on future growth, the S&P 500’s dividend yield has reduced to only 1.1%, which matches the all-time low from the dot-com bubble in 2000.3
In other news, Kevin Warsh has begun his four-year term as Chairman of the Federal Reserve. His first press conference is set for 17 June, and his remarks could shape the direction of US monetary policy for the remainder of the year. Warsh is known as a “policy hawk” who has long argued for higher interest rates and a smaller Fed balance sheet.4 With US inflation expected to breach 4% as a result of the Iran war, it will be interesting to see whether Warsh sticks to his principles or submits to President Trump’s preference for lower interest rates.
Europe
The European Central Bank could deliver its first interest rate hike in almost three years later this week.5 With Eurozone GDP contracting in the first quarter and inflation rising, the region now faces a “stagflation” economy, which historically does not bode well for either stocks or bonds. Thirty of the Euro Stoxx 50 constituents have declined this year, although semiconductor stocks Infineon and ASML have gained 107% and 62%, respectively.
Asia & Emerging Markets
The performance of emerging market stocks depends on your definition of “emerging”. The FTSE Emerging Index does not include South Korea, due to its GDP-per-capita being higher than countries such as Portugal and Japan. However, the MSCI Emerging Markets Index has benefited from including Korean tech firms such as Samsung, which produce AI memory chips. The MSCI index has gained 25% this year, compared with only 10% for the FTSE version.
Bonds
The UK 10-year gilt yield has dropped below 5% again for now, but attention may soon turn to the Makerfield by-election on 18 June. Andy Burnham is viewed as the main challenger to Prime Minister Keir Starmer, but bond investors are unlikely to welcome more left-leaning policies on government spending. The spread between UK and US bond yields nearly reached its widest level since 2009 last month, when the leadership crisis first unfolded.6
Points of Interest
If investors have an insatiable demand for AI stocks, it is perfectly rational for companies to supply as much stock as possible. In this vein, Google is hoping to raise $80 billion through the sale of new shares – the largest equity fundraising ever – to help meet the cost of its AI spending.7
Leading AI developers OpenAI (ChatGPT) and Anthropic (Claude) are hoping to list on the US stock market later this year, with valuations reaching up to $1 trillion each.8 Can the market digest such heavy issuance and march onwards regardless, or could this be a classic sign of a market top in the making? The proposed IPO of SpaceX on 12 June will provide the first test.
Summary
Stretched valuations, market exuberance and rising interest rates are usually a bad combination. Is this time different? We certainly have a revolutionary new technology to contend with – one that has driven US earnings estimates up by 25% this year alone.9 However, the profits are currently contained within the companies building the AI infrastructure, rather than the firms that are using it. For the benefits to last, that may need to change.
In the meantime, diversification remains an investor’s best protection against short-term price dislocations. The FTSE 100, and markets like it, can still produce good returns while counteracting any risk of an AI sell-off.
Note: Past Performance Is Not A Reliable Indicator Of Future Performance
Sources may be found online here, or provided on request
GWA Portfolio Performance
Please note that any performance figures are provided for information purposes only. The performance of your own investments may deviate from the returns shown below due to a number of factors, including product charges, the timing of contributions & withdrawals and portfolio rebalancing. Performance relates to the GWA Portfolios only; if you hold other investments performance will be different.
MGTS Qualis Funds
Please note that this should not be considered as investment advice or any form of recommendation or inducement to invest. If you require investment advice, please contact your financial adviser.
The MGTS Qualis Funds launched in June 2023 and are managed by
our wholly owned subsidiary, GWA Asset Management Ltd. Fund Prices at 05/06/2026
Fund Positioning
The MGTS Qualis Defensive Fund invests mainly in fixed income funds, which hold government bonds and corporate bonds. The fund also invests in other assets, such as property and infrastructure.
The MGTS Qualis Growth Fund invests solely in equities and is focused upon geographic diversification. The fund has a broad range of investments across the UK, US, Europe and Asia.
For further information including the latest Fund Factsheets, please visit qualisfunds.co.uk
