eToro Portfolio
eToro Portfolio

    Of Weapons and Algorithms: Geopolitical and Tech Impact

    giorgio.reveco

    Of Weapons and Algorithms: Geopolitical and Tech Impact

    Of Weapons and Algorithms: Geopolitical and Tech Impact

    Executive Summary

    During the week of June 9 – 14, 2025, three risk factors simultaneously hit the growth assets in my eToro portfolio:

    • Restrictive macro environment: The Federal Reserve maintained the key rate at 4.25 – 4.50% and reiterated a “higher for longer” stance, increasing the opportunity cost of growth valuations (Board of Governors of the Federal Reserve System, 2025). Meanwhile, Israeli attacks on Iran pushed crude oil up (+7%) and triggered safe haven flows into gold, which approached historical highs, while Bitcoin briefly fell below USD 104,000 (The Guardian, June 13, 2025).
    • Regulatory risk in Big Tech: The European Commission imposed the first fines under the Digital Markets Act: Apple (€500 M) and Meta (€200 M) have 60 days to modify their business models (European Commission, 2025).
    • Pressure on semiconductors and trade: Washington expanded export controls; Nvidia excluded China from its forecasts and will take a charge of up to USD 5.5 billion, while TSMC and ASML declined due to fears of the 55% tariffs the U.S. maintains on Chinese imports. The “preliminary agreement” announced by Trump lacks details and maintains uncertainty over the global supply chain (The Guardian, June 11, 2025).

    Overall, tech mega-caps fell 1.5 – 3%, growth ETFs (SCHG, SPYG, ACWI) declined > 1% weekly, and the semiconductor segment saw an additional 4 – 6% correction. Defensive hedges (gold via IAU) rose ~1.3% (Yahoo Finance, 2025), but Bitcoin volatility and the oil rally add short-term noise. Looking ahead, key events will be: Fed June 17–18, DMA deadline June 23, G7 summit June 25–27, and the evolution of crude-risk in the Middle East.

    1. Macroeconomic Context

    1.1 Federal Reserve Monetary Policy

    In its May–June meeting, the Federal Open Market Committee maintained the target range for the federal funds rate at 4.25 – 4.50%, emphasizing that policy will remain “restrictive for longer” while inflation risks and uncertainty from new U.S. tariffs persist (Board of Governors of the Federal Reserve System, 2025).

    The official statement highlighted “moderate” real GDP growth and a labor market that is “tight but cooling.” In a press conference, Jerome Powell stressed that the Federal Reserve is in a good place to respond if tariffs trigger a second inflation wave, making it clear that rate cuts are “not on the table” until there is strong evidence of sustained disinflation.

    1.2 Geopolitical Tensions and Oil Prices

    In the early hours of June 13, Israel carried out selective airstrikes on Iranian facilities, pushing the price of Brent to an intraday high of $78.50/barrel (+13%) and a close with a gain of nearly 7% (The Guardian, June 13, 2025). Analysts from ING and Goldman Sachs warned that the risk of disruption in the Strait of Hormuz could push crude above $120 if the conflict drags on (The Guardian, June 13, 2025).

    The oil surge triggered massive sell-offs in global equities: the S&P 500 dropped 1.1%, the Dow Jones 1.8%, and European airlines fell as much as 4% due to the prospect of higher fuel costs (The Guardian, June 13, 2025). At the same time, the strength of the dollar—as a safe haven—intensified pressure on emerging markets reliant on energy imports.

    1.3 Safe-Haven Dynamics and Gold Volatility

    On the same day, rising risk aversion drove gold to reach $3,428/oz, just 2% below the April record of $3,500/oz, marking a 31% increase year-to-date (Trading Economics, June 14, 2025). Demand came from both retail investors—reflected in high COMEX contract volumes—and emerging market central banks continuing to diversify their reserves.

    The precious metal also benefited from expectations that the Federal Reserve will maintain restrictive rates, as the real curve (Treasury yield adjusted for inflation) remained contained: a combination that historically supports gold prices (The Guardian, June 13, 2025). Nevertheless, several strategists warn of potential technical corrections of 10–15% if the Middle East conflict cools or if the dollar strengthens sharply.

    2.1 EU Sanctions on Big Tech

    On April 23, 2025, the European Commission imposed the first formal sanctions under the Digital Markets Act: €500 million for Apple and €200 million for Meta. The decision states that Apple violated the “anti-steering” ban, while Meta failed to provide a mode that limits the use of personal data. Both “gatekeepers” were given 60 days to modify their business models or risk daily fines of up to 5% of global turnover (European Commission, 2025; Tech Policy Press, 2025).

    2.2 U.S. Increases Antitrust Action Against Google

    On June 13, 2025, the Department of Justice launched an investigation to determine whether Google’s acquisition of the cybersecurity firm Wiz, valued at USD 32 billion, would reduce competition in cloud security services. This is the largest acquisition in Alphabet’s history and comes amid two ongoing antitrust lawsuits against the company.

    2.3 Export Controls on Semiconductors

    On June 12, 2025, Nvidia announced it will no longer include China in its revenue and earnings forecasts due to U.S. export restrictions on its AI chips. The company estimates that the limits will cost between USD 2.5 and 8 billion in revenue during the first fiscal half.

    3. International Trade

    3.1 Preliminary U.S.–China Agreement and Tariff Risk

    On June 11, President Donald Trump announced in London a “framework of understanding” with Beijing that, according to his statements, keeps U.S. tariffs at 55% on Chinese imports, while China would maintain a 10% levy on U.S. goods (The Guardian, June 11, 2025).

