BlackRock Investment Institute shifted from overweight to neutral on US equities due to increased market volatility.
BlackRock Analysts remark in new market commentary that the shift is rooted in expected macroeconomic policies.
“Higher interest rate expectations could negatively impact the market – and small caps in particular. We maintain our overweight in companies that benefit from the AI mega-power.”
The financial giant also switched from overweight to neutral on Japanese stocks.
“Japan’s exposure to imported energy could undermine strong stock gains, driven by healthy corporate balance sheets and governance reforms.”
Over a six- to 12-month period, BlackRock analysts note that they favor investments in AI infrastructure and equipment suppliers, arguing that they “will benefit regardless of the winners or losers.”
“We are particularly supportive of what we call ‘electrotechnology’: batteries, power electronics and electric motors that are at the heart of AI, energy, infrastructure and defense. AI doesn’t just drive demand; it strengthens the links between energy, technology, utilities and infrastructure, increasing electricity consumption and the need for power capacity. This is colliding with a limited supply of key materials such as copper – especially in fast-growing battery storage. Countries are diversifying supply and expanding their networks – to support utilities, although the returns are limited by regulations. They also reduce dependence on a limited number of LNG suppliers, keeping prices high for the time being because buyers pay for security of supply.”
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