Author: Fiona Craig

CleanTech Lithium PLC (LSE:CTL) reported progress on its Laguna Verde lithium brine project in Chile during the six months ended 30 June 2026, including an agreement on contractual terms for a 40-year operating contract, completion of a Pre-Feasibility Study (PFS) and further development of its Direct Lithium Extraction (DLE) process.

The company agreed the contractual terms of a 40-year Special Lithium Operating Contract with Chile’s Ministry of Mining, establishing a framework for the proposed development of Laguna Verde.

CleanTech also completed a PFS for the project, which indicated a pre-tax net present value (NPV) of US$1.37 billion. The study forms part of the company’s transition from resource definition towards project development.

During the reporting period, CleanTech continued work on producing battery-grade lithium carbonate using DLE technology, while progressing the selection of a strategic partner and holding discussions regarding project financing.

The company raised £5.3 million through a fundraising, recovered VAT and converted all outstanding convertible loan notes into equity.

Following the period-end, CleanTech reduced the cash consideration for 23 Laguna Verde concessions from US$35 million to US$14 million, a decrease of US$21 million.

The company also advanced production campaigns targeting high-purity lithium carbonate and continued preparations for a dual listing on the Australian Securities Exchange (ASX).

Further work includes permitting activities and securing financing for the development of Laguna Verde.

CleanTech is focused on developing lithium projects in Chile using DLE technology, with Laguna Verde serving as its principal development asset. The company intends to produce battery-grade lithium carbonate and is pursuing a long-term operating framework alongside strategic partnerships and project funding.

Piper Sandler has highlighted a decline in US stock market participation, with several of its technical indicators signalling weaker intermediate-term trends despite gains in communications, software and cybersecurity shares.

In a Wednesday research note, the firm advised against aggressively increasing equity exposure until broader market participation improves.

The S&P 500 fell 0.48% on Tuesday, contrasting with a 0.04% gain in the equal-weighted index. The difference reflected varying performance among index constituents rather than a uniform decline across the market.

Communications shares advanced 2.2%, breaking above resistance at their 200-day moving average.

Within technology, semiconductor stocks declined while other industry groups advanced.

The SMH semiconductor fund lost 4.75% as AI safety warnings affected semiconductor and infrastructure stocks. Software shares rose 5%, cybersecurity stocks gained 6%, and CrowdStrike (NASDAQ:CRWD) reached a record high.

Piper Sandler’s broader technical indicators presented a different picture from the gains recorded in those sectors.

Its 26-Week New Highs and 40-Week Technique measures are currently in sell positions, while the firm’s MACE analysis indicates that the number of stocks in weekly downtrends exceeds those in uptrends.

The percentage of market groups maintaining defined uptrends fell by 10 percentage points last week, declining from 53% to 43%.

The firm also highlighted developments in government bond yields and energy markets.

The 10-year US Treasury yield briefly exceeded 5.0%, while crude oil approached $105 per barrel before settling around $101.50.

According to Piper Sandler, a sustained move in the Treasury yield towards 5.2% and 5.31% would put pressure on equity valuation multiples.

For crude oil, the firm identified $106 as an important technical level. A move above that threshold would establish $111 as its next target.

Meanwhile, the S&P 500 and Nasdaq continue to trade near support associated with their 50-day moving averages.

Piper Sandler’s assessment combines weakening market breadth, divergent sector performance and higher bond yields. The firm favours waiting for broader participation to recover before increasing equity exposure.

The Bloomberg Commodity Index has moved above a resistance level established in 2014, but Oppenheimer technical analyst Ari Wald said the advance remains concentrated in a limited number of markets rather than reflecting a widespread increase in commodity prices.

In his assessment, the index’s technical breakout does not yet provide sufficient evidence of a sustained inflationary threat to equities.

Wald noted that commodity price increases have historically been associated with weaker subsequent equity performance. However, he said the underlying composition of the current rally warrants a distinction between the headline index and its individual components.

Energy markets have accounted for much of the recent advance, while relatively few other commodities have broken above their own long-term resistance levels.

