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In a turbulent week, worries about the US war in Iran took a backseat with the future of AI in the spotlight again.

Tuesday’s tech sell off was sparked by concerns about valuations (seven tech companies currently make up 30% of the US’s main index’s value), high capital expenditure plans, the prospect of higher US interest rates, and some profit taking. SpaceX’s announcement that it’s looking to raise $20bn in a bond sale restarted the conversation around the massive cost of AI spending. The downturn spread across to Asia sending South Korea’s main index down 9.99%, its biggest drop in three months.

So far, the twenty-twenties has been characterised by a series of demand and supply shocks that have exposed the fragility of the old global order. The Covid pandemic, “Liberation Day” and conflicts like the Russia–Ukraine war and US-Israeli strikes on Iran have all had a major impact on trade and economic norms. Many countries are increasingly prioritising self-interest over multilateral coordination, with a growing group of “middle powers” looking to work together to face this new political environment. The result is a global economy that is becoming divided along more segmented strategic lines…

As I write this morning, Prime Minister Sir Keir Starmer has just announced his resignation. Following Andy Burnham’s resounding victory in the Makerfield by-election last week, he is expected to take over the reins. This week we’re likely to find out whether he’ll have to fight a full leadership contest or be elected PM without challenge. Potential contender, Wes Streeting has already come out and backed Burnham, simplifying Burnham’s path to number 10.

In the weeks and months ahead, investors will be keeping a keen eye on who Burnham appoints as Chancellor, any plans to deviate from the current fiscal limits, and whether he can repeat his Manchester growth story on a national level…

In spite of the conflict in the Middle East, equity markets and risk assets delivered strong returns. The mood music seemed to be that a resolution was strongly favoured by both sides, but the conflict continued to roll on past its 100-day anniversary. Outside of this, markets were generally buoyed by the euphoria around artificial intelligence (AI) investments coupled with some strong fundamental earnings from many corporates in the US. “Magnificent Seven” firms, Amazon, Alphabet and Microsoft all demonstrated returns from their AI investments as their computing units benefited from the intense demand for AI infrastructure…

Investors drew a collective sigh of relief last night after Pakistan’s Prime Minister Shehbaz Sharif announced a deal between the US and Iran to end the conflict in the Middle East. Sharif said both sides had agreed to “the immediate and permanent termination of military operations on all fronts, including Lebanon”.

However, the situation in Lebanon could jeopardise the signing of the deal. Israel’s Defence Minister, Israel Katz, says the IDF plans to stay in Lebanon “without time limits”, whereas Iran’s Foreign Minister, Seyed Abbas Araghchi has said today that a “complete halt” to Israeli attacks in Lebanon is required. Under the deal…

US President Donald Trump is set to meet leaders of major AI companies this week to discuss the US government investing and becoming a stakeholder. Former Democrat leadership candidate, Bernie Sanders, has been on the road in the last few weeks proposing a government run wealth fund which would take a 50% stake in major AI companies, and Trump didn’t completely dismiss Sanders’ plan when asked, “Where economics are concerned, we have things that aren’t that far apart.” Trump’s comments come as Elon Musk’s SpaceX kick off the AI-IPOs on Friday. SpaceX has set a valuation target of $1.75tn. The company is trying to raise $75bn, nearly three times the amount raised by Saudi Aramco in 2019…