Just this week, many previously stable large-cap data, analytics and software-related business (eg RELX, LSEG, SAP) were hammered into long-term lows. The fear is that generative-AI is expected to take future profits away from these tech firms.
Anthropic’s Claude latest tool is the spark that cascaded into this sell-off. A sell signal akin to the ‘DeepSeek’ moment seen a year ago.
The latter, however, didn’t cause much lasting damage. This time, investors are not so sure.
Even the tech behemoth – Microsoft – is now plummeting to multi-month lows. At $410, prices are suffering a 20-plus drawdown from its October peaks.
The sharp reversal of many of these long-running uptrends (eg RELX rose for 15 years) suggests a definite sector shift. Changes are definitely afoot.
In contrast, the food and consumer staple company Unilever is showing an improving chart picture.
Its share price rose recently to the upper side of the trading range – around 5,000p – to affirm the pattern of rising lows.
With market and tech uncertainty on the rise, perhaps consumer staples will rotate back into fashion. After all, investors need some stocks to hide into.
Part of this sector shift was Walmart (US:WMT)’s clinch of the desired $1 trillion market cap. The supermarket giant became the 12th US company to attain this impressive milestone.
Meanwhile here in the UK Tesco (TSCO) and Sainsbury (SBRY) also rallied this week, suggesting the same rotation.
In sum, I expect this capital herding into consumer staples to last further – until risk sentiment improves.