Some agricultural products have reached their highest prices of 2026, according to Oppenheimer, but remain well below their previous peaks in 2014 and 2022.

The firm characterised the movement as a rotation between commodity categories rather than a simultaneous increase across the broader market.

A sustained advance spanning energy, metals, agricultural products and soft commodities could create more persistent inflationary pressures. Such a development could affect companies through higher input costs, reduced profit margins and changes in equity valuations.

However, Wald’s analysis indicates that the current market conditions differ from that scenario because the gains have not extended across the full range of commodity categories.

He therefore considers the inflationary implications of the Bloomberg Commodity Index breakout more limited than the index’s overall performance might suggest.

The distinction also applies to exchange-traded funds linked to commodities and commodity-related equities.

The Energy Select Sector SPDR Fund (NYSE Arca: XLE) tracks energy companies within the S&P 500 and provides exposure to a sector affected by movements in crude oil and natural gas prices.

The iShares Bloomberg Roll Select Commodity Strategy ETF (NASDAQ: CMDY), meanwhile, offers exposure through a broader commodity strategy, incorporating movements across different segments of the market.

The differing exposures mean that the two funds may respond differently to a rally concentrated primarily in energy rather than one extending across multiple commodity categories.

Oppenheimer’s analysis indicates that the Bloomberg Commodity Index’s technical breakout has not been matched by equivalent advances across its constituents, limiting the evidence for a sustained, broad-based inflationary shock.

Bank of America has raised its year-end S&P 500 target to 7,400 from 7,100 while introducing a 12-month forecast of 7,800, reflecting expectations for limited gains in US equities despite projected earnings growth.

The revised year-end target implies approximately 3% downside from current market levels, while the 12-month projection represents potential upside of about 2%.

Strategist Savita Subramanian said in a note this week that investors could encounter a more favourable entry point following a market pullback.

She noted that US equities have experienced only one correction of at least 5% this year, occurring in March, compared with an average of three in a typical year. Approximately half of the bank’s bear-market indicators have also been triggered.

BofA identified several risks to its outlook, including inflation, Federal Reserve interest-rate policy, corporate earnings quality and credit conditions.

Subramanian highlighted a difference between current equity valuations and the bank’s inflation projections, noting that the market’s price-to-earnings multiple implies substantially lower inflation than BofA anticipates.

The strategist also drew a historical comparison with the 1970s, when inflation risks, a weaker US dollar and Federal Reserve rate increases accompanied a stock market decline of more than 40%.

Regarding the US midterm elections, Subramanian downplayed the potential impact of a Democratic sweep on capital expenditure, arguing that state governments are largely driving investment in artificial intelligence infrastructure.

Her longer-term outlook for equities remains positive, supported by expectations that companies will achieve productivity gains by replacing labour with scalable business processes.

BofA projects S&P 500 earnings growth of 33% in 2026 and 12% in 2027, although its index targets suggest that higher corporate earnings may not translate into equivalent gains in share prices over the forecast period.

The bank’s equity preferences include large-cap value stocks, selected opportunities among small- and mid-cap companies and the equal-weighted S&P 500 rather than the market-capitalisation-weighted benchmark.

The forecasts reflect BofA’s expectation of a potential near-term pullback followed by limited gains over the next 12 months, alongside continued earnings expansion.

Capital Economics expects the S&P 500 to decline to 6,500 by the end of 2027, down approximately 21% from its forecast of 8,250 for the end of 2026, as the firm assesses the potential consequences of a reversal in artificial intelligence-related stock valuations.

Chief economic adviser John Higgins said in a note this week that he believes the AI investment cycle is approaching the later stages of a bubble, with US equities likely to experience the largest impact if valuations reverse.

Higgins estimates that the eventual decline in the S&P 500 from its peak to its trough could reach at least 30%, exceeding the difference between the firm’s two year-end forecasts.

He pointed to historical market performance, noting that declines of 30% or more have occurred seven times over the past century. The collapse of the dot-com bubble provides the closest comparison in his assessment.

