Market Update: 26th July 2026- From Missiles to Microchips

Markets have had one of those weeks where the story changed before the ink was dry.

A few days ago, investors were braced for an oil shock and a fresh inflation problem as tensions in the Middle East escalated. Today, crude has surrendered much of its geopolitical premium and markets have largely moved on.

The market’s attention span remains impressively short.

Lower oil prices should help the inflation outlook, but not enough for central bankers to relax. Inflation remains stubbornly above target, and the prospect of meaningful rate cuts still looks frustratingly distant.

Meanwhile, technology continues to dominate proceedings, although a touch of fear is beginning to creep in.

The AI story remains compelling, and investors are still willing to pay handsomely for it. But questions are emerging over whether the enormous sums being poured into artificial intelligence will generate returns quickly enough to justify the valuations.

After all, every great investment boom begins with a genuinely transformative idea. The problem is that they occasionally end with investors paying any price for it.

That does not mean the technology rally is over. It simply means the market is becoming a little more discerning.

The broader lesson from this week is that markets remain driven by narrative. On Monday it was geopolitics, by Wednesday inflation and by Friday we were back to discussing chips and data centres.

The headlines move quickly; the fundamentals usually do not.

For investors, the answer remains much the same as ever: stay diversified, remain patient and resist the temptation to chase every new story. Markets have a habit of making both the optimists and the pessimists look equally foolish.

And this week has been another excellent example of that.

Anyway, till next time, all of you trade safe!

By James Trescothick
Head of Market Research and Market Analysis

Risk Disclaimer: This information is for educational purposes only and does not constitute investment advice. Financial markets involve risks, and past performance is not indicative of future results. Always conduct your own research and seek professional advice before making investment decisions