Markets closed out one of the strongest quarters in recent years with a familiar combination of AI leadership, resilient economic data and fading geopolitical risk.

While technology continued to drive index performance, the broader macro backdrop also improved as inflation pressures eased and confidence in the economic outlook strengthened.

After last week's pullback, buyers returned quickly.

The Nasdaq 100 rebounded sharply on Monday before extending gains into quarter-end as semiconductor stocks completed their strongest quarter on record. Investors continued to position for sustained AI investment, with the sector once again leading broader market performance.

While chipmakers paused on Wednesday, the broader trend remains unchanged. Capital continues to favour businesses expected to benefit from long-term AI infrastructure spending.

Away from technology, several developments supported risk assets.

Progress in US-Iran negotiations pushed oil prices lower throughout the week, removing much of the energy-driven inflation premium that had weighed on markets in recent months.

At the same time, economic data continued to point towards resilience.

Manufacturing activity expanded for a sixth consecutive month, while easing input costs suggested that inflationary pressures may be moderating without a meaningful deterioration in growth.

Fed Chair Kevin Warsh reinforced that view, stating that inflation risks have eased as commodity price pressures continue to fade.

Although AI remains the dominant leadership theme, this week's gains were supported by a wider range of sectors.

Most companies within the S&P 500 advanced, suggesting participation is becoming broader rather than relying solely on a handful of megacap technology stocks.

That is often a healthier characteristic of a sustained market advance than narrow leadership alone.

Geopolitics → Oil → Inflation → Federal Reserve → Economic growth → Equity leadership

• Oil prices continue to ease
• Inflation pressures are moderating
• Economic data remains resilient
• The Fed appears less concerned about inflation
• AI continues to lead, but market participation is broadening

For now, improving fundamentals are providing the foundation beneath the AI narrative.

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