Global markets turn selective as AI, oil and capital flows drive divergence: Manulife Investments
Marc Franklin, Deputy Head of Multi Asset Solutions, Asia at Manulife Investments, expects global markets to become more selective due to factors like AI-led growth, oil prices, and capital flows. He notes that US growth and AI investment are supporting markets, but rising oil prices and currency pressures are creating divergences across regions.
Global markets are entering a phase of sharper differentiation, driven by capital flows, energy exposure, and AI-linked growth. US economic data has been strong, except for housing purchase volumes, and AI-led investment is continuing to support markets. However, rising oil prices and currency pressures are creating clear divergences across regions, particularly between developed and emerging markets. The European economy is more sensitive to oil supply shocks and less exposed to the AI boom, while emerging markets are affected by their energy export status and exposure to AI. Korea and Taiwan are performing strongly, while Southeast Asian markets and India are lagging. The strengthening US dollar and capital flows into US assets are putting pressure on emerging market currencies.
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