    Although the agreement includes China’s commitment to supply rare earths and to open university enrollment quotas, it lacks details on a schedule for tariff reductions, maintaining regulatory uncertainty as the main risk for global supply chains (The Guardian, June 11, 2025).

    3.2 Impact on Emerging Markets

    The most illustrative case was India: the BSE Sensex dropped more than 800 points on June 12—its worst session in five weeks—due to the surge in crude oil and lack of clarity on the U.S.–China deal (Economic Times, June 12, 2025).

    A day later, the correction continued and the Nifty 50 closed below 24,750 points, dragged down by sell-offs in banks and consumer companies dependent on imported raw materials (Economic Times, 2025).

    4. Relevant Market Movements

    4.1 Global Equities

    Wall Street closed with heavy losses on June 13: the S&P 500 fell 1.13%, the Nasdaq 1.30%, and the Dow Jones 1.79%. In Europe, the STOXX 600 index dropped 0.9% and marked its fifth straight losing session. Risk sentiment also deteriorated in Asia, where major indices declined between 1% and 1.5%, while volatility spiked at the end of the week (The Guardian, June 13, 2025).

    4.2 Precious Metals

    Gold reinforced its role as a shield: it closed Friday at $3,430/oz, a daily gain of 1.37% and just 2% below the April record; in contrast, silver ended nearly flat at $36.23/oz, and platinum fell by 5.17%.

    4.3 Cryptocurrencies

    Bitcoin plummeted to $103,900 after the Israeli airstrikes, its lowest level in three weeks (Reynolds, 2025). It later bounced back toward $106,000, but closed with a decline of nearly 2% (Sandor & Carreras, 2025); options skews reveal increased demand for put hedges (Godbole, 2025).

    5. Impact on Portfolio Segments

    5.1 Tech Mega-Caps

    Apple dropped 1.9% after the €500 M fine and the threat of daily penalties; Meta lost 2.4%; Alphabet is under review for the Wiz acquisition; Microsoft stated that its capex will grow “at a slower pace” (Hood, 2025); Amazon denied investment cuts, but analysts warn of slower data center deployment timing (Pymnts, 2025). Finally, Nvidia fell 6% after excluding China from its forecasts.

    5.2 Growth ETFs (SCHG, SPYG, ACWI)

    The “higher for longer” stance and geopolitical tensions hit growth ETFs: SCHG closed at USD 28.27 (FinanceCharts, 2025); SPYG fell to USD 91.01; ACWI lost 1.5% for the week.

    5.3 Semiconductors (NVDA, TSMC, ASML)

    TSMC has accumulated a >20% YTD decline due to the threat of 55% tariffs; ASML was dragged down (–4% weekly) amid rumors of extended lithography controls.

    5.4 Metals and Hedging (IAU)

    The iShares Gold Trust (IAU) rose 1.33% on June 13 alongside the gold rally (Yahoo Finance, 2025).

    5.5 Crypto (BTC)

    Bitcoin sank to USD 103,900 before rebounding; its inverse relationship with Brent intensified, and option skews revealed increased demand for protective puts.

    6. Outlook and Recommended Actions

    • Tactical rebalancing and option hedging. The simultaneous drop in mega-caps and semiconductors suggests reducing exposure to stocks most sensitive to tariffs and export controls (e.g., NVDA, TSM) and reallocating part of the weight to defensive sectors like healthcare / consumer staples or to “buffer ETFs” that limit drawdowns—a product that captured a record USD 5.6 billion last quarter. Option premiums have fallen ~16% compared to the beginning of the year, providing a window to buy index puts (S&P 500, Nasdaq-100) or gold calls as macro hedges. Some managers, following the Israel–Iran shock, recommend three- to six-month “calendar spreads” to weather tariff and geopolitical uncertainty.
    • Tactical liquidity increase. The week ended with global equity outflows and increased positions in money-market funds; Bank of America estimates that cash holdings rose to 5.8% of mixed portfolios, the highest since 2023. Keeping 5–10% in liquidity (or in ultra-short T-Bill ETFs) allows taking advantage of potential pullbacks and mitigates volatility linked to oil and “higher for longer” rates.
    • Monitoring regulatory milestones and high-level forums. a) The FOMC meetings on June 17–18 (projections and Powell’s press conference) will set the tone for how long the restrictive policy lasts. b) Apple and Meta must present DMA compliance plans before June 23 to avoid daily fines of up to 5% of global revenues. c) The G7 will meet in Apulia (Italy) on June 25–27; the agenda includes critical supply chains and AI regulation—key issues for Big Tech and semis. d) The U.S. Congress will debate expanding chip controls and possible additional sanctions in hearings scheduled for the first week of July.

    7. Monitoring Checklist

    1. June 17–18 — Fed decision + “dot plot.” Confirm whether the projection of three rate cuts remains or is postponed; direct impact on growth multiples.
    2. June 23 — European Commission deadline for Apple and Meta to present changes to App Store and “pay-or-consent” model in accordance with the DMA; risk of daily fines.
    3. June 25–27 — G7 Summit in Apulia (Italy). Watch for statements on: a) U.S.–China tariffs, b) coordination on semiconductor controls, c) potential release of strategic oil reserves.
    4. June 30 — Preliminary update from the Department of Commerce on the effectiveness of AI export controls; Nvidia and ASML under scrutiny.
    5. Ongoing — Evolution of Brent following the Israel–Iran attack and potential follow-up actions; a Strait of Hormuz closure would increase risk to ≥USD 100/barrel.

    References


    Entradas relacionadas

    Leave a Reply

    Your email address will not be published. Required fields are marked *