Blogs

Please see below the daily update article from WH Ireland, received today – 31/07/2026

31 July 2026

The Federal Reserve did not raise interest rates this week. The bond market tightened policy anyway.

The Federal Open Market Committee left the federal funds rate unchanged at 3.50–3.75 per cent, but the 9–3 vote exposed a committee divided over an economy combining solid growth with renewed inflation. Beth Hammack, Neel Kashkari and Lorie Logan wanted an immediate quarter-point increase. The current stance is no longer the product of a settled consensus, merely the point around which a divided committee could assemble a majority.

Chair Kevin Warsh offered little guidance on what comes next. His message: study the economy rather than rely on the Fed to map the path of rates. That sounds like a restoration of market discipline. It may prove to be a transfer of power.

Since the financial crisis, statements, projections and the dot plot narrowed the outcomes investors felt obliged to price. Warsh is loosening that anchor. Investors must now judge not only the next decision but how a divided committee will react to each inflation and employment release. As the distribution of outcomes widens, bondholders demand compensation. That compensation is the term premium.

The decision was therefore neither hawkish nor dovish — a hold accompanied by tighter financial conditions. That may be deliberate: if Treasury yields, mortgage rates and corporate borrowing costs rise on their own, markets may deliver some of the restraint the dissenters wanted without a formal increase.

But allowing markets to transmit policy is not the same as relying on them to set it. A conventional cycle raises short rates according to an intelligible reaction function; a term-premium shock raises borrowing costs because investors are unsure what that function is, restricting credit in places only loosely connected to the inflation problem.

And the present pressure is not simply excess demand. Energy disruption and tariffs raise prices by restricting supply, and higher rates cannot produce more oil or reverse a tariff. They can only weaken demand elsewhere enough to stop the shock spreading into wages, services and longer-term inflation expectations.

Treat that shock as temporary and the Fed risks repeating “transitory”. Respond too aggressively and it imposes a domestic slowdown to offset a foreign supply loss. The dissenters think waiting is the greater danger: supply shocks harden into persistent inflation when companies retain pricing power and workers chase lost real income.

But a central bank cannot absolve itself because inflation begins on the supply side. Policy does not cause the shock, but it influences how far it spreads.

For investors, every release now carries more risk. Under strong guidance, a single number was filtered through a stable framework; under pure data dependency, it can change the framework.

Borrowers get no comfort either. Higher yields lift mortgage and corporate costs, weakening housing, investment and asset prices, and with them collateral and risk appetite — even for borrowers whose own performance has not deteriorated.

The danger is that market-led tightening continues until inflation is no longer the Fed’s principal problem.

Warsh is restoring discretion after an era in which Fed language was itself a tradable asset. There is merit in that, but discretion has a price. Investors who cannot identify the reaction function do not become better economists; they shorten duration, cut risk or demand a higher yield.

The conclusion is not merely that yields may rise, but that the distribution has widened. If inflation persists, the dissenters may gain support. If higher long yields damage housing and credit, the economy may slow before the Fed acts — and long-duration bonds could rally sharply, despite looking least attractive today.

The Fed once guided the bond market. Warsh wants it to discover the price of money for itself.

He should be careful what he wishes for. Markets do not tighten with a central bank’s precision. They tighten borrower by borrower, refinancing by refinancing, until the damage is large enough that the Fed must start guiding them again.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Alexander James Roberts

31/07/2026

Please see below, an article from EPIC Investment Partners which discusses Microsoft’s prospects in the AI space. Received today – 30/07/2026

Microsoft’s recent results have reignited an important debate among investors: does the company’s aggressive artificial intelligence investment represent exceptional long-term vision, or excessive capital allocation?

The question matters because, despite Microsoft’s consistently strong results, the stock has experienced a challenging period as investors have questioned the scale of AI spending, rising depreciation, margin pressure and the timing of returns. For shareholders, this has been a frustrating journey.

The line between genius and insanity is often only visible in hindsight.

History has shown that transformative technology shifts often require significant investment before the full economic benefits become visible. Companies that successfully identify and control the next major computing platform can create enormous long-term value, but the path is rarely straightforward.

Microsoft, Amazon, Alphabet and Meta all invested heavily ahead of major technology transitions because their leadership teams understood that owning the platforms through which innovation develops could create powerful competitive advantages.

