Investors flee to defensive stocks amid AI fears

Investors are ditching tech stocks for ones they believe can shield them from a market downturn as fears over the end of the AI bull market continue to grow. So-called defensive sectors, which include consumer foosa, healthcare and utilities, have come back into favour in recent weeks as investors hunt for reliability amid wider global uncertainty. The MSCI consumer staples index posted its largest monthly gain in nearly 30 years in October, rising 10.6 per cent. Meanwhile its global healthcare index recorded a 9.8 per cent increase, the second-highest of the century. It was defeated only by the start of the Covid pandemic, which caused gains of 12.4 per cent in April 2020. In a sharp contrast, the MSCI global technology stocks index has plummeted over 13 per cent since the start of October. “Investors grew increasingly sceptical of technology sector valuations and questioned the long-term funding plans for the massive AI build-out,” Schroders analysts said in a note to