About face on AI

Elon Musk announced plans to build a competitor to ChatGPT, as part of his X branded ‘everything app’. The start-up is currently looking for engineers and investors. It has already amassed quantities of the Nvidia chips required to power a large language model capable of producing generative AI.  The announcement came just weeks after the tech entrepreneur signed an open letter demanding an immediate six month pause on the development of generative AI technology, warning of a ‘dangerous’ arms race. Meanwhile SpaceX, Musk’s space exploration company, suffered a setback when its Starship rocket exploded minutes after a test launch.

Divergent views on rates

Central banks’ resolve to prioritise controlling inflation, despite March’s turmoil among the banks, restored market calm and allowed the VIX volatility index to fall back to recent lows. Nonetheless, the markets increasingly believed that the US Federal Reserve (Fed) would make one final rate hike for this cycle, with perhaps rate cuts to follow by year end. Leaders of some US financial giants begged to differ. In their view ‘higher for longer’ interest rates remain on the cards, given sticky core inflation. It’s said a difference of opinion makes a market, but it can also bring spikes in volatility.

Commodity prices rising

Gold remained in demand, even after stresses in the banking sector subsided. And the price continued to climb, topping $2,000 per ounce for the first time since the pandemic. Gold is seen as a safe haven when markets are volatile. It is also traditionally viewed as an inflation hedge. Central banks are reported to be planning further additions to their gold reserves, which hit record levels last year in response to geopolitical tensions. Elsewhere in commodity markets, the oil price jumped as OPEC+ announced a surprise production cut, aimed at ‘supporting market stability’.