Hi ,

A quick update on what is happening in markets and what I'm watching from here.

1. What is happening now

Markets are still being supported by strong company profits, especially from AI, data centres and technology spending.

But at the same time, inflation has started to pick up again in several countries, and some central banks have already raised interest rates.

So the picture is mixed: Companies are still doing well, but the environment is becoming less comfortable.

2. What is affecting it

The biggest issue now is energy.

Problems around the Strait of Hormuz have disrupted oil and fuel supplies. Shipping and insurance costs have also risen sharply.

That can create a chain reaction:

Higher oil prices → higher business costs → higher prices → interest rates stay high

Higher interest rates also make savings and bonds more attractive, which can put pressure on expensive shares.

At the same time, markets are relying heavily on continued AI spending. If companies start spending less on AI infrastructure, some of the strongest-performing technology companies could disappoint investors.

3. What needs to change

For the outlook to improve, I would like to see:

• Oil and energy prices settle down

• Inflation start falling again

• Interest rates become less of a concern

• Company profits remain strong

• AI spending begin producing enough real profits to justify the money being invested
  

AI may still change the world, but even major technologies can go through periods where too much money is invested too quickly.

4. What I am watching

The main things I'm watching now are:

Oil prices. Inflation. Interest rates. Company profits. AI spending.

I'm also watching whether markets become less dependent on a small number of very large US companies.

Another longer-term issue is growing competition between the US, Europe and China for important resources such as copper, cobalt and other minerals needed for batteries, electricity and data centres.

5. What can happen from here

There are broadly three possibilities.

Better case:
Oil settles down, inflation falls and company profits stay strong. Markets can continue rising.

Middle case:
Inflation stays higher and interest rates remain high, but companies continue making money. Markets may still rise, but with more ups and downs.

More difficult case:
Energy prices stay high, interest rates remain high and company profits disappoint. That is when the risk of a larger market fall increases.

What does this mean for us?

I don't think the right approach is to try to guess exactly when markets will rise or fall.

The more important question is:

If the future does not turn out exactly as expected, is the portfolio still able to cope?

That is why I continue to focus on spreading risk, avoiding too much dependence on one market or sector, and making sure each part of the portfolio has a clear purpose.

For now, there are still good reasons to remain invested.

But there is also less room for things to go wrong, so portfolio discipline matters more.

Warm regards,
Zest

Executive Wealth Consultant | Associate Estate Planning Practitioner |

Licensed General Insurance Advisory

DISCLAIMER;

This message contains privileged and confidential information from Infinity Financial Advisory Pte Ltd. If you are not the intended recipient of this electronic message, please do not disseminate, copy or take any action in reliance on it. We request you notify us immediately before deleting this message. Any views expressed in this message or attachment/s are those of the individual sender and are not necessarily the views of the company. Infinity Financial Advisory Pte Ltd uses virus scanning software and while due care and attention is taken; the company excludes all liability for any loss or damage caused whether directly or indirectly by any computer virus or other defects transmitted with any email and any attachment(s), to the extent permitted by law. It is sent on the strict condition that the user carries out and relies on its own procedures for ensuring that its use will not interfere with the recipient's systems including but not limited to scanning this email and any attachment(s) for viruses and defects before opening or sending them on. The recipient assumes all risk of use and releases the sender from all responsibility and liability for any direct or indirect consequence of use.