From the studio

Podcast: (7 min)
Podcast: Investors Club: CIO’s Tan Teck Leng on our revised EURUSD forecasts and more (11 min)

Thought of the day

Global equities notched another record high on Monday, with the S&P 500 breaking 6,300 for the first time. The Magnificent 7, a group of top US growth and tech firms, posted a 9th consecutive gain, the best run since 2023. This comes ahead of results on 23 July from Alphabet and Tesla. Investor sentiment was buoyed by an encouraging start to the second-quarter earnings season, and there appears to be a respite in US President Donald Trump’s tariff threats in recent days as trade negotiations continue.

We expect market volatility to pick up in the lead-up to the 1 August tariff deadline, with threats to Federal Reserve independence and geopolitical uncertainty lingering in the background.

But we also believe near-term market swings offer investors an opportunity to build exposure to our Transformational Innovation Opportunities (TRIO) of Artificial intelligence, Power and resources, and Longevity, as innovation remains key to long-term equity gains.

Rising AI monetization should continue to drive robust earnings growth. Despite a 7% average earnings per share (EPS) beat, the share prices of tech companies that have already reported have declined by 5% on average post-earnings. This reflects investors’ heightened expectations, in our view, especially following the strong market rebound over the past few months. But while we expect volatility ahead amid potential semiconductor tariffs and AI-related restrictions, our conviction in AI remains intact. Global AI capital spending is on track to grow by 60% this year and another 33% in 2026 to USD 480bn, based on our forecasts, and monetization trends have been encouraging with rising AI adoption. In fact, rising use cases across industries suggest overall AI adoption is far from a peak. We continue to advocate for balanced exposure across the AI value chain.

Power and resources companies are well positioned to capitalize on surging electricity demand and the global energy transition. Global electricity consumption is accelerating, increasingly overcoming the mitigating effect of efficiency gains that kept a lid on power generation and grid infrastructure needs in recent decades. According to forecasts by the International Energy Agency, electricity use is projected to grow at nearly 4% annually through 2027, equivalent to adding more than Japan’s entire consumption each year. This robust trajectory for demand is not only encountering constraints on new electrical infrastructure, but also the reality that much of the existing foundation is approaching or past end-of-life. Roughly 40% of Europe’s distribution grids are more than 40 years old, 70% of transmission lines in the US are more than 25 years old, and the average US nuclear power plant is operating beyond its initial 40-year license. We believe investments along the electrification value chain will remain critical.

Longevity is supported by demographic shifts and innovation in health care, medtech, and wellness. While tariff uncertainty re-emerged for US pharmaceutical imports after President Trump threatened tariffs of up to 200% on imported drugs, large-cap pharmaceutical firms have already announced significant capital investments in US manufacturing, and research and development. A potential 12- to 18-month transition period has alleviated the immediate risk of sudden levies, and markets appear to have viewed the rhetoric as more of a negotiating tactic than imminent policy. We continue to expect a rapidly expanding longevity market, with health care, wellness, and related sectors poised to capture a growing share of global profits as populations age.

So, we expect our TRIO themes to offer durable, secular growth that we believe can persist well beyond short-term market volatility. In addition to direct exposure to these opportunities, investors can also consider structured strategies for more defensive positioning.