Danske Research Team highlights that global equities finished broadly flat, masking notable rotation as investors cut AI and semiconductor exposure. Europe and defensive sectors outperformed, with consumer staples leading. Despite a marginal S&P 500 decline, breadth remained strong and the equal-weighted index outperformed, challenging narratives of narrow US leadership signalling an imminent broader correction.

AI and semiconductors under pressure

“Global equities finished broadly flat on Monday, but the headline concealed substantial rotation as investors cut AI exposure, particularly semiconductors, among this year’s strongest performers. Europe and defensives outperformed, with consumer staples leading sector returns. “

“Despite the marginal decline in the S&P 500, 321 constituents advanced versus 179 that declined, marking the seventh session in eight with positive breadth and another day of outperformance for the equal weighted index.”

“We remain cautious about historical parallels: leadership has been driven predominantly by substantially stronger earnings growth rather than relative multiple expansion, an important distinction when assessing its vulnerability.”

“The rotation away from AI and not least semiconductors continue this morning, with Korea’s KOSPI down around 7%.”

“European and US futures are mixed, with defensive exposure providing support while AI and semiconductors remain under pressure.