Yields up, AI accelerates, cities adapt

Despite a complex backdrop of geopolitical tensions, elevated bond yields, and rapid technological change, capital markets have shown remarkable resilience this year, defying expectations of deeper disruption. What’s behind this strength, and how should investors position for what's next? In this episode, Yves Klenk, Head of Client Coverage and Advisory, and Marko Radovic, Senior Portfolio Manager and Head of Alternatives at Julius Baer, join Helen Freer to discuss the major themes shaping financial markets today. They reflect on the biggest surprises of the year, the outlook for broadening market performance, and where investors can find opportunities to diversify their exposure. The conversation also explores the implications of the upcoming US midterm elections, the role of private markets in portfolio construction, and the key forces driving markets today.

Meta Platforms sparked a broader sell-off across the semiconductor complex after reporting its first cash outflow in more than a decade. At the same time, government bonds rallied, pushing the 10-year US Treasury yield back below 5%. Meanwhile, pressure on French assets intensified, with the spread between French and German 10-year government bond yields widening towards 180 basis points. In today’s Moving Markets episode, Richard Tang, Head of Research in Hong Kong, joins us to discuss the outlook for Chinese equities after major indices slipped into bear-market territory.

On Wednesday equity markets across Europe rallied on the back of strong earnings announcements with even France’s CAC 40 gaining more than 1% on the day. Nervousness in French bonds markets continues though, with the 10-year government bond yield reaching 5% for the first time since 2002. The positive tone was echoed in the US where indices also closed higher and earnings again broadly satisfied. However, after the close the mood changed as Tesla’s earnings disappointed and geopolitical tensions saw Brent oil rise above USD 110 per barrel. Asian equity markets have sold off this morning with China’s CSI 300 heading into bear market territory. Norbert Rücker, Head of Economics and Next Generation Research, joins the podcast today for a timely look at why oil is trading at such unjustified levels, as well as sharing why he believes that the direction for both oil and gas prices should be down.

Oil volatility, a broadening equity rally and earnings dominated markets yesterday. While Netflix disappointed, SpaceX delivered standout results and Elon Musk floated the idea of a potential tie-up with Tesla. In Asia, stronger semiconductor sentiment and robust Japanese export growth supported risk appetite, offsetting weakness in CATL, China’s top battery maker, following its earnings release. Dario Messi, Head of Fixed Income Research, and Mathieu Racheter, Head of Equity Strategy, examine Europe as France's debt concerns deepen, European bank stocks central to Italy’s and Spain’s stock markets hit a four-month low, and Swiss large caps have been outperforming.

US technology stocks bounced back on Monday after last week's sharp sell-off, while political unrest in France weighed heavily on European markets, French bonds, and the euro. Oil prices swung on escalating geopolitical tensions in the Middle East, and investors continued to assess the implications of higher interest rates, AI investment spending, and upcoming earnings. In today's show, Enrico Chinello from Next Generation Research discusses last week's weakness in AI-related stocks, explains why we remain constructive on the long-term AI opportunity, and highlights the growing importance of cybersecurity.