The tension between an unrelenting AI investment supercycle and a series of geopolitical shocks defined global markets in Quarter 2 2026. The Iran conflict that erupted in March dominated the Quarter, closing off roughly a fifth of global oil and LNG flows through the Strait of Hormuz and pushing oil prices sharply higher, which in turn forced investors to reassess central bank rate paths after markets had been pricing in interest rate cuts or extended pauses from the Fed, ECB, and Bank of England, with markets forced to contemplate renewed tightening rather than the cuts previously expected.
Despite this volatility, the structural AI theme kept powering equity and credit markets: top technology firms remained on track to spend nearly $700 billion on capex in 2026, up 36% from the prior year, helping drive S&P 500 earnings growth, expected to be the strongest since the post-pandemic rebound.
Despite the AI-driven market boom, this came as a backdrop of rising concern about market concentration in a narrow set of AI-linked mega-cap. The closing week of Quarter 2 saw profit-taking and a significant pullback in some of these AI names, thus giving up some of the quarter’s gains. We do, however, expect to see strong corporate earnings in Quarter 3, which will hopefully spur Global Markets further.
In light of these factors, we maintain a disciplined investment approach. Maintaining a well-diversified global portfolio will be crucial for managing risk while capitalising on growth opportunities.
Follow the link below for our latest Quarterly Market Commentary, providing an overview of recent market activity and the key themes shaping the investment landscape.
