LONDON, June 9 Tumult on world markets in the past week shows the economic outlook is now on a knife edge, investors said, with equal odds of an AI boom lifting growth or oil shocks from the U.S.-Iran war pushing stocks and bonds into a tailspin.
Global equities hit an all-time peak on June 3, suffered their worst day since October two days later, and have spent this week reversing course constantly in line with U.S
President Donald Trump’s volatile rhetoric about Iran and rapidly shifting bets about when the Strait of Hormuz shipping route might reopen. “Most investors have been running with the assumption that within less than three months we reach a reopening of the strait,” Lombard Odier Investment Managers’ head of macro and multi-asset portfolio manager Florian Ielpo said. “If we move to expecting oil prices of $95 or more for many more months, that would be a complete change of view and a stagflation outlook,” he added. “The market is walking a narrow line.” ALL TOGETHER As interest rate and inflation markets, the oil outlook and tech investment bets have become more correlated, many assets that are not obviously linked have moved together in recent months. AI-driven optimism has buoyed Wall Street stocks and U.S. household wealth, boosted official growth forecasts for years to come, driven breakneck expansion for Asian exporters and lifted sentiment towards assets across the globe from global bank shares to Greek debt. Taiwan expects the best economic growth in 16 years for 2026 thanks to blockbuster semiconductor exports, while global tech spending has sent imports and exports surging in China, the world’s biggest consumer of commodities.
That’s one reason why Britain’s FTSE 100 index, which is stacked with energy producers and miners, has halted its usual habit of moving inversely to so-called growth stocks in the tech industry and begun rising alongside them instead. THE FLIPSIDE These tech-driven correlations will also make it much harder…