Markets are reacting to a confluence of pressures as geopolitical tensions persist, with Brent crude prices hovering above $110 a barrel. Investors are increasingly skeptical of optimistic narratives surrounding a potential resolution to the ongoing conflict, leading to a sell-off in risk assets. The UK government’s inaction on fuel duties is exacerbating the situation, causing yields on UK Gilts to surge and raising concerns about inflation and borrowing costs.

Tech stocks are facing their own set of challenges, with significant declines in major players like Meta and Nvidia. Factors such as a shift in AI demand from GPUs to CPUs and a court ruling against Meta are contributing to a broader sell-off in the sector. The Nasdaq is down nearly 3% this week, reflecting a market increasingly wary of tech’s long-term growth prospects amidst rising interest rates and economic uncertainty.

As we approach the Easter holiday, the prevailing sentiment suggests that investors are bracing for continued volatility. The combination of geopolitical instability and domestic policy inaction could lead to further declines in both equity and bond markets, particularly affecting UK-focused firms and tech giants.

Source: xtb.com