Market snapshot: animal spirits are alive and well for some
It appears that nothing can stop the American tech sector juggernaut currently, while UK stocks lack the positive catalysts to compete. ii's head of markets discusses latest developments.
3rd June 2026 08:35
by Richard Hunter from interactive investor
Animal spirits are alive and well, with an apparently insatiable appetite for AI-related stocks driving US markets to record levels overnight once more.
Judgement day is yet to come, when companies will need to justify the hundreds of billions of dollars currently being invested through increased revenues, profitability and productivity. For the moment however, AI stocks have the Midas Touch and the latest session showed opportunities continuing to appear in abundance.
Poster child NVIDIA Corp (NASDAQ:NVDA) rose by more than 6% after unveiling a new processor for personal computers, pulling Dell Technologies Inc Ordinary Shares - Class C (NYSE:DELL) along with it, where shares spiked by over 10%. Hewlett Packard Enterprise Co (NYSE:HPE) saw a share price hike of almost 20% after blowing past expectations in its latest quarterly update, driven by demand from companies building up their AI capabilities. Comments from the Nvidia CEO that Marvell Technology Inc (NASDAQ:MRVL) could be the next trillion-dollar company lit a fire under its shares, although even after a 30% rise a market cap of $250 billion leaves some considerable way to go.
Meanwhile, the pace of investment shows no signs of slacking. Google parent Alphabet Inc Class A (NASDAQ:GOOGL) announced plans to raise $80 billion through the sale of some of its stock to fund further upscaling and development in an overall spend which could reach $190 billion this year, with the potential for a significant increase on that number next year.
Concerns surrounding the ongoing conflict between the US and Iran, such as they are, continue quite simply to be bulldozed by the current wave of AI euphoria. This is despite no apparent end to the impasse around the Strait of Hormuz and Iran’s nuclear capabilities, an ongoing war of words and some military volleys between the sides which threaten what is a fragile ceasefire. The oil price appears to have settled just below $100, although any reescalation of hostilities would inevitably lead to a further spike.
With a report showing that US employers were advertising the most jobs in five years, bullish sentiment continued unabated and each of the main indices closed at record highs for the umpteenth time over recent weeks. In the year to date, the Dow Jones is ahead by 6.8%, while the more tech-focused S&P500 and Nasdaq have enjoyed gains of 11.2% and 16.6% respectively.
With Japan’s Nikkei 225 also spiking on the new AI developments, the UK has latterly become something of an investment backwater, with its relative lack of tech exposure limiting progress.
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The FTSE100 suffered another dreary open, with the well-received £390 million acquisition of DIY Kitchens by Howden Joinery Group (LSE:HWDN) lifting the latter to the top of the risers board, but its 5% spike did little to offset declines elsewhere, with a broad markdown affecting the previously high-flying mining and defence sectors in particular.
Despite the lack of positive catalysts, the main UK indices have nonetheless made steady if unspectacular gains so far this year. The wider downbeat assessments on prospects for the economy have hardly helped sentiment, but gains of 4.4% for the FTSE100 and of 3.8% for the FTSE250 suggest that there remains some lingering interest in the UK as an investment destination, if not at the scale of the gains being enjoyed elsewhere.
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