When market optimism turns to scepticism

With the hype surrounding artificial intelligence still going strong, record valuations, a central bank undergoing change and a new dynamic in the financial markets, Bryan Ferrari has brought together three experts from Spuerkeess to analyse the first half of 2026.

Julien Ensch is Head of Client Relationship Management.

Julien Kohn is Investor Relations Manager.

Nick Huberty is a Sales Trader.

Together, they analysed why semiconductors are dominating the AI markets, the roles played by gold, energy and Japan in current developments, and the impact of decisions taken by central banks in Europe and the US.

Bryan Ferrari: To analyse the first six months of 2026, let's start with expectations. What had the markets predicted, and were they right?

Julien Ensch: We had a start to the year similar to the previous six years, when we were generally all optimistic. Then, after a few months, things took a different turn. We'd assumed we'd see good growth overall – particularly in America, slightly less so in Europe, but still solid – and inflation under control. That was indeed the case at the start of the year. But, as we now know, things turned out a little differently…

Bryan: The first two months made a particular impression on me. Investors tended to turn to anything but the US.

Julien Ensch: That's right. AI-related stocks were performing well, and some issuers became wary. They thought to themselves, 'Right, we need to diversify a bit more, and perhaps now is the time to increase our exposure to Europe.'

Bryan: Then we had a favourable tailwind in terms of currency. A weak dollar, forecasts suggesting there would be plenty of oil… But in the end, things turned out differently.

Julien Ensch: That's true; we were really in a situation where our investors could take risks and be optimistic. That was also reflected in the performance over the first two months. I think that, on the whole, the performance over the first two months wasn't bad at all.

Nick Huberty: At the start of this year too, despite pressure on interest rates, gold and silver became speculative assets rather than safe havens. They experienced a period of extreme volatility. These metals are now moving in tandem with the stock markets, which wasn't the case before.

Bryan: Copper, another metal, is still close to its all-time high. It's no longer a proxy for interest rates, but it is a proxy for AI.

Julien Kohn: We need copper in everything. So it's no surprise that it's the metal that continues to perform well. Copper is difficult to mine. It's always the same story. Demand is rising, supply is struggling to keep up and, as a result, the price remains where it is. In the current climate, with the rise of artificial intelligence, this makes sense. Can it carry on like this? As we've seen with gold and silver, the tide can turn. All these shiny, attractive assets – they too could end up hurting us one day.

Bryan: Let's talk about excess and madness… SanDisk and Micron – which virtually no one had in their portfolio – and the Korean memory companies, which came out of nowhere, have posted returns ranging from 100 to 500 per cent…

Nick: Demand for these companies is currently skyrocketing. What happened was that production capacity was no longer sufficient to manufacture semiconductors, so it had to be expanded to include other players. Among them is one that has since become a trillion-dollar company. Yet this is a company that, as recently as two years ago, was making losses. It is extremely volatile, not only in terms of turnover, but above all in terms of its net profit. At the moment, things are booming, but it's an extremely cyclical business.

Bryan: Those who argue that the memory cycle has changed say that contracts are now being signed for extremely long terms. Micron, for example, has signed a ten-year contract with NVIDIA. Samsung is doing the same. Consequently, they say the business is less cyclical. But that doesn't mean you can't walk away from that contract the day things take a turn for the worse.

Nick: That was precisely my next point. These contracts, including chip orders, work a bit like the bond market, where most players, if they want to secure an allocation of five million somewhere, place a much larger order. That's a reality. For semiconductors, it seems to be similar. Simply out of fear of not getting the chips quickly enough in the short term, we place orders that can be cancelled relatively quickly. At the same time, over the last few weeks I've been looking back at the situation in the 2000s, when internet traffic was expected to double every three months, to see what happened back then. There comes a point where, at such high valuations, even a slight dip in order books is enough to trigger a collapse driven by massive sell-offs. We must therefore be cautious because, at the moment, we are extrapolating the immense growth we have seen recently into the future. The stock market always overreacts, whether it's going up or down.

Bryan: What lesson should listeners take from all this? Because it's difficult these days to invest passively without holding any shares in one's portfolio. If we look at emerging markets, such as South Korea or Taiwan, and their indices, the outperformance comes from just three or four companies.

