Five Things to Start Your Week

Good Morning Investors,

Our Alpha Portfolio is at +7.19% YTD.

• Leading: Silver at +28.65%

• Lagging: Agilent Tech at -3.9%

Market Snapshot

Global markets reveal a sharp rebound in the technology and financial sectors, driven by optimism in semiconductors and stable growth in financials.

In technology: TSMC leads the global rally, soaring 10%, fuelled by heightened demand for AI-driven chips, with ASML (+8.45%) closely following, benefiting from its pivotal role in advanced semiconductor manufacturing.

In financials: MUFG (+2.47%), ICICI Bank (+3.71%), and HDFC Bank (+3.45%) reflect strength across Asian banking markets, supported by a favourable interest rate environment and economic resilience.

In Europe, SAP climbs 4.71%, signalling robust performance in software and cloud solutions. Meanwhile, AstraZeneca (-5.76%) and other pharmaceuticals underperform, indicating potential profit-taking or sector rotation out of healthcare.

• Divergence in the UK, where HSBC (+1.80%) sees gains, while AstraZeneca (AZN) suffers a 5.76% drop, reflecting a broader drag in the pharma sector.

The energy sector is seeing moderate gains, with BHP (+2.92%) and Vale (+3.87%) reflecting resilience in commodity prices and global demand for natural resources.

Macro Trade Idea

Try the barbell strategy by going long on semiconductors and financials, while shorting pharmaceuticals:

• Long on TSMC (+10%) and ASML (+8.45%) to ride the tailwinds of increasing AI and chip demand, supported by the global tech recovery.

• Long on financials, particularly ICICI Bank (+3.71%) and MUFG (+2.47%), given their strong regional positions and potential for continued growth in emerging markets.

• Short AstraZeneca (AZN: -5.76%) to hedge against weakness in the pharmaceutical sector, where recent underperformance could signal sector rotation or slowing growth.

Dollar Drops

Traders kicked off a big week for markets by selling the dollar, with Bloomberg’s gauge of the currency dropping Monday to its lowest level in more than eight months. The move was driven by strength in the yen, which touched the highest since July 2023 amid speculation this week’s slew of central bank decisions will lead to a narrowing interest rate differential between the US and Japan.

This Week’s Alpha Picks
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We have 9 new stock picks this week and are selling 7 from last week

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Steady Stocks

Still, stocks started the week in a muted fashion, with Europe’s benchmark Stoxx 600 index and US equity futures keeping to narrow ranges after handy gains last week. There was little reaction in markets to news of a second attempt to assassinate former President Donald Trump. Shares of Trump Media & Technology rose as much as 10% in premarket trading after the candidate said he has “absolutely no intention of selling” his stake when a lockup expires this week.

Newsworthy

This is what’s caught our eye over the weekend.

• US crackdown on cheap Chinese goods adds to Temu, Shein woes.

• UK home-sellers raise asking prices at twice the usual pace.

• HSBC’s new CEO gets busy with $2 billion in costs still to trim.

• China’s deepening slowdown tests Xi’s tolerance for growth miss.

• UK moves to shut down London firm in Iran oil kingpin’s network.