Although Capital Economics expects a downturn in US equities to spread to other stock markets, the firm anticipates a smaller impact internationally, reflecting the generally lower weighting of technology companies in markets outside the United States.

The implications for government bonds could also differ from those observed following the dot-com collapse.

Capital Economics expects developed-market 10-year sovereign bond yields to decline modestly by the end of 2027 but does not anticipate a Treasury rally comparable to the one that followed the earlier technology downturn. The firm attributes this difference to more limited potential for a reduction in term premia.

In corporate credit markets, Higgins expects US bonds to face some pressure because credit spreads are currently very low. Nevertheless, he forecasts a smaller impact than during the dot-com collapse.

The US dollar is another market that Capital Economics expects to be affected. Higgins considers the currency more overvalued than it was during the dot-com period and anticipates that it will weaken if the AI bubble bursts.

The firm’s outlook therefore combines a potential substantial decline in US equities with more moderate movements in sovereign bonds, some pressure on corporate credit and depreciation of the dollar. These remain forecasts based on its assessment of AI-related market risks.

US equity futures indicated a strong start to Thursday’s session as falling oil prices and lower Treasury yields offered some relief following Wednesday’s late sell-off.

The prospective gains came after the Dow Jones Industrial Average ended the previous session at a three-month closing low, while the S&P 500 recorded its weakest close in more than a month.

Market attention remained focused on the Federal Reserve’s latest interest-rate increase and the possibility of further tightening before the end of the year.

Lower Oil Prices Support Pre-Market Sentiment

US crude futures declined 2.5% on Thursday, moving below $100 a barrel after falling more than 3% on Wednesday.

Oil prices retreated amid reports that Saudi Arabia was taking steps to prevent supply disruptions following the closure of its key East-West pipeline.

The decline helped alleviate some concerns about the inflationary impact of elevated energy costs.

Treasury yields also moved lower during the morning, with the benchmark 10-year yield retreating after finishing the previous session little changed.

Together, the movements in oil and government bonds provided a more favourable backdrop for US stock futures ahead of the opening bell.

Major Indices Reverse Earlier Gains on Wednesday

Wall Street had initially advanced on Wednesday as investors returned to equities following losses in the preceding two sessions.

The rally faded late in the day, however, as markets responded to the Federal Reserve’s interest-rate announcement and comments from Chair Kevin Warsh.

The Dow dropped 631.21 points, or 1.2%, to close at 51,461.90, its lowest closing level in three months.

The S&P 500 lost 33.92 points, or 0.5%, ending at 7,551.81, its weakest close in more than a month.

The Nasdaq Composite was comparatively resilient but still finished lower, slipping 3.15 points, or less than 0.1%, to 25,978.42.

The late reversal left all three benchmarks in negative territory despite their earlier advances.

Fed Signals Further Tightening Could Follow Rate Increase

The Federal Reserve raised its target range for the federal funds rate by a quarter of a percentage point to 3.75%–4%, marking its first increase since July 2023.

In its policy statement, the central bank said inflation remained elevated and indicated that the rate increase was intended to support progress towards its 2% target.

Updated projections showed that most Fed officials expected interest rates to stand above 4% at the end of 2026, pointing to at least one further increase this year.

Warsh reinforced the central bank’s focus on inflation during his post-meeting press conference.

“Our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high, and has been for too long,” he said.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”

His comments coincided with increased selling pressure in equities during the final part of Wednesday’s session.

Banks and Oil Services Stocks Record Sharp Losses

Several sectors contributed to Wednesday’s market decline.

The Philadelphia Oil Service Index dropped 3.1% as crude prices weakened, reaching its lowest intraday level in more than a month.

Banking shares also came under pressure, sending the KBW Bank Index down 2.9% to its lowest closing level in two months.

Brokerage firms, housing-related companies and gold stocks weakened later in the session, adding to the broader decline.

Thursday’s rise in index futures suggested that US equities could recover some of those losses at the open. Subsequent trading remained dependent on developments in commodity markets, bond yields and expectations for the Federal Reserve’s next policy moves.