The key question today is whether artificial intelligence represents another such transition.

The market is understandably focused on the trees: capital expenditure, higher depreciation, near-term margin pressure, and uncertainty over when AI revenues will fully justify current investment levels.

However, investors may be missing the wood.

Microsoft’s opportunity is not simply to build artificial intelligence models. Its ambition is to become the platform through which businesses adopt and integrate AI across their organisations.

Azure provides the infrastructure required to train and operate AI workloads. Microsoft 365 brings AI into the daily workflows of hundreds of millions of users. GitHub provides access to the global developer ecosystem, while its cybersecurity capabilities support the trust required for widespread enterprise adoption.

The early evidence suggests demand is already developing.

Microsoft’s cloud business has surpassed $100 billion in annual revenue, providing a significant foundation before AI adoption reaches maturity. Azure growth has accelerated to 43%, reflecting strong demand for AI-related infrastructure. Commercial remaining performance obligations, a measure of future contracted revenue, increased substantially from $368 billion to $678 billion in one year.

These figures suggest AI is not merely a future possibility based on investor enthusiasm. Enterprises are already committing resources towards the infrastructure required for the next generation of computing.

However, the investment case cannot rely only on what may happen over the next decade. Investors also need to consider what could drive recognition of Microsoft’s strengths over the next one to three years.

Potential catalysts include continued Azure growth, accelerating monetisation of AI services such as Copilot, evidence that productivity benefits are translating into customer spending, and improving confidence that today’s capital investment will generate attractive returns.

The risks remain real. AI models could become increasingly commoditised, adoption could progress slower than expected, or customers could capture a larger share of productivity gains than technology providers.

However, Microsoft does not need to win every aspect of the AI race to create significant shareholder value. Its advantage lies in owning the infrastructure, distribution, and enterprise relationships through which businesses adopt this technology.

The market today is focused on the trees: quarterly margins, capital expenditure and near-term uncertainty.

The bigger picture is that Microsoft may be positioning itself at the centre of one of the most important technology transitions of the coming years.

The success of this strategy will depend on whether the competitive advantages created by AI translate into durable revenue growth, stronger customer relationships and attractive returns on capital.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

30^th July 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 28/07/2026.

Is inflation set to rise?

The conflict in the Middle East has broadened, leading to higher oil prices – but what could this mean for inflation?

Key highlights

• Middle East conflict: Escalating tensions spread from the Strait of Hormuz to the Red Sea, pushing Brent crude oil prices to above $100 per barrel and renewing inflation concerns.
• Bond yields and rate expectations: Yields rose across developed markets as oil rebounded, with rate hikes increasingly priced in by the U.S. Federal Reserve, European Central Bank and Bank of England.
• AI investment promise: Alphabet raised capital expenditure guidance to up to $205 billion while Google Cloud revenue surged 82%, providing evidence that AI spending is beginning to translate into commercial growth.

A broadening conflict puts inflation back in focus

Markets were dominated by two powerful themes last week: geopolitics and AI capital expenditure (capex). Escalating tensions in the Middle East pushed oil prices higher, renewing concerns over inflation and driving a repricing of interest rate expectations. Meanwhile, corporate earnings provided further evidence that the AI investment cycle remains firmly intact, although the enormous scale of spending is prompting greater scrutiny over future returns.

Geopolitical tensions intensified as the conflict broadened beyond Iran and the Strait of Hormuz. Risks increasingly extended into the Red Sea, where Houthi militants in Yemen targeted Saudi-linked oil tankers, raising concerns that disruption could spread across multiple critical energy and shipping routes. This helped push Brent crude oil to above $100 per barrel as markets priced in a greater risk to global energy supplies.

Source: Bloomberg

The renewed surge in oil comes just as recent inflation data had started to show some improvement. Headline inflation in developed economies eased in June, helped in part by lower energy prices. With oil prices now rebounding sharply, that disinflationary tailwind is likely to fade – and could potentially reverse if higher prices persist.

President Donald Trump announced a new round of tariffs covering dozens of U.S. trading partners, with duties broadly ranging between 10% and 12.5%. Markets largely took the announcement in their stride; the measures are essentially a continuation and restructuring of existing tariffs under a new legal framework rather than a significant new escalation in the overall tariff burden.

