Global Markets Face AI Boom or Oil Shocks

World markets are currently in a state of tumult, balancing the optimism surrounding an AI boom with the significant risks posed by oil shocks stemming from the United States-Iran conflict and potential interest rate hikes. Global equities have experienced extreme volatility, hitting an all-time peak before suffering their worst day in months, largely influenced by Donald Trump's rhetoric regarding Iran and the uncertain reopening of the Strait of Hormuz. Investors like Florian Ielpo of ARM Investment Managers are closely watching oil prices, with sustained prices above $95 potentially leading to a stagflation outlook. The articles highlight increased correlations between interest rates, inflation, oil, and tech investments, making it harder for investors to find safe havens. Economies like Taiwan and China are benefiting from AI-driven tech spending, while others like Germany and India face energy supply scares. Asset managers, including those from Amundi, Invesco, Edmond de Rothschild Asset Management, and Carmignac Gestion, are implementing various hedging strategies, such as buying volatility derivatives and inflation-linked debt, to navigate these uncertain conditions. The S&P 500 has shown rapid swings, and bond market volatility is elevated, reflecting widespread investor caution.