Equity markets continued to haemorrhage, triggered by fears, over the overvaluations of AI shares. The valuations are astronomical, with some companies trading, over 200 times future earnings. The correction is underway, but the question is how deep and how long? The US Government shutdown is beginning to impact others, outside of Washington, with flight cancellations due to shortages of Air Traffic Controllers. It has impacted markets too, through the thin economic data availability, as with the failure to release the important Non-Farm Payrolls last Friday. The Challenger Jobs report indicated big cuts to jobs, but could not be confirmed by the missing NFP’s, driving uncertainty. The US Dollar traded flat, with the EUR moving back towards 1.1600, while the GBP pushed above 1.3150.
Trade exposed countries are suffering market uncertainty, despite the softer reserve, unsettling the commodity currencies. The AUD has slipped back below 0.6500, while the NZD, may test the downside of 0.5600. This coming week punters will be watching AI shares closely, but also key US economic data including Retail Sales and inflation.
