Client Update - 11th June 2026

This week’s client update comes to you a day early. Global equity markets continue to be dominated by developments in artificial intelligence and the broader technology sector, but the latest news flow underlines just how unsettled and unpredictable this part of the market has become. I appreciate that I wrote about artificial intelligence (AI) stocks last week and I do not want this to get boring, however no sooner had we issued last weeks newsletter, than we had strong jobs data from the US last Friday and US technology stocks went south, and quickly. What is interesting, is their sudden recovery on Monday, when news of the expected listing by OpenAI was announced, underlining the incredible volatility in today’s markets.

The confidential filing by OpenAI, reportedly targeting a valuation above $1 trillion, follows similar moves from SpaceX and Anthropic, continuing the wave of mega listings in the AI ecosystem. SpaceX’s public debut later this week will be the first real test of investor appetite for these enormous valuations. Whether the main beneficiaries will be long term investors or the investment banks bringing these deals to market remains an open question.

Market behaviour has once again illustrated the fragility of sentiment. A major driver of this volatility is the bond market’s uncertainty about the US Federal Reserve’s (Fed) next steps. Conflicting economic signals—above target inflation alongside flat real wages, subdued rent inflation and a stable unemployment rate—have left markets unsure whether the Fed’s next move will be a rate hike or a pause. This uncertainty has pushed volatility higher at the short end of the yield curve. Historically, when short term rates become unpredictable, equity markets—particularly growth and technology stocks—tend to swing sharply.

At the same time, the AI investment theme remains both compelling and deeply uncertain. While there is broad agreement that AI represents a major technological shift, investors still lack clarity on who will ultimately capture the economic value. It is possible that low barriers to entry could spread the benefits widely, limiting returns for the companies currently investing heavily in models and data centre infrastructure. Alternatively, the sector could evolve into a winner takes all environment. Early revenue growth at companies like Anthropic is encouraging, but far from conclusive.

This uncertainty is amplified by the narrowness of the current market, where performance is increasingly concentrated in a handful of large technology and semiconductor names. Research from Deutsche Bank shows that overall equity exposure in investment funds is high, but exposure to tech specifically is extreme, suggesting that investor positioning is stretched. Additional data from Nomura highlights rapid growth in leveraged ETFs tied to Korean and Taiwanese semiconductor markets—an indication that leverage is building within AI related trades. Such positioning increases the risk of self reinforcing cycles of buying and selling, which can intensify market swings.

With major secondary offerings from Google and SpaceX adding supply to the market—and more IPOs expected—the environment is likely to remain volatile. The direction of travel is uncertain, but the journey will almost certainly involve sharp turns and rapid shifts in sentiment. This is why we believe so strongly in a diversified portfolio approach, to help manage unpredictable tech driven volatility, smoothing returns by spreading risk across assets that don’t all rise or fall together. We have seen this in evidence over the last week as tech has struggled, but consumer staples and other “boring” equities have done well.

Whatever lies ahead, we believe a well-diversified portfolio can improve long term returns because it reduces the drag from any single underperforming area, allowing more consistent compounding over time. In other words, when one sector (like today’s volatile tech space) struggles, others can offset the weakness – like consumer staples and healthcare. That steadier growth path helps your capital stay invested, avoid large drawdowns, and benefit more fully from long term market recoveries. Well, it has worked for us over the last thirty years anyway. Do have a good weekend.