Please see below the daily update article from Brooks Macdonald, received this morning – 17/07/2026:
What has happened?
Global markets moved onto a more defensive footing, led by a sharp reversal in the AI and semiconductor trade. US markets fell yesterday, with Nasdaq weakness more pronounced and Asian markets sold off heavily overnight, with chip-related names under pressure. The move came despite generally resilient US economic data, including lower jobless claims, steady retail sales and a strong Philly Fed manufacturing print. However, higher oil prices, renewed US-Iran escalation and more hawkish Fed commentary have revived concerns that inflation may prove stickier than hoped.
AI in focus
The standout theme is the market’s reassessment of AI-related expectations. TSMC’s results were strong, with upgraded revenue and capex guidance, but investors focused instead on elevated expectations, rising investment requirements and whether AI infrastructure spending can continue to justify valuations. Alphabet’s reported delay to Gemini 3.5 Pro and Netflix’s after-hours weakness added to the pressure on large-cap technology. At the same time, China’s Moonshot Kimi K3 model has sharpened the debate around lower-cost, open-source AI competition, reinforcing the idea that the AI story remains powerful but increasingly contested.
What does Brooks Macdonald think?
The latest moves look less like a broad macro shock and more like a valuation and positioning reset in the most crowded parts of the market. Encouragingly, US market breadth was positive, with many cyclicals, defensives and healthcare names outperforming even as mega-cap technology weighed on headline indices. That suggests risk appetite has not disappeared, but leadership is becoming more selective. For investors, the key question is whether strong growth data and AI-related capex can continue to offset higher oil prices, geopolitical uncertainty and a less dovish central bank backdrop. Near-term sentiment may remain fragile, but a broader rotation would be healthier than a market reliant on a narrow group of AI winners.
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Andrew Lloyd
17/07/2026