Hello Morning Bid readers!
The week began with a selloff in some of the world's oldest sources of value, gold and silver, and has ended with investors reevaluating what businesses will have any value at all in the AI-driven future.
This week's so-called 'software-mageddon' is on track to erase roughly $1 trillion of market capitalization from the S&P 500 software and services index.
The catalyst for this plunge was ostensibly a new tool from Anthropic that could potentially automate a lot of legal work and, eventually, other sales, marketing, and data analysis services.
But this rout is obviously not explained by a new, mostly unproven, plug-in. It's a signal that the technological revolution is entering a new phase where the AI tide will no longer lift all boats. Instead investors will increasingly seek to discriminate between disruptors and casualties.
In theory, this type of dispersion should be great news for active managers.
But the problem with a 'stock picker's market' is that you actually need to pick the right stocks, something that may be infinitely more difficult now that past correlations and trends might no longer hold.
Perhaps oddly, investors who are worried that AI will dominate everything are also edgy about how much the 'Magnificent 7' mega-caps are spending to dominate AI.
Amazon shares plunged 11.5% in after-hours trading on Thursday after it projected a 50% jump in capital expenditures for 2026. Alphabet's announcement the previous day that it would target capex of $175 billion to $185 billion this year was lauded by many analysts, but its shares still took a hit.
Reflecting the risk-off mood, bitcoin touched a 16-month low early on Friday, testing the key $60,000 level, before rebounding slightly.
Moving from digital gold to actual gold, the yellow metal is off about 10% from its recent peak. It recorded its biggest one-day bounce since 2008 on Tuesday after its massive plunge on Friday and Monday. While gold is still up significantly over the past two years, this level of volatility is likely not what many investors, including central banks, signed up for when they increased their allocations to bullion.
Meanwhile, silver is currently trading under $75 per ounce, more than 35% below its high last week, after posting its biggest one-day drop on record last Friday.
What was the initial cause of the metals rout? In case you have forgotten, President Donald Trump announced last Friday that Kevin Warsh – a previous inflation hawk – was his pick for the new Federal Reserve chair.
The announcement of a more-orthodox-than-anticipated nominee supposedly upended the 'dollar debasement' narrative, reducing the attractiveness of previous metals.
There is likely some truth to that explanation, but the type of large moves we've seen in precious metals – particularly in silver – are likely indicative more of speculation and technical issues rather than any true revaluation of an investment thesis.
Over in energy, oil prices – like everything else – were volatile this week, as tensions between the U.S. and Iran see-sawed. Crude now looks set to record its first weekly drop in seven weeks. It's notable that the two things most important for oil prices right now – the potential conflict in Iran and China's oil purchases – are completely outside of OPEC's hands.
On Tuesday, there was the announcement of a trade deal between the U.S. and India that has potential implications for oil markets. President Trump said that India had agreed to stop buying Russian oil and would buy "much more" oil from the U.S. and potentially Venezuela. But it's unclear if any of that will actually happen, as the economics may simply not make sense.
Amid the week's market ructions, investors would be forgiven for missing the central bank announcements. Both the Bank of England and the European Central Bank kept their policy rates unchanged, though the BoE's meeting was notable for the unexpectedly narrow 5-4 vote.
Finally, the Reserve Bank of Australia bucked the global easing – or pausing – trend, delivering its first interest rate rise in more than two years. This move could herald a broader shift in global credit policy. Indeed, there are nascent signs that upward pressures on U.S. inflation are increasing. And given all the projected AI capex, that heat may rise.
For more commodities and markets news, check out Reuters Open Interest. Learn why the U.S. push for gas power could inadvertently speed up the global move toward clean power, the big question Europe needs to start asking, and the reason Trump may soon be complaining about "clueless Kevin Warsh".
As we head into the weekend, check out the ROI team's recommendations for what you should read, listen to, and watch to stay informed and ready for the week ahead.
I'd love to hear from you, so please reach out to me at anna.szymanski@thomsonreuters.com.
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