Nevertheless, tariffs remain another potential source of price pressure alongside higher energy costs, adding further uncertainty to the inflation outlook at a time when inflation remains above central bank targets in many developed economies.

Bond yields rise as rate expectations turn more hawkish

Source: Bloomberg

Government bond yields rose across developed economies as investors reassessed how central banks may respond if higher energy prices lead to more persistent inflation. The shift in rate expectations has been significant.

In the U.S., markets are pricing in roughly a one-third chance of a Federal Reserve rate hike at its July meeting, with almost two quarter-point increases priced by year end. In Europe, the European Central Bank kept interest rates unchanged at its July meeting, but markets are increasingly pricing in the possibility of a rate increase as soon as September. The repricing has also been pronounced in the UK, where markets are now pricing in almost two rate hikes by year end.

For central banks, much will depend on whether the energy shock produces only a temporary increase in headline inflation or generates more persistent second-round effects. Policymakers will therefore be watching closely for signs that higher energy costs are feeding into broader prices and inflation expectations.

AI spending accelerates, but so does scrutiny

While geopolitics and inflation dominated the macroeconomic backdrop, AI remained the other major force driving markets last week. Alphabet provided perhaps the clearest illustration of both the extraordinary scale of the AI investment boom and the growing debate around its returns.

The Google parent raised its expected capex for this year to between $195 billion and $205 billion, as it accelerates investment into AI computing capacity and cloud infrastructure. That spending comes at a significant cost – Alphabet recorded its first ever quarterly negative free cash flow – of $5.9 billion – since going public approximately two decades ago.

Source: Bloomberg

However, there are increasingly clear signs that rapid AI development is translating into growth. Google Cloud revenue surged 82% year-on-year, making it one of Alphabet’s fastest-growing businesses, supported by strong demand for AI infrastructure and solutions. Intel reinforced the message, with data centre sales rising 59%, benefitting from continued investment in AI and computing infrastructure.

The investment case for AI therefore remains intact. However, as capex reaches extraordinary levels, investors are increasingly scrutinising whether hyperscalers – the largest cloud and technology operators – can generate sufficient revenue, profits and cashflow to justify that spending.

The earnings season is gathering pace, with updates from major technology companies likely to shape sentiment around the AI investment cycle.

UK activity rebounds thanks to football and weather

Amid the geopolitical uncertainty, there was some positive signals from the UK economy. UK inflation slowed to 2.6% in June – below expectations and the lowest level in more than a year. Lower energy prices contributed to the improvement, although the subsequent rebound in oil means this favourable effect may prove temporary.

Economic activity also provided a positive surprise. The latest flash purchasing managers’ indices (PMIs) showed the composite index rising from 49.3 in June to 52.1 in July, moving back above the 50 level that separates expansion from contraction. Services activity rebounded, helped partly by stronger hospitality activity around the World Cup and warm summer weather, while manufacturing also improved.

Taken together, softer inflation and stronger activity provide some welcome evidence that the UK economy has regained momentum. However, some caution is warranted – part of the improvement may reflect temporary factors, and higher oil prices could raise costs for businesses and squeeze household purchasing power.

It remains to be seen whether the improvement can be sustained.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

29/07/2026

Please see below the daily update article from WH Ireland, received this afternoon – 28/07/2026:

28 July 2026

Climate change is no longer a distant environmental concern; it has become a material macroeconomic risk that is eroding fiscal resilience and destroying billions of dollars of physical capital every year. The rising frequency and severity of extreme weather events, including catastrophic floods, wildfires, hurricanes and heatwaves, are imposing mounting costs on governments, businesses, and households alike. When floods inundate major cities or wildfires devastate residential communities, reconstruction demands absorb vast public resources, diverting capital away from productive investments such as healthcare, education, innovation, and infrastructure. Increasingly, a country’s ability to recover from these shocks depends not only on the scale of the disaster but also on the strength of its balance sheet.

