Please see below the daily update article from Brooks Macdonald, received this morning – 05/08/2026:
What has happened?
Markets rallied as easing concerns over the Strait of Hormuz pushed oil prices and inflation expectations lower, supporting both equities and bonds. Brent crude fell back below $80/bbl. Short-term inflation expectations dropped to multi-month lows, bond yields continued to retreat, and both the S&P 500 (+1.79%) and Stoxx 600 (+0.73%) reached fresh record highs. Risk appetite also returned to the AI theme after July’s volatility, with technology stocks leading gains. The Nasdaq rose +2.59%, while the Philadelphia Semiconductor Index surged +6.55%, its strongest daily gain since March and extending its advance since last Wednesday to +16.58%, the largest four-day rise since 2020.
Strait of Hormuz fears continue to fade
Much of the market optimism reflected further signs of progress around the Strait of Hormuz. Qatar confirmed that a draft proposal had been circulated, while Treasury Secretary Bessent suggested an agreement to restore shipping flows could be reached soon. Reports from Axios and the Wall Street Journal indicated that the US is pursuing a 60-day interim arrangement between Iran and Oman to ease vessel transit through the region. While the longer-term framework remains unclear, investors responded by further unwinding geopolitical risk premiums.
Confidence returns to the AI investment cycle
Investor sentiment was also supported by developments that reinforced confidence in AI-related spending. Palantir (+29.45%) issued a strong outlook, reports emerged that Anthropic had agreed a $10bn computing infrastructure deal, and Caterpillar (+5.60%) raised sales guidance while pushing back against concerns that data-centre investment was slowing. Reuters also reported that US regulators are considering restrictions on imports of Chinese optical transceivers, a key component in data-centre networks. The news boosted domestic suppliers such as Marvell (+12.81%) and Coherent (+12.35%), underscoring how AI supply chains are becoming increasingly intertwined with US-China strategic competition. Some of the enthusiasm faded after the close, however, as SpaceX and AMD shares declined in extended trading following earnings updates.
What does Brooks Macdonald think?
Importantly, the rally in government bonds does not appear to be signalling a meaningful deterioration in growth. While June JOLTS job openings eased to 7.36 million from 7.54 million previously, the broader details remained constructive, with hiring improving, layoffs subdued and the quits rate holding at a healthy 2.0%. Taken together, the recent data suggest markets are reassessing inflation risks more than growth risks. As geopolitical concerns ease and energy prices retreat, investors have become more willing to look through recent volatility and refocus on the underlying earnings and investment backdrop. That has created a supportive environment for both bonds and equities.
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Cherise Lancaster
05/08/2026