The Big Three

Ceasefire unravels

Just weeks after a tentative truce had calmed nerves, the Middle East returned to the top of investors’ worry list. Speaking at the NATO summit in Turkey, President Trump declared that the ceasefire with Iran was “over”, and renewed hostilities quickly followed. The reaction was swift, with Brent crude jumping nearly 10% to around $78 a barrel while equities sold off, particularly European markets.​

The episode is a reminder of how quickly geopolitical risk can reassert itself. Although oil remains some way below the peaks seen at the height of the earlier conflict, the reintroduction of a risk premium matters at a delicate moment. Concerns once again centre on key chokepoints such as the Strait of Hormuz, through which a significant share of global supply passes.​

For investors, the implications are familiar but no less important. Higher energy prices feed into inflation expectations and complicate the outlook for central banks just as they weigh their next move. Such an environment continues to favour energy and defence, while leaving more cyclical and growth-sensitive assets exposed.​

Trade lines redrawn

Trade policy moved back into focus as a long-negotiated agreement between the US and the European Union came into force on 1 July. Under the deal, most European goods entering the US will face a 15% tariff, while the EU removes duties on American industrial goods and grants preferential access for selected farm and seafood products. Although far from frictionless, the agreement removes a significant source of uncertainty that had long hung-over transatlantic trade.​

Elsewhere, the picture is less settled. The administration confirmed it will not renew the USMCA in its current form after talks with Canada and Mexico failed to reach agreement, casting doubt over a trading relationship worth some $2 trillion. Fresh threats, including a possible 100% tariff on countries levying digital services taxes on US firms, have added to the noise.​

The wider implication is that trade remains a defining feature of the investment landscape. While the EU deal offers a degree of welcome clarity, the unresolved North American situation is a reminder that tariff risk has not gone away. For investors, the effects continue to filter through to supply chains and corporate margins, with consequences for inflation further down the line.

A record-breaking first half

Behind the recent volatility, it is easy to lose sight of just how strong the first half of 2026 has been for equity markets around the world. In the US, the S&P 500 gained close to 10%, and the technology-heavy Nasdaq rose almost 15%, both setting fresh records before the latest bout of geopolitical nerves crept in. The standout performance, however, came from Asia, where booming demand for semiconductors and artificial intelligence hardware pushed markets in Taiwan and South Korea sharply higher, with Japan also enjoying strong gains. ​

A common thread has run through these gains. The relentless investment cycle around artificial intelligence has been the single most important driver, fuelling record capital spending and a surge in demand for the chips and data-centre infrastructure that underpin it. That has particularly benefited semiconductor-heavy Asian markets, but the effect has broadened well beyond technology into areas such as utilities and industrials. Alongside this, resilient corporate earnings and growing confidence that inflation is easing, allowing central banks to move towards lower rates, have provided further support.​

The question now is whether the momentum can be sustained. With valuations looking full in several markets and the second-quarter earnings season about to begin, expectations are high, leaving little room for disappointment. For investors with a global perspective, the strong start is encouraging, and a reminder of the value of looking beyond the US, where much of this year’s leadership has in fact been found elsewhere. Much will depend on whether companies can deliver results strong enough to justify current pricing as the year progresses.

Source: Trading Economics, data to 09/07/2026