Hi, I’m Matt Wacher, Chief Investment Officer at Morningstar Investment Management. Welcome to the Morningstar Market Minute, a video series where we explore markets, the economy, and other notable trends.

There has been quite a bit of volatility in markets this week. A key focus of investors has been technology stocks, in particular the software sector, experiencing markets’ ire as investors contemplate AI making SaaS businesses redundant sometime in the future. In fact, the US software sector is down over 25% from its recent high, led lower by companies like Microsoft (NAS:MSFT), Oracle (NYSE:ORCL) and Salesforce (NYSE:CRM). Broadly speaking, valuations are still expensive in the equity markets, but this volatility is creating pockets of interest.

Aside from stock market volatility, there was plenty of volatility across asset classes with the week starting with significant sell offs in Gold, Silver and other precious metals. We saw a recovery mid-week, but prices are still well off their recent highs. Even so, Gold and Silver have had a stellar run over the last 12–18 months as investors remain nervous about global debt levels, currency debasement and geo-politics.

Of course, the RBA raised rates this week with the markets pricing in more rate rises to come. The RBA has remained true to the phrase “data driven” and will be hoping that inflation numbers again come under control, or they’ll have to continue to push rates higher. This has pushed the Aussie dollar above 70 cents, and it is stronger against most currencies, however more volatility in the equity markets may see its risk on/risk off characteristics trump the widening rates differential.

All in all, it seems to be a time for cautious readiness. If markets do fall further and valuations improve, being prepared to add to growth assets seem the best path from here.

Thanks for joining me today. We’ll be back next week with another Market Minute.