Financial markets regularly go through periods of speculation and volatility. But over recent weeks there have been some particularly notable moves. Investors who piled into precious metals like gold and silver, on an extraordinary run over recent months, have seen a sharp reversal. And the story of Bitcoin has taken another twist, with a further decline adding to falls towards the end of last year. The value of the best known cryptocurrency is now down around 50 per cent from its 2025 peak.
These add to signs of excess in share markets, where the AI boom has driven major indices to record high, particularly in the US. These gains have been regularly questioned, but up to recently markets have kept heading higher.
But as investors start to look more closely at the winners and losers in the new world of AI, many sectors have started to come under pressure. Business models are going to be disrupted, including big sectors like financial services and software.
The high valuations many stocks have reached in the seemingly-endless market rise are starting to come into question. A recent forecast from US president Donald Trump that the US market is set to double in value looks shaky indeed.
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It remains to be seen if the pockets of volatility which have emerged turn into a more generalised market downturn, with wider economic implications. It is a trend worth watching. Market disruption can spread to cause wider economic difficulties by hitting confidence, damaging household wealth and in some cases leading to wider financial upheaval.
For Ireland, the presence of big US tech companies here, most of which are spending heavily on AI, is also important. Already there are signs that the sector is starting to retrench on employment levels here, in part because of the financial pressure their parents face from AI investment.
Markets always ebb and flow. But the signs of excess which have emerged risk dislocating corrections, not only for those whose money is at risk, but also for the international economy on which Ireland depends.
