According to VIG Alapkezelő, the main drivers on global capital markets over the past month were the renewed acceleration in AI infrastructure investment and energy- and geopolitics-related risks stemming from the conflict with Iran. The semiconductor sector delivered strong gains while the energy price shock and rising long-term yields weakened the macro outlook and pressured broader equity segments.
Market developments in detail
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Semiconductors and AI: The investment wave behind artificial intelligence pushed the semiconductor sector sharply higher. The Philadelphia Semiconductor index stood significantly above its 200-day moving average — a deviation seen previously only in 1995 and at the 2000 dot-com peak. Analysts have repeatedly upgraded capex forecasts for AI companies, with a growing share of that spending financed by debt. Corporate results in the semiconductor and chipmaking industries consistently beat prior expectations.
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Energy and geopolitics: Tensions around Iran produced an energy price shock that worsened the macro picture: April–May inflation prints were repeatedly higher than expected. By month-end there was meaningful progress in negotiations over the Iranian blockade, but issues such as the placement of uranium stocks and transit fees through the Strait of Hormuz remained unresolved.
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Monetary policy and bond yields: The Federal Reserve’s leadership passed to Kevin Warsh, whom market participants generally view as more hawkish than his predecessor. Expectations for rate cuts have vanished and markets now consider rate hikes more likely. Rising long-term yields increasingly threaten sections of the equity market; the S&P 500 shows both extreme concentration and underperformance across the broader market.
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Japan: Quarterly GDP growth came in stronger than preliminarily reported, with exports — notably semiconductor-related goods — a key driver. The Bank of Japan’s hiking path became uncertain after a lower-than-expected 1.4% inflation reading, while long-term bond yields rose toward a near-3% historical high. Through Softbank’s exposure to OpenAI, the Japanese equity market delivered one of the best regional performances by month-end.
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South Korea and China: South Korea emerged as an indisputable winner from the AI-hardware story: the KOSPI index hit an all-time high and became one of this year’s top global performers. In China, April macro data were soft: retail sales barely expanded, industrial production missed forecasts, and car sales fell to levels not seen since 2022. The Trump–Xi summit produced agreements on agricultural and energy purchases, but no breakthrough on chips. Announcements by Alibaba and Baidu on AI chip development were well received by local markets.
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Eurozone and autos: The eurozone’s economic performance was clouded by the energy price shock: movements in the manufacturing PMI were overruled by higher energy costs, and the services sector also brought negative surprises. A June ECB rate hike has become less likely as wage dynamics remain contained. The auto sector showed a mixed picture: overall sales trended up for three months, EV markets are expanding, but Ferrari’s electric model launch triggered a notable negative trading reaction.
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United Kingdom and the region: Political uncertainty in the United Kingdom weighed on sterling after expectations around the likely resignation of Labour’s Keir Rodney Starmer; hedge funds built substantial sterling short positions. Central European markets faced dual pressure from rising global yields and high energy prices, generating risk-off moves in local assets. The Hungarian forint has strengthened by about 7% year-to-date versus the dollar, reflecting relative interest rate positioning and stabilising regional risk perceptions.
Banking and regional notes
OTP Bank reported better-than-expected first-quarter results: consolidated net income was HUF 177 billion and adjusted profit HUF 324 billion, both above consensus. Regionally, the main risk remains persistently high energy prices and their consumer and fiscal repercussions.
VIG Alapkezelő model portfolio currency exposures
The VIG Alapkezelő medium-risk, medium-term model portfolio’s current currency exposures are:
- HUF exposure: 24.9%
- EUR exposure: 33.2%
- USD exposure: 33.2%
- Other currency exposure: 8.7%
The allocation is for information only; this article does not constitute investment advice or an offer.
Conclusion
VIG Alapkezelő assesses that markets are being shaped by the interaction of accelerated technology — especially AI and semiconductors — investment and energy-driven geopolitical risks. These forces are likely to produce significant volatility and asymmetric outcomes across regions and sectors in the short to medium term.
