Latest / Best of Business / Jeremy Hutton: Milford Asset Management expert on the stock market turning around in April

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Jeremy Hutton: Milford Asset Management expert on the stock market turning around in April · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk ZEDB. Follow
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  Speaker 2: Jeremy harton Milfit Asset Management.
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  Speaker 1: Is with us.
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  Speaker 2: Hello, Jeremy.
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  Speaker 3: Good evening, Heather Er, I'm well.
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  Speaker 2: Thank you.
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  Speaker 1: Now.
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  Speaker 2: March and April on the US stock market were two
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  Speaker 2: really contrasting stories were that was a pretty remarkable turnaround.
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  Speaker 3: Yeah. Justin March, the market reaction was all pained from
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  Speaker 3: the Iran shock. You had oil prices surging, inflation returning,
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  Speaker 3: and interest rate expectations moving higher, and that's a pretty
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  Speaker 3: poor backdrop for equity markets. And we saw the US
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  Speaker 3: market down. The SMP five hundred at one point was
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  Speaker 3: down over ten percent. So Michael was feeling a bit nervous.
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  Speaker 3: Then we got to April and it was a much
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  Speaker 3: much better story, and the market started anticipating that Trump
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  Speaker 3: wanted away out of of the Iran quagmaia. We got
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  Speaker 3: the two week ceasefire announced on April the seventh, and
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  Speaker 3: that really triggered a pretty remarkable rally in the market,
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  Speaker 3: and within a week it was back to all time highs,
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  Speaker 3: and then the rally extended a bit further into the
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  Speaker 3: end of the month, we had the strong earnings from
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  Speaker 3: some of the US companies, and the SMP effectively gained
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  Speaker 3: twelve and a half percent from the lows intra month.
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  Speaker 2: So explain to me what's happening under the surface, chair meet,
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  Speaker 2: because it looks like the AI narrative is gathering even
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  Speaker 2: more steam.
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  Speaker 3: Yeah, it's true. I mean the mag seven AI tech stocks,
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  Speaker 3: I mean they've contributed contributed a large portion of the
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  Speaker 3: rally during April alone, in Vidio was up twenty two percent,
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  Speaker 3: Googled twenty one percent, and Amazon twenty four percent. And
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  Speaker 3: these are pretty remarkable shifts for huge companies and has
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  Speaker 3: has created a lot of value. And given there such
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  Speaker 3: large proportions of the SMP index, I mean, they're going
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  Speaker 3: to drive the performance up by themselves. But what was
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  Speaker 3: most interesting to me was if you look at the
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  Speaker 3: largest percentage gains on the index, it was actually the
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  Speaker 3: data center and infrastructure AI infrastructure rally, so not just
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  Speaker 3: the models themselves. So I suppose that AI benefit moving
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  Speaker 3: into secondary areas as well.
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  Speaker 2: So are we seeing do you think of broadening out
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  Speaker 2: of the AI rally?
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  Speaker 3: Yeah, Effectively, investors are betting on some of the physical
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  Speaker 3: hardware that goes into these data centers as a very
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  Speaker 3: hot player right now. The market is calling it the
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  Speaker 3: picks and shovels layer of the AI buildout. So it's
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  Speaker 3: effectively this physical hard stuff that's required to build all
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  Speaker 3: these things. So this is infrastructure. It's mainly semiconductors, chips
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  Speaker 3: or computer equipment, and it's also called old world businesses
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  Speaker 3: like electricity, commodities, copper and all of these themes really
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  Speaker 3: really strongly as well in April, and so some of
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  Speaker 3: these older world businesses, they're almost now being perceived as
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  Speaker 3: structural winners in what's turning into potentially one of the
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  Speaker 3: largest CAPEX events in financial markets history.
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  Speaker 2: Okay, so what is the outlook from here? I mean,
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  Speaker 2: there are risks obviously, both to the upside and the downside,
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  Speaker 2: right yeah.
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  Speaker 3: I mean, one can argue that markets have gone back
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  Speaker 3: to their trend, which is hard to do if you
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  Speaker 3: can ignore some of the volatility in March and April
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  Speaker 3: when and we did have some very strong earnings from
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  Speaker 3: the Q one numbers that have been coming out for
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  Speaker 3: US companies over the past two weeks. But I would
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  Speaker 3: just comment that these earnings are only to March and
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  Speaker 3: may not be fully capturing in some of the Middle
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  Speaker 3: East disruption, and they are assuming a relatively clean resolution,
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  Speaker 3: and we know that it's extremely messy over there. So
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  Speaker 3: to the extent that that's not the case, then there
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  Speaker 3: could be some downside. But then on the upside, I mean,
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  Speaker 3: as I mentioned earlier, there's a huge economic stimulus coming
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  Speaker 3: from this AI capex. You've had the recent surge and
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  Speaker 3: clawed revenues, which is helping answer some of the curly
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  Speaker 3: questions that investors had on how sustainable is this AI spend.
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  Speaker 3: And then we do we do have the further earn
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  Speaker 3: it huge earnings tonight with my Rosoft, Google measure and
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  Speaker 3: Amazon reporting, So you know, I think their comments on
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  Speaker 3: AI and the outlook is going to be the next
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  Speaker 3: litmus test for any moves and markets going forward from here.
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  Speaker 2: Thank you very much Jeremy for talking us through Jeremy
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  Speaker 2: Hutton more Ford Asset Management.
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