Stuck at the top

César Pérez Ruiz, Chief Investments Officer Pictet Wealth Management.

The week in review

The US and Iran neared an interim agreement to extend their ceasefire for 60 days and reopen the Strait of Hormuz, but neither country’s leader signed a deal. The US defence secretary said President Donald Trump would remain “patient”.

Market hopes that an agreement will be clinched and enthusiasm for artificial intelligence (AI)-related stocks powered the S&P 500 [1] 1.4% higher. The blue-chip index has risen for nine consecutive weeks, the longest winning streak since 2023. Micron Technology ’s market valuation rose above USD 1 tn on AI-driven demand for its memory chips. In a fresh sign of corporate AI adoption, Starbucks is tying 25% of its tech workers' bonuses to how much they are using AI. Anthropic raised USD 65 bn in a funding round, bringing its value to USD 965 bn ahead of an expected public listing.

The AI excitement met some resistance. Pope Leo XIV called for stronger ethical safeguards. China began scrutinising stock rallies fuelled by AI, asking some listed companies to clarify whether their core businesses have any meaningful link with the technology.

Also in Asia, China launched a crackdown on offshore assets. The yuan nonetheless continues to appreciate – up for six consecutive quarters. In Japan, the prime minister announced a supplementary budget of just over USD 19 bn to combat rising living costs.

Quote of the week

The European Commission said dialogue with China will continue but added: “As economic and security interests become ever more intertwined, both dimensions will require a more robust and coherent response.” The Commission launched an investigation into a Chinese e-commerce group’s bid for a German retailer over possible state subsidies.

Key data

In the US, core personal consumption expenditure (PCE) inflation data for April showed an increase of 0.24% month-on-month in April and a 3.3% rise year-on-year, up from 3.2% the prior month.

Tokyo’s core inflation rate slowed to 1.3%, the lowest in four years, as government subsidies eased pressure on households.

The French economy shrank by 0.1% in the first quarter. European Central Bank officials nonetheless appear to be moving towards raising interest rates in June.

[1] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month returnin USD): 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%; 2025, 17.9%.