Nations with substantial Net Foreign Assets (NFA), large sovereign wealth funds and healthy fiscal reserves are significantly better positioned to absorb climate-related shocks. High-income Gulf Cooperation Council (GCC) countries, for example, can deploy accumulated financial wealth to rebuild damaged infrastructure quickly, invest in advanced climate adaptation technologies and support insurance markets without jeopardising fiscal stability. These reserves effectively function as a national self-insurance mechanism, enabling governments to protect public services while financing long-term resilience projects. In contrast, lower-income and conflict-affected countries often lack the fiscal capacity to respond adequately. For these economies, even relatively localised disasters can trigger prolonged humanitarian crises, rising public debt and years of lost economic growth.

The financial consequences extend well beyond the immediate destruction of physical assets. Climate risks are increasingly reshaping global real estate and insurance markets as historical actuarial models become less reliable in forecasting future losses. In many high-risk regions, insurers have sharply increased premiums, reduced coverage, or exited markets altogether, leaving homeowners, businesses and mortgage lenders exposed to greater financial risk. Although wealthier nations typically incur larger absolute losses because of their high-value infrastructure, developing economies suffer disproportionately greater welfare losses, as lower insurance penetration and weaker fiscal support leave households to bear the full economic burden.

As climate risks intensify, governments face the difficult challenge of financing both immediate disaster relief and the substantial long-term investments required to strengthen resilience, including flood defences, modern drainage systems, wildfire mitigation, and climate-resilient infrastructure. For countries with weak external balance sheets or negative net foreign assets, a single catastrophic event can erase a significant share of annual economic output, worsening debt dynamics and widening global inequalities. Without sustained investment in adaptation and stronger fiscal planning, the economic costs of climate change will continue to place growing pressure on sovereign balance sheets and long-term global financial stability.

Have a good day.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Cherise Lancaster

28/07/2026

Please see below the daily update article from Brooks Macdonald, received this morning – 28/07/2026:

What has happened?

Markets were caught between easing Middle East tensions and renewed weakness in semiconductor stocks. The US-Iran pause agreed over the weekend appeared to hold, helping Brent crude fall -8.7% and supporting broader risk sentiment. The S&P 500 (+0.02%) and Nasdaq (-0.16%) finished little changed, while the Philadelphia Semiconductor Index fell a further -2.2%. Treasury yields also edged lower, although elevated real yields continued to weigh on equity valuations.

Diplomacy tempers energy concerns

Middle East developments were broadly supportive. President Trump said military action against Iran had been paused while negotiations continue, whilst reports pointed to ongoing discussions around the Strait of Hormuz. Although Houthi attacks on Saudi oil facilities over the weekend highlighted that risks remain, investors took comfort from the reduced likelihood of an immediate escalation.

Chips companies under pressure

Technology stocks weakened after another sell-off across the semiconductor sector. ASML fell -8.4% following reports that a Chinese company had begun mass production of deep ultraviolet lithography machines, raising competitive concerns for parts of the chipmaking supply chain. Nvidia also lost -5.0% amid renewed scrutiny of AI-related financing and spending. Despite the sector weakness, the wider market remained resilient, with nearly two-thirds of S&P 500 constituents advancing and the Russell 2000 rising +0.6%.

What does Brooks Macdonald think?

Yesterday’s trading highlighted the balance between easing geopolitical tensions and growing scrutiny of AI-related companies. The de-escalation in US-Iran tensions helped ease concerns around energy supplies and oil prices, although the situation remains fragile. Meanwhile, weakness in semiconductor stocks showed that parts of the AI trade remain sensitive to shifts in investor sentiment. Encouragingly, broader market participation remained healthy, suggesting overall risk appetite has held up well.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Cherise Lancaster

28/07/2026

Please see the below article from Tatton Investment Management discussing the pause in market optimism, driven by oil price pressures, rising bond yields, hawkish central banks and concerns over whether AI investment can keep supporting equity market momentum, received this morning – 27/07/2026.

Hiatus in optimism

Markets had a rough week, as Brent crude oil pushed back above $100 per barrel and long-term government bond yields rose sharply. This week starts on a better note, with US and Iran ceasing their attacks at least for now. Brent spot is below $92, and bond and equity prices have recovered about half of their losses from last week.

Andy Burnham’s talk of fiscal flexibility unsettled the gilt market, but the new Prime Minister quickly projected a “fiscal discipline” message, and John Healey’s appointment as Chancellor calmed nerves slightly. The UK’s lower-than-expected 2.6% inflation figure helped too.

