Simonelle Mody: Welcome back to Morningstar’s Market Minute, where we talk everything that’s happened in the past week over markets. Today, I’m joined by Bianca Rose from the investment team. Bianca, thanks for joining me today. Let’s start with geopolitics. So the conflict in the Middle East remains largely unresolved. How are we seeing this flow through to things like energy prices, inflation expectations? What are you seeing right now?

Bianca Rose: So I think it’s a lot of back and forth every week. Every week. I think markets get excited that maybe we’re going to have a resolution. We hear a lot about talks between Iran and the US. I think what’s complicating things in the last week or so is that Israel doesn’t really want to give up. And so it’s causing a lot of kind of problems, I guess, with the negotiations as well.

But yes, we have seen energy stocks being, you know, around the top performing sector this week. And it looks like as long as this continues and we see prices kind of staying higher for longer, then that is kind of going back into these concerns about inflation staying higher for longer and kind of remaining quite sticky.

And so that really means what we’ve seen, as well as bond yields rising and interest rate expectations worldwide continuing to kind of increase.

Simonelle: And turning to tech. Now there was sort of a bit of optimism earlier in the week. But then Broadcom results came in. What happened there? What was the change in sentiment here?

Bianca: So a lot of excitement going in. And we’ve seen a lot of excitement particularly in the semiconductor space for the last couple of months. But specifically at the start of the week, I guess Jensen Huang, Nvidia CEO has kind of got rock star status, was in Taiwan for Computex, the tech conference, early in the week. Then he was in Korea and meeting up with a number of AI-related IT companies, whether it be on AI infrastructure or doing partnerships on robotics.

And so that got the market quite excited. And so, you know, we saw earlier in the week Asian tech stocks do really well alongside US tech stocks. And then we had Broadcom, who partners with Alphabet and Google on creating their custom chips and so on, come out with their results around midweek.

Now they came out with some really good results. But the market’s bar has kind of really lifted and the market was expecting a lot from them, mainly looking at the next 12 months, so financial year 2026. It kind of saw it as not having anything new in the results. I think the market was hoping for some further marquee clients or something like that, and they just reiterated what they had said earlier in the year.

So really the market kind of was like, okay, there’s nothing new in there. Still pretty positive, but because the bar was so highly set, yes, Broadcom was off the last few days. And that kind of set the tone for AI tech later in the week to be more down.

Simonelle: Do you think that the Broadcom results signal a broader market sort of reevaluation of these tech and semiconductor stocks? What are we seeing?

Bianca: Yeah. So I think a reevaluation definitely in the short term. I think the hype was kind of really rising there. And we’d seen particularly Korean memory semiconductor stocks, so SK Hynix and Samsung, obviously up very strongly this year.

I think it’s just pulled back that bar a little bit. I think the market was getting used to maybe exceeding expectations rather than just meeting expectations.

So I think the medium-term outlook, when we look three years out, is still pretty strong from the market’s perspective. But it was probably just that hype had got a little bit ahead of itself there in terms of those memory semiconductor stocks. So they’ve been pulling back at the end of the week.

Simonelle: Finally, we’ve seen a surge in capital raising. Alphabet, potentially Meta. What can investors expect out of SpaceX’s IPO this Friday?

Bianca: So I think from what I’ve been reading, it’s kind of doubly oversubscribed, with very lofty expectations for valuations in there.

I think the main thing as well is that people are talking a lot about equity supply and demand dynamics. Alphabet came out earlier in the week saying that they were going to raise around US$80 billion. Then they upped it to US$85 billion, and they’ve kind of had strong interest. Meta is talking about doing tens of billions to fund their AI ambitions, if you like.

So we’re not only seeing money needed from public market participants like Alphabet and Meta, but we also have SpaceX coming up. There’s talk of other listings later in the year as well.

So it’s kind of more about the equity supply and demand dynamics.