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Chapter 1: What is the main topic discussed in this episode?
The UK stands apart as a place to do business, not because of one advantage, but many working together. Over Ā£10 trillion in capital, four of the world's top universities, a 10-year industrial strategy in action, its stability with dynamism, global reach with local depth. It all adds up to greater growth. Find out more at business.gov.uk slash growth.
News when you want it with Bloomberg News Now. I'm Stephen Carroll.
And I'm Caroline Hepker.
AI's potential to change business models large and small is driving a trillion dollar sell-off in stocks, bonds and loans of companies. The route was first sparked by Anthropic's release of a new tool for legal work earlier this week. The move ignited fears across markets that AI leaders will overtake established industry players in innovation sooner rather than later.
And in a confusing mix of market signals, even companies long seen as the prime beneficiaries of the AI boom are showing signs of fatigue. In its latest earnings report, Alphabet topped projections for quarterly revenue but said capital spending on AI will be significantly higher than anticipated. CEO Sundar Pichai says the money will deliver a return on investment.
Revenue from AI solutions built by our partners increased nearly 300% year over year, and commitments from our top 15 software partners grew more than 16x year over year.
Sundar Pichai speaking there as the Google parent company said capital expenditure could come close to $185 billion this year, compared with the almost $120 billion analysts had expected. Alphabet shares fluctuated in extended trading following the publication of the earnings.
Now, the price of silver has plunged by as much as 17% today after a two-day recovery. Silver prices hit an all-time high in late January of more than $120 an ounce. Since then, silver has lost more than a third of its value and is trading at around $79. The precious metal rally last month was driven by speculative leveraged bets, geopolitical upheaval and also concerns over Fed independence.
The British Prime Minister is facing a growing backlash from his own party as revelations over Peter Mandelson's relationship with Jeffrey Epstein threaten to further damage his already embattled premiership. MPs voted to require the government to disclose all documents related to Mandelson's appointment as US ambassador by Keir Starmer.
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Chapter 2: What factors are contributing to the current tech stock selloff?
BNP also raising its 2028 profitability target to a return on tangible equity above 13% and sharpening its goal for the cost-income ratio. Shares and BNP up 2.8% at the open in Paris.
Now, the Bank of England is widely expected to leave interest rates on hold today as it waits for more evidence that inflation is under control. This as we get more on that preview from Bloomberg's Ewan Potts.
Just one of 32 economists in Bloomberg's survey expects a rate cut today. The overwhelming consensus is that the UK's base rate will remain unchanged at 3.75%. Ahead of the 12pm announcement, rate-setters will be weighing the contradictory problems of above-target inflation and growing concerns about the labour market with unemployment now above 5%.
But on productivity, there could finally be some good news. Speaking to Bloomberg, some analysts say that headline productivity estimates may be masking a recent resurgence driven by the adoption of artificial intelligence. One economist from UBS Wealth Management saying the UK and global economy are likely in better shape than the media would have us believe.
In London, I'm Ewan Potts, Bloomberg Radio.
The European Central Bank is also likely to keep interest rates on hold for a fifth consecutive meeting. That's despite geopolitical tensions and a stronger euro. All economists surveyed by Bloomberg expect the deposit rate to be kept at 2% at today's meeting. Investors and analysts see rates staying there until the end of next year, with the chances of a hike in 2026 receding.
And those are our top stories for you this morning. Looking at the markets, European stocks are down a tenth of one percent. FTSE 100 shares also down by four tenths of one percent. Now, interesting that we are seeing here in the UK longer dated gilt yields rising about four basis points. Also, the twos, tens yield curve steepening the most since 2018. Is that political risk?
It's all coming ahead of the Bank of England rate decision today, but there's no change really expected here. in terms of interest rates from the BOE and indeed no change to what is being priced in for reductions across the rest of the year, about 35 basis points expected. But the big dollar spot index is stronger. The pound is down two tenths of 1%. Oil prices are lower. Gold is down 1%.
You've got this continued tech hit to stocks in the Asia trading hours and stock futures for the US rebounding a bit for the Nasdaq up four tenths this hour.
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Chapter 3: How did Alphabet's earnings report influence market perceptions?
I'm Stephen Carroll.
I'm Caroline Hepka and this is Bloomberg.
As a place to do business, the UK stands apart. Not because of a single advantage, but a uniquely powerful combination of many. As one of the world's leading financial centres, the UK puts over Ā£10 trillion to work every day, fuelling innovation across every sector. Home to four of the world's top universities, it provides exceptional talent and breakthrough research.
This sits alongside a clear 10-year industrial strategy, unlocking smarter regulation and making it faster and easier to operate. Stability with dynamism. Global connectivity with local depth. It all adds up to greater growth. Visit business.gov.uk slash growth.