But gilts take their cue from global bond markets more than domestic politics, so were hurt by rising US and Japanese yields. Resilient US growth, rebounding employment, and enormous AI-driven spending (Alphabet posted a $5.9bn deficit last quarter) are pushing US money supply ahead of nominal GDP. Combined with higher energy prices, that’s a headache for the Federal Reserve, whose officials have turned surprisingly hawkish. Markets now price a 34% chance of a hike next week, up from 10%. As recently as April, a cut still looked more likely.

Oil’s spike came from Red Sea attacks on Saudi tankers, not the Strait of Hormuz. But the Houthis don’t have anything like Iran’s capabilities, and the US, UK, France and Saudi Arabia appeared ready to contain the threat. It will likely be resolved sooner than the US-Iran war, but the timing, just as the Fed turns hawkish, is unhelpful.

Big tech had a worse week than the broader market. Tesla and Alphabet shares fell sharply, even though Alphabet beat earnings forecasts. This was more than just referred pain from oil prices: investors are growing anxious about whether Silicon Valley’s vast AI spending will ever generate hard profits, especially after Chinese firm Moonshot released a competitive model for a fraction of the cost. With so many risks stacked up, questions about where AI’s productivity gains will actually show up – and for whom – are only getting harder to answer.

Oil rises but who wants it?

Brent crude broke back above $100 a barrel on Thursday after a series of escalations in the Middle East – particularly Houthi strikes in the Red Sea, through which many oil tankers have rerouted in recent months.

The strange part isn’t that oil prices spiked; it’s that prices stayed remarkably calm in previous weeks, despite the US-Iran ceasefire falling apart and the Strait of Hormuz closing again. That’s partly because oil traders expected one or both sides to back down, but also because of a sense that the previous Strait closure was not as bad for the world economy as feared.

A fifth of the world’s oil transited through the Strait before the war, but its closure hasn’t led to the doomsday scenarios predicted. That has been helped by strategic reserve releases, sanctions relief on Russian oil, and, above all, a sharp fall in demand.

China is central to that story. Its crude imports have fallen from over 12 million barrels a day before the war to under 8 million now, as Beijing draws down stockpiles and eases off its energy-intensive industrial base. Oddly, China hasn’t rushed to rebuild reserves even after Iran was cleared to sell to it again. Some of this looks structural: cheap electric vehicles were already denting Chinese petrol and diesel demand, a trend this price spike will likely accelerate.

So where does that leave us? The supply-demand balance is genuinely uncertain, and much depends on whether Beijing decides to restock. But we’d stress that this week’s rally, like the ones before it, is really about speculators piling back into energy markets on bets of undersupply, not a reflection of barrels actually going missing. It’s a risky bet – and, in the meantime, one that’s itself helping to destroy the demand it is betting against.

When momentum runs out

Chip stocks had a spectacular first half of 2026 but have sold off sharply in recent months, notwithstanding a small bounce for the Philadelphia Semiconductor index (Sox) last week. Most commentary has focused on how the AI investment boom is washing through a notoriously cyclical industry. We think there is another thread worth pulling on: what the episode says about the dynamics of momentum investing itself.

Momentum is one of the simplest investment factors: buy what is already winning, on the view that winners keep winning. Performance is typically measured on a 12-month rolling basis, but ignoring the most recent month to avoid short-term trend reversals. It somewhat contradicts the usual ‘buy low, sell high’ adage, but momentum has been the best-performing factor of the last decade, according to Bloomberg.

In 2026, momentum funds piled heavily into chips, amplifying the AI-fuelled rally. As chip stocks have sold off, so has momentum as a factor, with higher volatility prompting investors to trim their holdings.

The ’12-1’ measure of performance gives momentum strategies a structural blind spot. Ignoring the most recent month means momentum funds are slow to react to sharp turns. That tends to bite hardest after boom-or-bust periods, as in 2009 and 2020. That predictability is also a vulnerability: other investors can see the rebalancing coming and pre-empt it, buying new winners and selling them on to momentum funds a month later. Crowding compounds the effect, since momentum traders tend to look at the same data and rebalance at the same times, amplifying any sharp turn in markets.

