Trillion-Dollar Tech Wipeout, Crisis Engulfs UK’s Starmer, More
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What makes the UK a unique place for business?
The UK stands apart as a place to do business, not because of one advantage, but many working together. Over £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.
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 and 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 said that capital expenditure could come close to $185 billion this year compared with just under $120 billion that analysts had expected. Alphabet shares fluctuated in extended trading following the report.
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, though, silver has lost more than a third of its value and is trading at around $75. The precious metal rally last month was driven by speculative leveraged bets, geopolitical upheaval and concerns over Fed independence.
In the UK, Keir Starmer's position is in doubt following the scrutiny of the appointment of Peter Mandelson as UK ambassador to the US and his relationship with Jeffrey Epstein. The Prime Minister is facing backlash from his own party members after he struggled to answer questions from opposition leader Kemi Badenoch about his knowledge of Epstein and Mandelson's relationship. Speaking in Parliament yesterday, Starmer maintained he was not warned of the extent of wrongdoing.
Mandelson betrayed our country, our Parliament and my party. He lied repeatedly to my team when asked about his relationship with Epstein before and during his tenure as Ambassador.
Keir Starmer speaking during Prime Minister's questions where he was forced to acknowledge that the material used to vet Mandelson did contain details of Mandelson's dealings with Epstein. MPs voted to release all documents related to Mandelson's appointment as an ambassador. They'll be reviewed by the Cross-Party Intelligence and Security Committee.
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. Bloomberg's Ewan Potts has a preview.
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.
How is AI influencing the stock market and business models?
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.
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