Global markets ended the second quarter 2026 on a stronger footing as easing Middle East tensions, falling oil prices and renewed buying in technology shares helped lift risk appetite.
While investors remain cautious over higher US interest rates and elevated inflation, the focus has shifted back toward AI-driven growth and the start of the Q3 2026 reporting season.
Markets have undergone another sharp shift in mood over the past 48 hours.
Only last week investors were worrying that the AI trade had finally run out of momentum after a brutal technology sell-off.
Today, attention has swung back toward improving geopolitical conditions, with investors once again buying large-cap technology stocks as oil prices continue to retreat.
Wall Street finished Monday firmly higher, with the Nasdaq outperforming after renewed strength in major AI-related names helped the index recover much of last week’s losses.
The Dow Jones also closed at another record high, supported by broad-based buying as investors welcomed signs that tensions between the United States and Iran may continue to ease despite sporadic military exchanges over the weekend.
The turnaround in oil has been equally striking.
Brent crude has now fallen back below $73 per barrel, effectively erasing almost all of the geopolitical premium built into prices during the recent conflict.
Markets have been encouraged by the reopening of shipping through the Strait of Hormuz, while reports that the United States has eased restrictions on Iranian oil exports have further improved the global supply outlook.
Lower oil prices have helped calm inflation fears, although few investors believe the story ends there.
The Federal Reserve remains firmly in focus after another series of resilient US economic reports strengthened expectations that interest rates may need to remain elevated for longer.
The stronger dollar reflects that view, with the currency on course for its strongest quarterly performance in almost a year.
That has created an interesting split across asset classes.
Equity investors continue buying AI-related companies, encouraged by robust corporate investment and improving earnings expectations.
Bond and currency markets, however, remain far more cautious, with higher real yields signalling continued concern that inflation could remain stubborn despite the collapse in oil prices.
The AI story therefore remains central to almost every major asset class.
Reuters noted that enormous debt issuance from hyperscalers including Amazon and Alphabet continues to reshape global capital markets as technology companies race to fund the next phase of AI infrastructure.
While demand for semiconductors and cloud computing remains exceptionally strong, investors are becoming increasingly sensitive to how those investments are financed and whether future returns will justify the enormous capital commitments now being made.
Asian markets have provided one of the year’s strongest success stories.
Japan’s Nikkei completed its best quarter on record, gaining around 38%, while South Korea’s KOSPI surged more than 70% during the quarter thanks largely to extraordinary demand for semiconductor companies.
Taiwan also posted exceptional gains, underlining how dominant AI-related investment has become across regional equity markets.
At the same time, institutional investors appear noticeably more cautious than retail traders.
Much of the recent buying has reflected quarter-end portfolio adjustments and “window dressing” rather than large amounts of fresh money entering the market.
That may help explain why rallies continue to feel fragile despite generally positive news flow.
Currency markets continue telling a different story.
The US dollar remains firmly supported by expectations that US monetary policy will stay restrictive for longer than many other major central banks.
The Japanese yen weakened to another four-decade low near ¥162 per dollar, once again raising speculation that Japanese authorities could intervene if depreciation accelerates further.
Gold has struggled as the stronger dollar and higher real yields continue weighing on precious metals.
The metal is now on course for its biggest monthly decline since late 2008, illustrating how dramatically investor sentiment has shifted away from defensive assets following the easing in geopolitical tensions.
Bitcoin has also remained under pressure.
Unlike AI-related equities, cryptocurrencies have struggled to benefit from improving risk sentiment, with higher real yields and tighter financial conditions continuing to reduce appetite for more speculative assets.
Attention now turns toward the opening days of the third quarter, with investors preparing for several major catalysts.
Federal Reserve Chair Kevin Warsh is due to speak at the ECB’s Sintra conference, while Thursday’s US non-farm payrolls report is expected to become the week’s defining macro event.
A further strong labour market reading could reinforce expectations that the Fed will keep policy tighter for longer.
Investors will also continue monitoring developments in the Middle East.
Although markets have welcomed the easing in tensions, the recent conflict demonstrated how quickly energy markets can reprice geopolitical risk.
For now, however, traders appear far more focused on AI investment, corporate earnings and whether the recent rebound in technology shares marks the beginning of another leg higher or simply a quarter-end recovery.
Global markets regained their footing on Tuesday as investors returned to…
The week ahead promises to be one of the most important of the month for…
Global markets came under renewed pressure on Thursday as fresh US-Iran…
Language: English | Français | Español | Deutsch | Português | Netherlands | GB
Leave a Reply