Of course, betting against momentum investors requires deciphering meaningful trend reversals from short-term noise. That gamble has rarely paid off over the last decade. Whether chips and momentum both recover from here depends on one unresolved question: whether the AI theme itself is turning.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

27^th July 2026

Please see below, an article from EPIC Investment Partners which discusses the external factors impacting the US bond market. Received today – 24/07/2026

For most of the past two years, investors have treated the US bond market as an extension of Federal Reserve policy. Inflation would fall, growth would slow, the Fed would cut rates, and long-term borrowing costs would follow.

That assumption is now being tested.

Treasury yields are increasingly being driven by forces the Fed cannot easily control: war, energy prices, government borrowing and the refinancing of debts accumulated during the era of near-zero rates. The Fed controls the overnight rate. It does not control oil prices, the federal deficit or the yield investors demand to finance the US government for 10 or 30 years.

Before the war with Iran, the 10-year Treasury yield was below 4 per cent. It has since risen towards 4.7 per cent, while the 30-year yield has moved above 5 per cent.

Part of that reflects reduced expectations of rate cuts. But investors are also demanding greater compensation for inflation, heavy Treasury issuance and fiscal uncertainty. This term premium may remain elevated even if the Fed eventually lowers short-term rates.

The pressure is magnified by the volume of debt due to be refinanced. Governments, companies, households and property owners benefited from the low-rate era. Debt issued at 1, 2 or 3 per cent does not immediately become more expensive when yields rise. The cost appears gradually as maturities arrive.

That delay can be mistaken for resilience.

This is the uncomfortable echo of 2007. Then, the hidden problem was deteriorating credit quality. Today, it is the delayed repricing of debt across the public and private sectors. In both cases, slow transmission risks being mistaken for evidence that the system has absorbed the shock.

Commercial property provides the clearest example. A building producing $10mn of annual net operating income is worth $250mn at a 4 per cent capitalisation rate. At 6 per cent, the same income supports a value of only $167mn.

A third of the value disappears without any fall in rents. Refinancing also becomes more expensive, while weaker growth may reduce occupancy. The borrower may avoid default by injecting equity or extending the loan, but the economic loss remains.

This matters because investors often respond to rising Treasury yields by moving towards equities, private credit, infrastructure or real estate. Yet those assets do not exist independently of the Treasury market. Their financing costs and valuations are built on top of the same sovereign curve.

Higher government yields raise corporate borrowing costs, reduce the present value of future cash flows and push property capitalisation rates higher. The alternatives to Treasuries therefore become less attractive partly because Treasury yields have risen.

For a while, the damage remains hidden. Existing loans are fixed, private assets are valued infrequently, and lenders extend maturities rather than recognise losses. But as debt rolls over, more income is diverted towards interest payments. Transactions slow, investment is postponed and hiring weakens.

Eventually, growth slows not despite high bond yields, but partly because of them.

That creates a perverse investment cycle. The rise in yields that makes Treasuries appear unattractive may create the weakness that ultimately makes them valuable again. As demand slows and inflation eases, investors may return to government bonds for income and capital protection.

The debt wall will arrive borrower by borrower and maturity by maturity. By the time its effects are visible, the rise in Treasury yields may already have created the conditions for their reversal.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

24^th July 2026

Please see below the daily update article from Brooks Macdonald, received this morning – 23/07/2026:

What has happened?

Renewed tensions in the Middle East continued to dominate markets, pushing Brent crude to a seven-week high and fuelling concerns that central banks may need to keep interest rates higher for longer. Government bonds came under pressure on both sides of the Atlantic, with the US 2-year Treasury yield rising 3.5bps to 4.30%, its highest level since February 2025. Equity markets were more mixed. The S&P 500 fell -0.14%, while European shares outperformed, with the STOXX 600 gaining +0.58%.

Escalation keeps energy markets on edge

There was little sign of easing in the US-Iran conflict, with both sides issuing fresh warnings and US Central Command confirming another round of strikes overnight. Meanwhile, reports of Houthi attacks on oil tankers in the Red Sea added to concerns about global energy supplies, particularly as Saudi Arabia has rerouted exports through the region. Brent crude rose +3.36% to $94.07/bbl, while European natural gas futures climbed +4.82% to €62.54/MWh, their highest closing level since early 2023.