Julien Ensch: Emerging markets also include China. A large proportion of emerging market indices is now made up of major Chinese tech stocks linked to AI. I think everyone is aware that the party will only last as long as these companies' profits remain strong. No one knows how long they'll stay strong. That's causing a certain amount of nervousness. We've seen it over the last few days. Sometimes all it takes is a single announcement and it results in a 15 per cent drop.

Bryan: You said that things can change quickly… Things have changed at the Fed too. Jerome Powell, the former chair, has been replaced by someone else, who was also chosen by Donald Trump. However, Jerome Powell is still on the committee.

Julien Ensch: Trump wasn't a big fan of Jerome Powell; he wasn't particularly keen on his monetary policy. He would have liked to see lower interest rates in America. Consequently, there was some concern that the new nominee would be someone who would go along with Trump's wishes. That's probably why Powell insisted on staying on a little longer. However, we can see, for the moment at least, that this really isn't the case. This new nominee isn't toeing Trump's line at all. We'll see how long this pleases Trump. So far, he hasn't commented on the matter, but if things carry on like this, I don't think it will last much longer.

Nick: It's a matter of time. Kevin Walsh has historically never been a fan of an extremely accommodative monetary policy.

Bryan: Monetary policy is set to remain an interesting topic. Here, Ms Lagarde said last week that she no longer sees any need to take action. But accommodative monetary policy has nonetheless led to a great deal of speculation. For example, through phenomena such as leveraged ETFs on individual shares. You can buy a triple-leveraged ETF on Tesla, on SK hynix…

Julien Kohn: Or twice SpaceX now!

Bryan: Twice SpaceX… That one was launched on the very day the IPO was priced. You could go twice long or twice short on SpaceX. That should give us pause for thought, shouldn't it, this leverage…

Julien Kohn: My personal view is that you need to know whether you really want that. Obviously, these are gambles. They come at a cost and can also, in the long run, end up causing problems. That's why, personally, I'm not a big fan. If you have a genuine conviction, if you believe in a company, you should buy the shares and take a long-term view, hoping that profits will rise. If profits rise, the share price will follow suit. But using leverage is highly speculative.

Bryan Ferrari: We've been talking about semiconductors. A return to normality seems to be taking shape in Japan, where the central bank is starting to raise interest rates following an extremely accommodative monetary policy. We're seeing increased activity in the mergers and acquisitions sector. Companies are struggling to find buyers. How do you view Japan? Because it's a market in which the average investor, after 20 years of poor returns, holds relatively little in their portfolio.

Nick: That's true. After five years of higher inflation, Japan is on the path to normalisation. Short-term rates are still relatively close to zero, but the Japanese 10-year government bond now offers a yield of between 2 and 2.5 per cent – levels not seen in Japan for an age. The question is whether a structural rebound in their economy, with structurally higher growth figures, is possible over the next ten years.

Julien Kohn: From a macroeconomic perspective… Their demographic trends are not at all in their favour. Immigration is not particularly high either – in fact, it's virtually non-existent. In the long term, they simply lack the factors that would contribute to rising inflation. So why would a central bank raise interest rates so sharply? That's already a good sign. Now, if we look at their companies, there are a huge number of names that are capitalising on the key themes of the moment. That, combined with the fact that these companies are trading at lower valuations than many European or US companies, makes this market relatively attractive.

Bryan: Japan is an alternative to the US or China. But within the MSCI World index, Japan accounts for between 8 and 10 per cent. That's still not much, so that leaves us with Europe. In a way, Europe – which is anti-AI – is currently benefiting from the fact that it doesn't have much AI and that oil prices are falling. But valuations aren't exactly cheap either…

Nick: It depends on the sector. Companies where there's less uncertainty are definitely not cheap. What's still cheap is everything to do with consumer stocks, whether in the mid-price range or even the high-price range.

Julien Ensch: What's also very interesting in Europe is that we're seeing a real regional divide. We've actually been talking about this for a few months, or even almost a few years, now. Northern Europe isn't performing as well in terms of growth, whilst the South is doing better. This has been reflected in performance figures since the start of the year. The DAX, for example, is slightly up. But if we look at the Spanish or Italian indices, we can see that they have risen by more than 10 per cent since the start of the year. We are therefore seeing a regional divide that can be explained by the fact that countries such as Germany and France are facing structural problems, particularly with regard to spending, especially given the impact of the war in Iran. On the other hand, we have the southern European countries, which are far less affected by this war because they have invested in renewable energy.

