Nick Spencer-Skeen, Senior Executive Officer, Lunaro Financial Markets
Friday Closing Prices
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- S&P 500 7,537 (+0.72%)
- Nasdaq 26,121 (+1.12%)
- Gold $4,120 (-0.08%)
- Brent Crude Oil $75.22 (-1.42%)
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Markets endured a week of sharp cross-asset swings, with Middle East tensions driving the early risk-off move in oil and stocks before semiconductors and broader equities recovered into the end of the week.
The S&P 500 gained 0.4% for a second consecutive weekly advance, while the Nasdaq 100 rose 0.3%. In contrast, the Stoxx Europe 600 fell 1.8%, its worst week since April, as higher oil prices revived inflation concerns and pushed investors to price a greater chance of further European Central Bank (ECB) tightening.
Semiconductors dominated the story in the stock market. Samsung’s earnings disappointed elevated expectations and initially weighed on sentiment, but the successful US debut of SK Hynix ADRs, alongside Micron’s plan to lift US plant spending to $250bn, revived confidence in the AI demand cycle. The Philadelphia Semiconductor Index surged 5.2% on Thursday alone, while the VIX fell to its lowest level since January.
Oil was the main macro transmission channel for the geopolitical headlines. WTI initially dropped below $69 per barrel after Saudi Arabia cut official selling prices, before Brent spiked towards $80 following renewed US strikes on Iran. Prices later eased as diplomatic talks remained open, but oil is a key asset to watch for the week ahead.
Bond markets remained sensitive to the inflationary implications of the conflict, with long-dated Treasuries under pressure and expectations for Fed cuts fading. Elsewhere, copper gained for a second week, the US dollar weakened below its 21-day moving average, and the Reserve Bank of New Zealand (RBNZ) delivered its first-rate hike in three years.
What OPEC Sees Next
The OPEC monthly oil market report is due to be released today and will be scrutinised more closely than usual by investors as they assess whether the oil market is genuinely normalising or remains vulnerable to another geopolitical supply shock.
The report arrives after renewed US-Iran tensions drove another bout of volatility in Brent and WTI, while tanker traffic through the Strait of Hormuz remains below pre-conflict levels. Some of the details to note will be OPEC’s estimates for Gulf production, Iranian exports, and the speed at which disrupted supply can return. These figures may help investors assess whether the recent decline in crude prices reflects improving fundamentals or excessive confidence in a lasting diplomatic settlement.
We’ll also be taking note of demand forecasts. OPEC reduced its 2026 global demand-growth estimate to 970,000 barrels per day in June but remains considerably more optimistic than the IEA. The upcoming report could have a significant impact on market expectations, with any further downgrade reinforcing expectations of softer prices, while resilient demand projections would strengthen the case for a tighter market.
CPI Puts Warsh on the Spot
Tuesday’s US Consumer Price Index (CPI) June report isn’t just important as a stand-alone data print, but is unique this time around as it lands alongside Fed Chair Kevin Warsh’s first congressional testimony. The data will be released at 8:30am ET, with Warsh then speaking at 11:00am ET. That overlap creates an unusually direct link between the inflation print and the Fed’s policy response, with markets able to test the data against Warsh’s rhetoric in real time.
Consensus expects headline CPI to ease to around 3.9% year-on-year from 4.2% in May, although that moderation may owe more to softer energy prices than a genuine improvement in underlying inflation. June covered two very different oil regimes, with crude prices falling sharply early in the month before rebounding as US-Iran tensions intensified. Energy will therefore be the largest source of forecast risk.
Core inflation will matter more for the Fed. May’s 0.2% monthly increase offered some relief, but persistent services inflation and evidence of energy pass-through mean another soft reading is far from assured. A core print of 0.3% or above could revive near-term hike expectations and could push US Treasury yields and the US dollar back higher.
Banking On It
The KBW Bank Index had its worst Q1 since 2023 (-6%), but has recovered sharply since April as Q1 bank earnings beat expectations and the macro backdrop stabilised. This week, we get all the major banks reporting for Q2, which could be a key driver for the broader market.
JPMorgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs report on Tuesday, followed by Morgan Stanley on Wednesday. Tuesday, therefore, is the most concentrated single-day bank earnings event in recent memory, with five of the six largest US banks reporting within a 75-minute window.
Trading and investment banking are expected to provide the main earnings tailwind. Q1 was a historic quarter for trading. For example, JPMorgan posted $11.6bn in total trading revenue, its highest ever, driven by volatility related to the war in Iran.