Big Tech earnings fail to reassure investors

US equity futures edged lower overnight following earnings releases from Alphabet and Tesla. Although Alphabet exceeded expectations, helped by strong cloud revenue growth, investors focused on the company’s higher-than-expected capital expenditure plans, sending the shares more than -3% lower in after-hours trading. Tesla also fell over -4% after reporting its first quarter of negative free cash flow in more than two years, as rising operating costs offset healthy vehicle sales.

What does Brooks Macdonald think?

Today’s main event will be the ECB’s policy decision. While rates are widely expected to remain unchanged following June’s increase, the accompanying guidance may prove more important than the decision itself. The recent surge in oil and natural gas prices complicates the outlook for policymakers. Higher energy costs can push inflation higher. Markets are currently pricing close to two additional ECB rate hikes by year-end, so investors will be paying close attention to whether policymakers share those concerns or continue to signal confidence that inflation could stay steady. More broadly, the ECB’s assessment will offer an early indication of how other central banks may respond if geopolitical tensions continue to filter through into energy markets and inflation expectations.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

23/07/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 21/07/2026.

Why have semiconductor stocks fallen?

After achieving exceptional gains, semiconductor stocks have retreated – but what’s driving the sharp sell-off?

Key highlights

• Tensions in the Middle East intensify, lifting oil prices and reminding investors that inflation risks remain uncertain, reinforcing a cautious approach from central banks.
• Semiconductor stocks sell off sharply despite strong results from TSMC and ASML, suggesting the weakness reflected profit-taking, leveraged positioning and valuation concerns rather than deteriorating AI fundamentals.
• The U.S. economy remains resilient, with healthy consumer spending, a stable labour market and solid bank earnings continuing to support the broader outlook.

Oil prices rebound as Middle East tensions intensify

The standoff in the Gulf set the tone from last Monday’s open and never fully released its grip. The Strait of Hormuz remains a live question, with the Joint Maritime Information Centre reporting the southern route technically open but the threat level severe, and vessels warned of mines.

Source: Bloomberg

Meanwhile, Iran’s Revolutionary Guard, said it would let no ship pass until foreign interference ended. Traffic appeared to halt almost entirely, though some clients close to the market suggested ships were still moving with their transponders switched off.

Last Tuesday, President Donald Trump floated a plan to charge a 20% toll on cargo transiting the Strait and to reinstate a U.S. naval blockade. The plan lacked any credible route to implementation, and by Wednesday it had quietly been dropped.

Overall, Brent crude oil prices jumped by more than 13% in a week to over $86 per barrel.

The near-term worry runs deeper than crude itself. More than 10% of global refining capacity remains offline following Russia’s export ban and repeated Ukrainian strikes on its refineries. With inventories of refined products low, that bottleneck has pushed petrol, diesel and jet fuel higher – gasoline rose around 6% at one point. These all feed directly into inflation expectations. Longer-dated oil futures still point to a supply glut later this year, so the market’s discomfort is about timing, not a permanent shift.

On a positive note, the latest U.S. inflation report offered some reprieve. Headline consumer price index (CPI) inflation contracted 0.4% in June, driven by energy prices. Core CPI was flat on the month, the biggest downside surprise since mid-2022.

Source: Bloomberg

Core services excluding shelter inflation fell sharply, shelter inflation decelerated and even the tech-related categories showed deepening deflation. The odds of a July hike evaporated. But this is a pause, not an all-clear; with a tight labour market, booming AI investment, loose financial conditions and rising oil again, we still think a rate rise is likely at one of the year’s final three meetings.

The Federal Reserve (the Fed) Chair, Kevin Warsh, told Congress the Fed has “no tolerance” for persistently elevated inflation, while adding it’s in no rush.

Semiconductor stocks stumble despite strong AI fundamentals

Ironically, the sell-off came despite another week of encouraging news for the AI investment cycle.

Both TSMC and ASML delivered strong results and maintained constructive outlooks. TSMC continued to benefit from robust demand for advanced AI chips, while ASML – whose lithography machines underpin the world’s most advanced semiconductors – highlighted strong order momentum and confidence in sustained demand.