Bryan: Let's move on to the highlight of this quarter: IPOs, which have picked up again. The biggest IPO in history took place a few weeks ago with Elon Musk's SpaceX.

Julien Kohn: Elon Musk is a genius. There's no other way to put it. It was perfectly timed. For a long time, his company didn't mention AI. Then, all of a sudden and for a few months, he started talking about it non-stop, saying he was going to create the biggest business model of the coming decades… and that, of course, is when he launched his IPO – and what's more, in a market that's jumping headlong into the AI trend. It was absolute madness. It remains to be seen whether this is good for shareholders. Because it's worth remembering that, to date, this is a company which, apart from Starlink, isn't really profitable, yet is trading at an exorbitant valuation.

Bryan Ferrari: Elon Musk also got investors' hopes up by telling them we were going to build data centres in space. Given that in the US there's a huge amount of opposition because people don't want data centres in their back gardens, all this storytelling is sensational.

Julien Kohn: The idea itself is sensational; we just need to see if it actually works and if it's profitable. That's the big question.

Julien Ensch: Well, it's not going to happen overnight. It'll take a while to get there. That's where it starts to get a bit complicated. Maintaining such a high valuation until the business is actually profitable seems difficult to me.

Julien Kohn: As far as IPOs are concerned, what we're also seeing are share buybacks – that is, shares that the companies themselves are buying back. This means that, for the first time, we could see more shares coming onto the market than are being taken off it. Historically, in recent years, this has always helped to stabilise the market. I'm curious to see how the market will react this time.

Bryan: What shocks me most about all these IPOs is the lack of respect for the indices. The index providers – S&P being the exception – have caved in and simply said, 'We're includingSpaceX…'

Nick: How did that go? When you want to please someone, you do that sort of thing. I don't view this favourably. The rules governing whether a company that's just gone public can be included in a stock market index have only just been changed… and as we're investing more and more passively via ETFs, this has a much greater impact. At S&P, a company must have been listed for a year, be large enough and meet other criteria before it can be included in an index. SpaceX is large enough, but there are a huge number of index providers – including the Nasdaq, for example – which have now changed these rules and made them more flexible.

Bryan: Let's hope it doesn't go wrong. But Anthropic and OpenAI will probably enjoy the same benefit, won't they?

Nick: Given that all these rules have changed, yes, they'll benefit from it too.

Bryan: I'd like to say, 'Thank you, S&P and Dow Jones, for standing your ground.' The rules must stay as they are. Because now, this means that an investor who wants to buy without complicating their life, whilst being sure they won't have SpaceX in their portfolio, must either buy an actively managed fund that invests based on valuation criteria, or buy an S&P index fund. Anyway, let's look to the future… Is it worth trying to imagine what tomorrow will look like?

Nick: No, because that would be wrong. Predicting the index is extremely difficult because it depends on 30 companies across the globe. Economically speaking, the fact that monetary policy is tighter is, of course, not necessarily a positive thing. Nevertheless, it has to be said that we're currently in a much better position than we were a few months ago. Apparently, the US consumer remains strong. Discretionary consumption seems to remain healthy, at least in the United States. In Europe, we do not yet have any figures. We will know more when all the major companies, particularly European consumer stocks, publish their results in late July or early August. But it may well be that the second quarter wasn't actually all that bad after all, with the bulk of the damage apparently affecting car manufacturers, as registration figures are under pressure almost everywhere. One area where Europe is certainly benefiting is from tourism from the Middle East, where visitor numbers have risen. But we'll know more once the second-quarter results are in. Finally, the big unknown ahead is semiconductor orders. If they were to start falling, even if only marginally… If, instead of ordering 100 units, only 90 were ordered, how would the markets react? No idea.

Julien Ensch: Unfortunately, there's another dimension to consider. That's the political dimension. Nobody has the faintest idea what else is in store for us. Trump has already told us 39 times over the last three months that he'd reached an agreement with Iran. He changes his mind every day and we don't really know what ideas he's still harbouring. Then there are also the mid-term elections in the US this year. Has he already written off these mid-terms or not? We don't really know that either.

Bryan: I saw this morning that the price of a gallon of petrol in the US has dropped back below five dollars. That means Americans, who use huge amounts of it, have already forgotten that there's currently a war going on in Iran.

Julien Kohn: The World Cup has also calmed people down a bit.