Update Equity: AI continues to fuel market optimism
Global equity markets experienced a positive week, with gains observed across the US, Europe and emerging markets. US markets remained resilient, despite the unresolved government shutdown; while in Europe, political uncertainty briefly unsettled markets.
On Monday, less than 24 hours after announcing his new government, French Prime Minister Sébastien Lecornu resigned. Markets, however, quickly stabilized, as investors believed that near-term elections were unlikely.
In the US, the utilities and information technology sectors led market gains. A significant development in the tech sector was OpenAI's agreement to purchase chips worth tens of billions of dollars from AMD. The deal also includes an option for OpenAI, the creator of ChatGPT, to acquire a 10% stake in the chipmaker over time. This news led to a sharp rise in AMD’s stock price, which also buoyed other semiconductor companies.
Utilities continued their upward trend amid expectations of increased energy demand to support artificial-intelligence (AI) driven datacentres. Additionally, expectations of a Federal Reserve rate cut further boosted defensive sectors, such as utilities. In Europe, the energy sector performed well, following an announcement from OPEC. The oil-producer group revealed a modest monthly increase in oil output, easing investor concerns about a potential supply glut and supporting energy stocks.
The French multinational tire manufacturer Michelin faced challenges, as concerns grew over its ability to meet medium-term targets. The company hinted to a downgrade of its short-term earnings expectations, leading to a decline in its share price. In contrast, the healthcare sector saw positive momentum. Humana’s stock surged after the company reported improvements in its Medicare Advantage "star" ratings for 2026. Higher ratings mean increased government payments to the insurer, which boosted investor confidence following a recent pullback. The rally was further fuelled by Humana’s raised full-year 2025 guidance, strong sector performance and broader market optimism.
Overall, global markets demonstrated resilience, with the AI boom and sector-specific developments driving investor sentiment.