US indices are still benefiting from their exposure to artificial intelligence

Global share prices have recovered since the lows in March this year, which were due to the US and Israeli war against Iran and the subsequent rise in energy prices. Although the Strait of Hormuz has been effectively closed for three months, investors remain optimistic about the resolution of the crisis, encouraged by Donald Trump's social media posts suggesting that a peace deal is imminent. Meanwhile, in the US, political pressure is growing in Congress to pass legislation to prevent war.

Even after the strait reopens, it will likely take months for trade routes for energy and related goods to normalize. There is also a risk that renewed hostilities and attacks on energy infrastructure could shake the financial markets. However, markets tend to look to the future, so signs of progress in the peace talks are likely to boost stock markets, which are most affected by changes in oil supply and prices. Since the start of the war, European equities have significantly underperformed their US peers, with the EURO STOXX 50® falling slightly, while the S&P 500® and NASDAQ® have gained between 10 and 20 percent in local currency terms. The US is arguably less vulnerable to high oil prices as it is a net exporter. In addition, US equity markets have continued to benefit from the surge in semiconductor demand as a result of the boom in AI investment.

The largest weightings in the Euro Stoxx 50® include ASML, a leading supplier of advanced equipment to major chipmakers, LVMH, a luxury goods giant, TotalEnergies, an energy company, and SAP, a giant in the enterprise resource planning (ERP) software industry. Despite the weak performance of shares in companies such as SAP and LVMH, the index is currently showing positive trends. Last week, the STOXX 50® broke out of a phase of price consolidation and rose above its previous three-month high of around 6,060 - 6,070 points. In recent days, however, it appears to have retested these breakout levels. If these levels hold, further price gains are possible, which could extend to the pre-war level of around 6 200. Conversely, there is downside potential to around 5 900 if support fails, e.g. in the event of unfavorable developments in the Middle East.

Apart from the ongoing peace negotiations between the US and Iran, which also involve the Israeli occupation of southern Lebanon, the most important topic is the US labor market report, which will be published on Friday, June 5. The consensus expectation is that 95,000 new jobs will be created, which is a low figure by historical standards.

On Wednesday, June 3, Swedish retailer Clas Ohlson will publish an interim report and hold a capital markets meeting. Interim reports are also expected from Inditex, a major competitor of Swedish fashion retailer H&M, and from US semiconductor company Broadcom later in the day. Volvo Cars will present its car sales figures for the period from March to May. In terms of macroeconomic news, Wednesday will be dominated by the Purchasing Managers' Index for the services sector for May from China, Sweden, Spain, Italy, France, Germany, the eurozone, the UK and the US. In addition, the producer price index for April from the eurozone will be published. In addition to the aforementioned US services PMI, ADP private employment figures for May, industrial new orders for April, weekly oil inventory statistics from the Department of Energy and the Fed's Beige Book are expected.

On Thursday, June 4, American Toro will publish an interim report. Norwegian will publish its traffic figures for May. In terms of macro data, we will start with the Swedish consumer price index for May. This will be followed by Eurozone retail sales for April. From the US, we have first quarter productivity data and weekly initial jobless claims.

Friday, June 5, is the Danish national holiday, so the Copenhagen Stock Exchange will be closed for trading. In terms of macroeconomic statistics, April household consumption in Japan and interest rate announcements in India will be released. This will be followed by the Swedish current account balance for the first quarter, French industrial production for April and Eurozone GDP for the first quarter. The most important figure of the week comes from the USA in the form of the non-farm payrolls for May (see the monthly five-year chart below).

The S&P 500® recovery remains strong, although earnings concentration remains a key theme. The index has been disproportionately driven by its largest technology companies, which have shifted from pure AI speculation to tangible corporate revenues, real infrastructure rollouts and improved corporate productivity. In addition, stabilizing interest rates and a robust macroeconomic environment in the US have boosted market confidence. From a technical perspective, momentum remains strong with the index supported by rising EMAs (9 and 20). Although the RSI has returned to overbought territory, this should not be seen as an isolated sell signal.

The performance of the NASDAQ-100 Index® was supported by monetization across the generative AI space. This was led by an increase in capital expenditure (capex) in hardware, cloud infrastructure and semiconductors. There are also early signs that enterprise software revenues are starting to increase. As long-term yields have stabilized, the headwind from the discount rate has eased. After a period of aggressive cost cutting, large technology companies have achieved high operating leverage and record cash flow. Once again, the index is finding support from below, at the rising 9-day exponential moving average (EMA) and the 20-day moving average, while the relative strength index (RSI) is reaching overbought levels.

Once again, the German DAX is lagging behind the S&P 500®, despite not having any significant exposure to technology or artificial intelligence. However, it has benefited from a stronger global manufacturing cycle, faster disinflation in the eurozone and stabilizing gas and electricity prices. However, as the chart below shows, this was not enough to drive the index to new highs. Nevertheless, momentum remains strong, with the rising 9-day exponential moving average (EMA) and 20-day moving average providing initial support in the event of a decline.

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. The Fibonacci numbers are a sequence in which each subsequent number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Convergence divergence of the moving average