Investors weigh AI-driven growth optimism against potential stagflation from prolonged oil supply disruptions near $95 per barrel.
Global equities hit record highs last week before plunging in their worst session since October, as markets oscillate between AI-fueled growth expectations and escalating oil price risks. U.S. rhetoric on Iran and uncertainty over the Strait of Hormuz’s reopening have driven volatility, with investors previously betting on a resolution within three months.
Oil prices at or above $95 for an extended period could shift sentiment toward stagflation, upending current market assumptions. Meanwhile, AI-driven optimism has bolstered Wall Street, U.S. household wealth, and global assets from bank shares to Greek debt, while Asian exporters like Taiwan anticipate strong economic expansion.
Correlations between interest rates, inflation, and tech investments have tightened, causing seemingly unrelated assets to move in tandem. The FTSE 100 and other indices reflect this tension, reversing course frequently amid shifting geopolitical and economic signals.