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Market Wrap
In Market Wrap, we look back at the events of the past month and outline what's on our radar for the month ahead.
Key Points
01.
Geopolitical risks resurface
Middle East tensions remain, putting pressure on oil and inflation expectations. NATO summit offered a more constructive signal of cooperation.
02.
Tech and energy stocks lead the way
US stock market profit growth is expected to be supported by semiconductors and energy.
03.
Events on our radar
Investors will be watching Middle East developments, upcoming central bank meetings and company profit reports for their potential impact on markets.
Geopolitical risks resurface
Early July saw the fragile Middle East ceasefire come under pressure after the US launched airstrikes and tightened sanctions in response to Iranian attacks on commercial shipping in the Strait of Hormuz, raising concerns that tensions could re-escalate. The flareup came just weeks after the US and Iran signed a memorandum of understanding (MoU) aimed at creating space for negotiations. While diplomatic efforts appear to be easing immediate tensions, the ceasefire remains fragile and periods of volatility are likely.
Oil prices had fallen following the MoU as investors became more optimistic that regional energy exports and shipping would gradually return to normal after significant disruption earlier this year. Recent events have reminded markets that this process may be uneven. A prolonged period of instability could delay the normalisation of energy markets and, if tensions were to escalate more seriously, renewed disruption to shipping and higher energy prices could contribute to inflationary pressures and increased market volatility.
The recent NATO summit has also been in focus, with President Trump reaffirming the US commitment to the alliance. Rather than announcing significant new spending commitments, the summit focused on implementation, with greater emphasis on defence procurement, industrial capacity and expanding production. Continued support for Ukraine and closer defence-industrial cooperation highlighted a broader shift from political commitments to long-term industrial delivery, reinforcing a more durable outlook for defence investment.
Tech and energy stocks lead the way
At the halfway point of the year, the S&P 500 is up 10%, with semiconductors, the chips and equipment powering AI systems, driving about half of the gains.1 Despite recent volatility and headlines, semiconductor stocks remain up around 75% this year.2 Software has been the biggest drag.3 Attention now turns to earnings season, when companies report their latest profits and forecasts for future earnings. Looking at earnings expectations, which refer to what analysts and investors think companies are likely to earn compared with the same period last year, S&P 500 companies are expected to grow profits by a combined 25% year-on-year. About half of that growth is expected to come from semiconductor and energy companies.4
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Please see page 2 for historical performance data.
Events on our radar
Looking ahead, markets will focus on central bank meetings from the US Federal Reserve and the European Central Bank. Earnings season will test whether tech companies can meet high investor expectations, especially around AI spending. Developments in the Middle East, particularly around shipping and oil supply, will be key, as they could quickly translate into market volatility.
1,2,3 Source: BlackRock, Bloomberg, as of 30 June 2026. 4 Source: Bloomberg, as of 6 July 2026.
Performance of financial markets, 2021-2026 YTD
The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Source: Bloomberg, as of 30 June 2026.
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