📊 AI Reset Drives Defensive Rotation

Good Morning Investors,

Selling pressure was driven primarily by tech and AI linked headlines. A fresh round of AI model news triggered a sharp reset across software, data, and adjacent financial technology names, reversing recent momentum and spilling into the broader complex. While some market commentators framed the move as a potential dip buying opportunity, price action suggests investors are first demanding clearer earnings visibility and proof of monetization before re engaging with high multiple growth themes.

Macro stress added to the pressure. Rising layoff announcements, early year labor softness, and renewed bond market volatility weighed on sentiment, pushing investors toward more defensive positioning. Commodities surged on the day, highlighting a divergence between real asset strength and equity risk aversion. That split leaves resource and industrial small caps at a crossroads, with selective rotation underway but little tolerance for balance sheet or funding risk.

Matthias Schneider
Editor at Analytica Investor