Market Roundup - July 2026

Energy Price Elevation

In early July the US-Iran ceasefire, which saw tensions ease between the two countries over the course of the last 3 months, collapsed. The renewed hostilities saw energy export concerns reignite with the market wary of further supply disruptions and higher prices.

Subsequently, the recent lows for Brent Crude and West Texas Intermediate oil seen at the beginning of the month, evaporated as prices reacted swiftly to the resumption of the conflict, with Brent reaching $100/bbl towards the end of the month.  

Simultaneously, renewed inflationary anxiety worked to push bond yields higher, weighing on fixed-income assets. Commodities lifted off reduced (energy) supply and equities eased following the increased geopolitical uncertainty.

Central Banks Bump Interest Rates

While inflation across developed economies remains high compared to Central Bank targets, most advanced countries have experienced positive downward movement in prices over the course of the last few months, progressing towards more sustainable levels.

However, the reescalation in military action across the Middle East proved a headwind to the broader disinflation trend. Accordingly, markets adjusted their rate cut expectations lower and now anticipate limited rate cuts from policy setters over the rest of the year.

Major Central Banks that met in July mirrored this sentiment, generally leaving interest rates unchanged. This included the Bank of England, who warned that inflation was expected to rise over the course of the year as the effects of higher energy prices pass through.

Similarly, the ECB left interest rates unchanged, attributing the uncertain environment to geopolitical events, while offering reassurance that the Governing Council is closely monitoring both indirect and second-round effects.

The US Federal Reserve’s second policy meeting under Chairman Warsh, also left interest rates unchanged, however notably, they were less vocal around the influence of geopolitical triggers on the economy than their Central Bank peers.

Instead, Chairman Warsh highlighted that the US was benefiting from strong growth in business investment (particularly high-tech capex), which has contributed to healthy momentum in manufacturing and building out key infrastructure for future growth.

In contrast the Reserve Bank of New Zealand bucked the trend, issuing their first increase to the Official Cash Rate in three years. The 0.25% increase was judged appropriate given the above target inflation levels, which are projected to continue in the coming quarters.

Recalibration of Expectations

Along with the above comments, the Fed Chair specifically referenced a year-on-year growth rate of close to 20% for AI-related tech spending on software and equipment - a statistic that encapsulates the magnitude of funds following into Artificial intelligence.

Against this backdrop July saw investor focus sharpen, as profitability came under scrutiny. Markets transitioned from broad enthusiasm for future potential, to focus on companies’ actual ability to generate revenue off the back of the technology advancements.

Recalibrated investor expectations triggered a sharp correction in AI-related equities. Companies able to show direct bottom-line cloud and AI returns outperformed peers that struggled to demonstrate monetisation from the technological investment.