Silicon, Silver, and Sky-High Stocks

Markets ripped to fresh all-time highs and gained for the sixth week in a row. Events such as the US and Iran inching closer to a nuclear deal, a wall of bullish first quarter earnings, an explosive AI memory rally, and finally a surprise Apple/ Intel chipmaking deal buoyed sentiment. Brent futures slid lower, gold and silver rallied, and with global central banks turning more hawkish, the divergence between AI-led equity euphoria and stressed fixed income markets defined the week.

The S&P 500 and Nasdaq both closed at record highs at the end of the week, gaining 2.3%, and 5.5% respectively, whilst the Dow Jones managed only a marginal advance as old economy names lagged. Beneath the surface, six of the eleven S&P sectors closed lower, pointing to a narrow rally driven almost entirely by mega-cap technology and AI infrastructure beneficiaries.

By the end of the week, almost 90% of US stocks reported their Q1 earnings, and this earnings season delivered more hits than misses, with the AI capex narrative continuing to dominate headlines. AMD stole the show with blowout data-centre growth and forward guidance well ahead of consensus.

The real story, however, played out further down the AI stack. SanDisk and Micron each rallied more than 15% on the week, as a combination of strong results and supply commentary confirmed that NAND chips and high-bandwidth memory shortages have become a structural feature of the AI build out, rather than a cyclical anomaly.

Friday’s Wall Street Journal report that Intel will manufacture selective Apple chips sent the stock up 14% on the day, capping a strong week for the sector. The move also reflects this year’s combined ‘hyperscaler’ capex guidance of around $725 billion, up 77% year on year, and reinforces the view that the AI trade now extends well beyond Nvidia.

Away from tech and AI, the house of mouse, Disney, delivered strong results and lifted its share buyback target, and Uber printed record gross bookings, driving investor confidence into the consumer discretionary sector amid the inflation worries from the US-Iran conflict and continued cost of living crisis.

Turning our gaze East, Asian markets had spectacular moves. The Nikkei 225 surged almost 8% as Tokyo returned from Golden Week and ripped higher on the AI memory trade. SoftBank also benefited from its chip-design unit Arm holdings delivering spectacular results. Elsewhere, the South Korea index, the KOSPI, had its strongest week since 2008, driven by Samsung, the newest member of the exclusive 1 trillion-dollar club).

Closer to home, Europe was a different story with the STOXX 600 eking out a tiny gain of 0.1%. Sentiment was capped for Europe on Friday following President Trump’s threat of “much higher” EU tariffs unless Brussels ratifies the Turnberry deal by July 4th. In the UK, the political backdrop did little to sweeten investors mood with early local election results delivering heavy losses for Keir Starmer’s Labour Party. Reform UK surprised even the most bullish forecasts, eventually picking up more than 1400 council seats. Weaker UK house price data for a second consecutive month rounded out a thoroughly unhelpful week for the UK market.

In the fixed income space, sovereign bond markets endured a violent round trip on the week, with both US Treasuries (UST) and UK Gilts whipsawing as traders struggled to price the competing forces of geopolitical risk, sticky inflation, and central bank policy expectations.

Elsewhere, in the commodities space, Gold rallied 2.3% on the week, but the character of the move was telling. Bullion is increasingly trading like a risk asset rather than a classic haven, with the gain driven by optimism around de-escalation in the Middle East rather than fresh investment flows. The logic runs that lower energy prices ease inflationary pressure, which in turn revives the opportunity cost of holding non-yielding metal. Silver joined the move higher, gaining 6.6%.

Looking ahead, investors will wish to refocus their attention to inflation data in the US on Tuesday and UK GDP data on Thursday, and of course, refreshing the Truth Social feeds to monitor Trump’s latest posts to help navigate markets.

(Cover Image Source: Scottsdale Mint)