As two of the industry’s most important bellwethers, their results reinforce the view that AI infrastructure investment remains on a solid footing and that hyperscale spending continues to support the sector.

So, why did semiconductor shares fall? The answer appears to lie more in market positioning than fundamentals.

Source: Bloomberg

Following an exceptional rally over the past year, investors took the opportunity to lock in profits as valuations across parts of the sector became increasingly demanding. Technical factors also amplified selling pressure, including leveraged exchange-traded funds (ETFs) in South Korea that accelerated declines in memory chip stocks and increased short-term volatility.

The recent correction therefore appears to reflect sentiment rather than a meaningful change in the outlook for AI. As earnings season gathers pace, guidance from the major technology companies on AI demand, capital expenditure and monetisation will be closely watched.

Economic fundamentals remain supportive

Against the market volatility, the underlying economic picture changed very little.

Recent U.S. economic data continue to suggest that growth is resilient. Initial jobless claims have fallen more than expected in recent weeks, while retail sales indicate that consumer spending continues to hold up.

Corporate earnings have also provided reassurance. Large U.S. banks generally reported solid results, supported by resilient consumer spending, healthy credit quality and improving capital markets activity. While management teams remain mindful of geopolitical uncertainty and the interest rate outlook, there was little evidence of meaningful stress among either households or businesses.

Taken together, these indicators suggest the U.S. economy continues to enjoy relatively solid foundations. That should continue to provide support for corporate earnings, even if markets experience periods of heightened volatility.

Attention now turns to earnings season, with updates from the major technology companies likely to shape sentiment around the AI investment cycle. Geopolitical developments in the Middle East will also remain in focus, given their potential implications for oil prices and inflation.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

22/07/2026

Please see the below article from Brooks Macdonald discussing how markets struggled to gain traction amid Middle East tensions, UK fiscal questions, and US trade policy concerns. Received this morning – 21/07/2026.

What has happened?

Markets struggled to gain traction yesterday. The S&P 500 fell -0.19%, while the NASDAQ (-0.05%) and Magnificent 7 (-0.07%) also edged lower as investors remained cautious despite some stabilisation in semiconductor stocks following last week’s sharp sell-off. European equities were also weaker, with the STOXX 600 down -0.30%. The FTSE 100 underperformed, falling -0.71%, as UK assets came under broader pressure.

Oil swings as Middle East tensions evolve

Investor sentiment towards the Middle East improved briefly after Reuters reported that Iran had received a proposal for a 10-day ceasefire aimed at reviving last month’s interim agreement. However, optimism quickly faded after the Houthis threatened a maritime blockade on Saudi Arabia, while President Trump struck a more hawkish tone and the US carried out a tenth consecutive night of strikes. Against this backdrop, Brent crude rose +1.27% to $89.22/bbl.

UK fiscal questions drive gilt sell-off

UK markets underperformed after newly appointed Prime Minister Andy Burnham said he would use “any flexibility” available within the government’s fiscal framework. Investors interpreted the remarks as potentially opening the door to higher borrowing, prompting a gilt sell-off. 10-year yields rose +8.1bps to 5.03%, while 30-year yields climbed +8.9bps to 5.74%. Attention also turned to the new government’s line-up. In a surprise move, Burnham appointed former Defence Secretary John Healey as Chancellor. Healey is generally viewed as one of the more market-friendly figures within the party, though his fiscal views remain unclear. Sterling ended the day down -0.16% against the US dollar. With further policy announcements expected this week, investors will be looking for greater clarity on the government’s economic agenda.

What does Brooks Macdonald think?

Alongside developments in the Middle East and the UK, trade policy is re-emerging as a potential market focus. Overnight, the US announced plans to impose a 50% tariff on selected Canadian goods under Section 338 of the 1930 Tariff Act, a provision that has never previously been used. While the measures will affect only around $20bn of imports and are unlikely to have a significant immediate economic impact, they may signal a more aggressive phase of US trade policy. With the administration’s temporary 10% global tariff set to expire on Friday and several Section 301 investigations still ongoing, additional tariff announcements could follow. While any single measure may have a limited effect, the cumulative impact could add to uncertainty around global trade and supply chains.

Bloomberg as at 21/07/2026.

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Alexander James Roberts

21/07/2026