- Mixed outlook for global equities
- Software selloff rears its ugly head
- Intel’s bumper results give AI hardware a boost
- Meta set to cut headcount by 10%
- UK retail sales surprise, interest rate decision looms
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
Equity markets are sending mixed signals this morning, with UK markets opening lower while US futures edge higher as investors weigh fragile geopolitical progress against still-elevated energy risks. A three-week extension to the Israel-Lebanon ceasefire is offering some support to sentiment, but optimism remains cautious amid ongoing naval tensions and an effective blockade of the Strait of Hormuz. Oil prices remain firmly elevated, hovering around $100 and above in some cases, as disruption to this key shipping route continues to raise concerns about global supply and inflation. With geopolitical headlines still driving volatility – including President Trump’s order for the US Navy to target vessels laying mines in the region – markets look set to stay reactive.
US markets had a softer tone overnight, with a renewed sell-off in software stocks once again grabbing attention. Weak sentiment was reignited earlier in the week after ServiceNow’s results and softer-than-expected outlook, which brought SaaS slowdown fears back into focus, even if the read-across to the broader sector looks limited. There’s little in the numbers to suggest AI disruption is materially denting demand, but it does reinforce the sense that, after a recent recovery, investors are looking to move out of software at the first sign of uncertainty.
If software is under pressure, the natural benefactor on the other side remains AI hardware. Intel shares surged sharply overnight after a strong update and upbeat outlook, underlining just how powerful the AI tailwind remains. If there were ever a question about how early we are in the AI cycle, Intel’s turnaround tells the story – a company that looked on the ropes not long ago is now being pulled higher by the rising tide of AI demand. We think this cycle could look different, with more of the economic value accruing to the hardware layer than in previous tech waves. That said, there will still be clear software winners, and these broad sell-offs feel more like opportunities than a signal to step away.
Reports of further headcount reductions at Meta come as little surprise and, while unfortunate for all involved, should be taken as a broadly positive signal. With heavy investment in top AI talent, trimming elsewhere points to a sharper focus on the individuals driving the next leg of growth. The setup into earnings looks clear – a beat on core revenues, accelerating AI-driven growth, stable Capex guidance for 2026, and signs of operating leverage through cost control or pricing power would all support upside to expectations.
UK retail sales surprised to the upside in March, with volumes rising 0.7% month-on-month, well ahead of expectations, leaving growth at a solid 1.6% over the first quarter. Much of the strength was driven by a sharp rebound in fuel sales, alongside a lift from warmer weather and seasonal spending, but the underlying picture looks less convincing. Consumer confidence has already started to roll over and, with inflation and unemployment expected to rise from here, the risk is that this strength proves short-lived, with growth likely to stall in the coming months. That backdrop should keep the Bank of England cautious next week, and we expect rates to remain at 3.75%, but the messaging is likely to stay cautious as policymakers remain wary of lingering inflation pressures and the risk of second-round effects.
The author holds shares in Meta.
