A Week of Many Moves: Inflation, SpaceX, and a Tech Selloff Test the iShares MSCI World ETF

Broadcom's shares fell 12.6% after failing to raise AI revenue target, while strong jobs data and looming inflation pressure tech stocks. SpaceX's $75B IPO adds uncertainty.

When a company beats earnings estimates, raises its outlook, and still sees its stock hammered, something has shifted in the market’s psychology. Broadcom delivered that paradox on Friday, sending its shares down 12.59% to $418.91 and triggering a 2.57% drop in the iShares MSCI World ETF to $200.38. The selloff was the fund’s steepest single-day decline in weeks, and it arrived just as a cluster of macro events begins to crowd the calendar.

Broadcom’s operational performance was strong by any normal measure. Adjusted earnings came in at $2.44 per share, revenue hit nearly $22.2 billion, and the company guided for roughly $29.4 billion in the current quarter – well above the $28.53 billion consensus. Yet investors punished the stock because Chief Executive Hock Tan did not raise the company’s annual target for artificial-intelligence chip revenue from $100 billion. The reaction laid bare how high the bar has become for AI winners. For the MSCI World ETF, that matters deeply because information technology accounts for 31.43% of the fund, with Nvidia alone representing 5.64% and Apple 5.05%. Microsoft, Amazon, and Alphabet A add another 3.50%, 2.86%, and 2.44% respectively. A revaluation of AI-related multiples hits the ETF at its core.

The tech rout was amplified by a double dose of macro pressure. The US economy added 172,000 jobs in May, nearly double the 89,000 forecast. That robust reading reinforced expectations that the Federal Reserve, now under new Chair Kevin Warsh, will keep rates elevated for longer. Fed-funds futures currently price a 97% probability that the central bank stands pat at its June 16-17 meeting, leaving the target range at 3.5% to 3.75%. Both Goldman Sachs and Bank of America have pushed back any rate cut beyond 2026. The jobs data also set the stage for this week’s inflation releases: the consumer price index for May is due June 10, followed by the producer price index on June 11. Inflation recently climbed to 3.8%, its highest since May 2023 and up from 3.3% in the prior month, driven by a 17.9% year-on-year surge in energy costs – the fastest such rise since September 2022. A hot CPI print would tighten the squeeze on richly valued growth stocks.

Alongside the inflation gauntlet, a historic IPO looms. SpaceX is set to be priced on June 11 and begin trading on the Nasdaq on June 12. At an expected issue price of $135 per share, the company aims to sell 555.6 million shares, raising $75 billion and achieving an implied valuation of $1.77 trillion – larger than Tesla’s current market cap. The immediate impact on passive funds will depend on index inclusion. MSCI Chief Executive Henry Fernandez has signalled that new listings could be added to MSCI benchmarks after just ten trading days, and analysts estimate the resulting buying pressure could reach $12 billion. That timeline would place SpaceX inside the ETF faster than most mega-IPOs.

Meanwhile, the healthcare sector faces its own headwind. New US tariffs on patented pharmaceuticals hit imports from the European Union, Japan, South Korea, and Switzerland at 15%, with a 10% rate for drugs from the United Kingdom. Healthcare makes up 8.39% of the fund’s allocation, adding a further layer of sector-specific drag.

The ETF itself is broadly diversified, holding 1,284 positions and $8.07 billion in net assets, with an expense ratio of 0.24% – though Invesco has undercut that with comparable world-equity products at 0.05%. Geographically, the US dominates, followed by Japan at 5.75%, the UK at 3.43%, Canada at 3.37%, France at 2.35%, Switzerland at 2.18%, and Germany at 2.13%. That regional spread provides some insulation against single-country shocks, but it does little to dilute the tech-heavy tilt.

Technically, the index is testing support. The MSCI World Index hit an all-time high just a week earlier, on June 2, but Friday’s plunge now challenges the 50-day moving average and the Ichimoku cloud on the daily chart. The relative strength index sits at 50.6, a neutral reading that offers no directional clue, while annualised 30-day volatility stands at 13.36%. Over the past seven days the ETF has fallen 2.22%, though the 30-day move is nearly flat at minus 0.12%.

Near-term catalysts arrive in quick succession. On June 10 and 11, inflation data will set the tone for rate expectations. On June 11, SpaceX pricing draws attention. Then on June 15, the ETF goes ex-dividend, with a payout of $1.261367 per share – the same day as the record date. The trailing 12-month yield is 1.40%, and the 30-day SEC yield stood at 1.20% at the end of April. Two days later, the FOMC decision will determine whether the tech selloff deepens or stabilises. For a fund that draws more than 30% of its value from a single sector, every data point this week arrives with an outsized consequence.