Rotation out of tech as the Fed chairman's remarks loom

A day away from technology

Thursday's trade in New York was shaped by rotation. The Wall Street Journal's live coverage described investors moving out of technology shares and into the Dow Jones Industrial Average and Treasurys, lifting both. By the close, the paper's summary was simpler: stocks gained as Treasury yields gave back some of their recent gains.

The pressure fell where the Journal said the risk was greatest. A separate piece that evening carried the headline that the riskiest corner of the artificial-intelligence trade is crashing into higher rates. It set the most speculative AI holdings directly against the cost of money, on the same day that money was leaving the sector.

None of this has deterred the industry's largest private names. Euronews reported that Anthropic's revenue had jumped 46% to $16.8bn, and that the company is eyeing a record $2 trillion valuation for its stock market listing. The BBC reported that the firm is wooing potential investors ahead of that debut. The courting of buyers and the selling of listed tech shares were happening in the same session, on opposite sides of the market.

London was expected to open lower on Friday. City A.M.'s early bulletin had the FTSE 100 set to dip even as tech rebounded from the sell-off, with oil on course for a weekly gain.

Waiting on the Fed chairman

The inflation data came first. CNBC reported economists saying that a hot producer price index reading showed the Federal Reserve's work is not done. The effect travelled quickly. The South China Morning Post reported that mainland Chinese and Hong Kong stocks fell as US inflation spurred concerns about further Fed tightening.

By Friday morning in Asia, markets were marking time. Gold fell as investors awaited remarks from the Fed chairman, according to the Journal. The Singapore dollar consolidated, likely aided by lower US Treasury yields.

Behind the day-to-day moves sits a larger question about American borrowing. A CNBC analysis argued that a $2 trillion deficit and 5% Treasury yields are becoming America's biggest economic challenge. Washington does not accept the gloomier version of that story. CNBC also reported that the US Treasury had dismissed a debt warning from the International Monetary Fund, along with what it called 'messy' forecasting. The two pieces ran on the same day and pointed in different directions, which is often how a fiscal argument looks before it is settled.

Higher rates cut both ways for Wall Street itself. The Journal reported that rising rates threaten the banks' trading business, which it described as the industry's golden goose.

Budget season in Westminster

The UK's data was better than expected. Sky News reported surprise GDP growth, with the economy stronger than first thought.

The fiscal arithmetic dominated the rest of the coverage. This is Money reported the IMF's finding that Britain is raising taxes at the fastest rate in the G7, and that Healey is preparing further increases after ruling out more borrowing to fund Budget giveaways. The banks believe they know where some of it will land: they told the BBC that Healey is planning a Budget tax raid on their profits. Separately, 200 business leaders wrote to the Chancellor urging a fix, once and for all, to what they called a 'broken' business rates system. On pensions, the shadow pension minister warned that Labour will 'live to regret' scrapping the triple lock. City A.M. reported that pension savers had been refunded £188m after HMRC overtaxed withdrawals, and that new inheritance tax rules will drastically change how pensions are used.

Dealmaking drew political attention too. The culture secretary, Lisa Nandy, said she is 'minded to intervene' in Sky's proposed £1.6bn takeover of ITV's entertainment arm, a story carried by the BBC, This is Money and City A.M. On the continent, Euronews reported that the European Central Bank has cleared UniCredit to take control of Commerzbank, and that Norway may open its €2 trillion wealth fund to nuclear weapons makers.

Andrew Bailey, the Bank of England governor, used the day to berate social media platforms over fraud he described as 'downright criminal and terrible'.