Tokyo CPI Cools, Fed Pushes Back on AI Inflation Hope

• Global investors returned to equity funds during the week ending May 27, driven by a rally in AI-linked stocks that revived market sentiment. • Regional performance was mixed, with U.S. equity funds attracting a net $1.97 billion and European funds gaining $678 million, while Asian funds saw net outflows of $3.92 billion.

• A survey of chief economists reveals that nearly 90% expect global economic growth to weaken over the next year, though only 13% anticipate a full-scale global recession. • An overwhelming 94% of respondents predict rising global inflation, primarily driven by the potential closure of the Strait of Hormuz.

• The European Central Bank (ECB) has urged eurozone banks to accelerate their technological upgrades to combat rising cyber risks driven by artificial intelligence. • In its supervisory priorities for 2026–2028, the ECB reported that significant cyber incidents have doubled in recent years, identifying operational resilience as a primary concern.

• Sweden is actively pursuing a strategy to achieve global leadership in artificial intelligence, moving beyond the mere application of existing US-developed AI systems. • The Nordic nation aims to "change the rules of the game" by developing its own sovereign AI capabilities and infrastructure to reduce dependency on foreign technology.

• SK Hynix has joined the trillion-dollar market cap club driven by surging demand for AI chips, while AI startup Anthropic is approaching a $100 billion valuation. • Major tech firms are restructuring their workforces, with Meta cutting jobs to prioritize AI initiatives and Nvidia reporting a gap in specialized hiring.

• Morgan Stanley has warned that artificial intelligence could trigger significant job losses across European banks in the coming years. • The report indicates that AI may boost productivity by up to 30%, drastically reducing the necessity for large workforces within banking operations.

• Participants at EuroDIG 2026 explored whether the European Digital Identity (EUDI) Wallet and a proposed business wallet could serve as foundational infrastructure for an integrated digital single market. • Jaromir Talir of the Czech registry CZ.NIC highlighted how EUDI wallet pilots are addressing long-standing challenges in registrant identification, cybersecurity, and regulatory compliance for domain registries.

• NVIDIA published material on **agentic AI**, describing systems that use reasoning and planning to solve complex problems and automate workflows. • The company says these systems can turn enterprise data into actionable insights, reinforcing the shift from static chatbots to task-oriented AI.

• A Dublin Tech Summit panel examined how **GDPR**, rather than the EU AI Act, may govern most AI use cases in practice. • The discussion also highlighted delays to high-risk AI rules and the governance work companies must do now.

• Nexus Luxembourg 2026 announced a speaker lineup of **150+ leaders** across AI, tech, finance, and governance. • The event is scheduled for **June 10-11** at **LuxExpo The Box**.

• Asian economies, particularly South Korea and Taiwan, are experiencing extreme market volatility and rapid growth driven by the global AI trade. • Taiwan's stock market has surged to become the world's fifth largest, surpassing India and trailing only the U.S., China, Japan, and Hong Kong.