Markets are repricing two big narratives at once: a technology reset after a dramatic valuation pullback, and renewed stress in global bond markets. Investors are working through a wave of tech revaluation after analysts estimated that some $2 trillion of software market value was erased last week, a move that forced traders to distinguish winners from the rest.
At the same time, Tokyo has become a focal point. Prime Minister Sanae Takaichi’s tax-cut pledge amplified concern about Japan’s finances and helped push long-dated yields higher, in a market that had been almost comatose for years. The move followed headlines about Japan’s $9 trillion government debt and a session where the 30‑year yield jumped by more than a quarter percentage point, reviving the old “widow‑maker” trade and prompting outreach from global counterparts.
Those twin shocks are showing up in stocks. Tech is bifurcating as hyperscaler spending benefits a narrow group of suppliers while others face secular risk. The overnight Meta–Nvidia tie-up and related flows lifted chip demand and sent Nvidia higher in extended trade, with the stock rising about 1.2% on the news, while competitors felt pressure, illustrating how partnerships can concentrate gains within subsectors rather than distribute them broadly in after‑hours action.
What happens next will hinge on three inputs: whether policymakers in Tokyo move quickly to calm markets, whether earnings and guidance sort the AI winners from losers, and whether macro data sustains a shift into cyclicals or forces a risk‑off reversion. Near‑term scenarios include further volatility in rates that could squeeze rate‑sensitive growth stocks, or a stabilization that lets the cyclical rally broaden. Watch rate moves, hyperscaler spending commentary, and company guidance on AI capex for the clearest signals.
Reposition accordingly: trim names lacking durable competitive edges, favor firms with clear AI revenue paths or pricing power, and keep an eye on global yields as a portfolio risk dial.
